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Michael J. Brown; Chief Officer; Euronet Worldwide, Inc.
Rick L. Weller; Executive Vice President, CAO and Chief Financial Officer; Euronet Worldwide, Inc.
Scott D. Claassen; General Advisor and Secretary; Euronet Worldwide, Inc.
Andrew William Jeffrey; Director; Truist Securities, Inc., Research Division
Carlos José Nabhan; Managing Director and Analyst; Stephens Inc. , Research Division
Darrin David Peller; MD and Principal Analyst; Wolfe Research, LLC
Kenneth Christopher Suchoski; U. S. FinTech & Payments AnalystU. S. Citizenship and Drug Independent search for U. S. LP
Michael John Grondahl; Senior Research Analyst and Head of Equity Research; Northland Capital Markets, Research Division
Peter James Heckmann; MD and Senior Research Analyst; DADavidson
Unidentified Analyst
Operator
Good evening and welcome to the Euronet Worldwide Fourth 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
THANK YOU. Hello everyone and welcome to the call for the Euronet Q4 and Full Year 2023 Effects Convention. On the call we have Mike Brown, our President and CEO; Rick Weller, our CFO. Before we begin, I draw your attention to the disclaimer regarding forward-looking statements on the second slide of the PowerPoint presentation we are providing today. Statements made in this call that relate to Euronet or its management’s intentions, expectations or long-term functional forecasts are forward-looking statements. The actual effects of Euronet would likely differ materially from those expected in those forward-looking statements due to a number of points that are indexed on the second slide of our presentation. Except as required by law, Euronet does not intend to update any such forward-looking statements and assumes no legal liability to anyone for providing an update. Avoid undue reliance on such forward-looking statements. Additionally, the PowerPoint presentation includes a reconciliation of the non-GAAP monetary measures we will use in the call to their comparable maximum GAAP measures. I’ll now turn it over to our CFO, Rick Weller.
Rick L. Weller
Thanks, Scott. Good morning and I would like to thank everyone for joining us today. I’ll begin my comments on Slide 5. For the fourth quarter, we generated coins of $957 million, a consistent coin supply of $97 million, an adjusted coin supply of $100 million, and adjusted EBITDA of $147 million. . These effects were made imaginable thanks to the contributions of the 3 segments. Adjusted EPS was a consistent $1. 88 percentage point, up from $1. 39 in Q4 2022 and ahead of the $1. 75 guidance we provided for the quarter. We exceeded our guidance due to better-than-expected functionality across the business, strong expense control, lower-than-expected tax rates and improved exchange rates against the US dollar. I should also note that Adjusted or Consistent with Revenue, Adjusted EBITDA and Adjusted EPS exclude non-currency acquisition accounting fees of $2. 5 million. Next slide, please. Slide 6 shows our effects as reported. Year after year, we saw our major currencies rise at mid-double-digit rates, with a few exceptions such as the Egyptian pound, which fell 26% and the Pakistani rupee, which fell 21%. To normalize the effects of those currency changes, we provide our currency-adjusted effects on the next slide. Here, on slide 7, we show our effects adjusted for currency fluctuations. Before moving on to each segment, I must reflect on the strength of our 3 segments, which generated another quarter of record consolidated currencies and expanding strong currencies in all 3 segments. EFT coins in accrual increased 9%, while source-adjusted coins in accrual increased 53% and adjusted EBITDA accrual increased 21%. This strong expansion is the result of an accumulation of overseas withdrawal transactions combined with the continued strong functionality of our commercial procurement business, where profits doubled during the year. the last 2 years. EFT margins improved year over year due to the accumulation of high-priced cross-border transactions. Epay coins grew 7%, while adjusted profit and adjusted EBITDA each increased 3% year over year. This buildup was primarily due to continued expansion in the core electronic payments business, adding strong expansion in virtual channels, partially offset by a reduction in promotional campaigns from our retail partners in the fourth quarter compared to the prior year. Excluding promotional activity, our epay trading coins for the fourth quarter increased 8% and consistent with the source of coins and adjusted EBITDA each increased 12% compared to the fourth quarter of 2022, highlighting the continued strength of our core epay business. little due to the combination of consistent price increases with promotional price transactions in the fourth quarter of last year. Money Transfer’s fourth-quarter currencies, adjusted for currency source, and adjusted EBITDA accretion increased 7%, 27% and 20%, respectively. This expansion is the result of an 8% expansion in outbound transactions from the United States, a 10% expansion in foreign currency movements, which comes with a 7% expansion from the Americas outside the United States, a 8% expansion in movements basically started in Europe, and a 20% expansion in movements began. in the Middle East and Asia and a 17% expansion in XE transactions, partially offset by a 13% decline in intra-US transactions. activity. These transaction expansion rates are accompanied by a 20% expansion in direct-to-consumer virtual transactions. The expansion of adjusted constant profit and adjusted EBITDA also comes with effective expense control, generating the maximum constant productive margin in the last 3 years. Money movement margins continued to improve, driven by currency expansion and careful control of expenses. In conclusion, we are pleased to see expansion across all segments as well as an overall improvement in profit margins. Our fourth quarter expansion trajectory and margin effects position us well for a physically powerful release in 2024. With that, let’s turn to Slide 8 to make some comments on the balance sheet. Here on Slide 8 we provide our year-end review compared to last quarter. As you can see, we ended the fourth quarter with over $1. 2 billion in unrestricted currencies and approximately $1. 9 billion in debt. The accumulation of unrestricted coins and coin equivalents was primarily due to coins generated from consistent transactions worth $98 million, the return of $75 million in coins from our ATMs following the peak travel season and fluctuations in current capital, partially offset by $54 million consistent with the percentage of repurchases and issuances. of a convertible note receivable worth $60 million. The debt build-up is largely due to borrowing through the revolving credit facility to facilitate multi-currency notes during the end of the financial year. These loans were largely repaid without delay after the end of the year. Let’s now move on to slide 10 for some comments on the full year. For full year 2023, we achieved a consolidated annual coin record of $3. 7 billion, coin source consistent adjustment of $432 million, and adjusted EBITDA of $619 million. Full-year adjusted EPS was $7. 46, up 15% from $6. 51 in 2022. Full-year effects are largely in line with last year’s effects. fourth trimester. Therefore, I may not re-address all the main points. However, I think it’s worth repeating that we are incredibly pleased with the record coins and adjusted coins consistent with the constant percentage for the entire year, driven by contributions from all 3 segments. As we reflect on the 23rd, we are pleased with the resilience of the 3 segments. At EFT, we saw transactions increase in the fourth quarter and even surpass travel transactions. And our merchant sourcing business acquired in 2022 continued to exceed our expectations. In the case of epay, we have noticed continued expansion in our core business, i. e. virtual channels, with greater focus on the expansion of our own products. In currency movement, we closed the year with another quarter of consistent double-digit margin and continued to expand our physical and virtual networks. We also continue to push our virtual projects forward as we sign more contracts with Ren and Dandelion. As we explained in the third quarter, we expect our 2024 adjusted EPS expansion to be between 10% and 15%. And although we are confident in this range, you can be sure that we are working hard to generate profits above this range. It’s been another wonderful year for Euronet and with that I hand it over to Mike, slide 15 please.
Michael J. Brown
Thanks, Rick, and thank you, everybody, for joining us today. I’ll begin my comments on Slide 15, as Rick said. Well, let me just start out and say, wow, what a quarter. We delivered fourth quarter earnings ahead of our expectations, which you may recall was nicely ahead of the consensus expectations back in October. These results were driven by better-than-expected improvement in international cash withdrawals, solid growth in our core epay business and diligent expense management in both EFT and Money Transfer.The record fourth quarter results are a true testament to the product and geographic diversity of our business together with the attention of our management around the world. As we shared with you in the third quarter, nearly 2/3 of our earnings are generated from non-ATM related businesses.Throughout our nearly 30-year history, we have focused on developing a network of access points, products and solutions that are secure, easy to use and enable customers to send and receive payments and access their money using their preferred method. This unique combination of our network, our product portfolio, technical solutions and geographic footprint differentiates us from our competition and allows us to weather even the most challenging economic shifts. As I reflect on 2023 and look forward to 2024, I do so with great optimism. Back last summer, the market was ready to write the obituary on cash. And, in turn, the entire EFT segment of our business. We believe the recovery of international card usage on our ATMs in the latter part of the third quarter and its continuation into the fourth quarter together with the third-party published data has put that subject to risk.And I can look forward to growth across all 3 segments in 2024 because of the momentum we gained in the fourth quarter along with several strong drivers that are in place, which include inflationary pressures are easy, while wages are growing as we look forward to the 2024 travel season.We see opportunities for pricing increases, particularly in the EFT segment. We have plans for expansion into new markets in all 3 segments and we will introduce new products and technology solutions to further diversify the business in this year. You will see examples of each of these as we go through the fourth quarter highlights.Let’s go to Slide #16, and I will update you on our international card trends in EFT. In the graph on the left, you can see that we have updated the slide we presented during our third quarter earnings call, with the update of international cards used on our ATMs versus Euro control data through the end of the year.At the end of the second quarter, the market’s conclusion was clear that cash was dead, and therefore, so is our growth potential. More than a bit of an overreaction, when you agree — at this time, we believe that our data together with the research data coming out of Europe showed that the shift was related to economic pressure on consumer spending in Europe, rather than an abrupt shift from cash to card.I’d like to remind you that over 80% of our international transactions are from Europeans traveling within Europe. So economic pressure on European customers is very, very relevant. During the third quarter, we saw the realignment between Eurocontrol travel data and the international card usage on our machines, which continued to improve as we move through the fourth quarter. In fact, our adjusted operating income grew 53% in the fourth quarter over the prior year and the main reason, international transaction growth.We know that the most popular question that we will be asked today is what we expect for 2024’s travel spend. And while it is difficult to predict the future exactly, we have some research to try to get a feel for what to expect on the economic data, which is available.In the graph on the right, you can see that in late 2022 or early 2023 inflation peaked in Europe, largely in line with higher fuel prices, driven by the war in Ukraine, while salary per employee significantly lagged that inflation. This resulted in less discretionary income when traveling. The graph also shows that in 2024, it is expected that wages will catch up to and past inflation, which will ease the pressure on consumer spending.Additionally, in the most recent overview, Eurocontrol expects that (inaudible) reach 98% of pre-COVID levels in 2024, another positive indicator of improving trends.Finally, and perhaps most importantly, in an update to the consumer behavior survey that we showed you in the second quarter of last year, 71% of European survey today say that they will increase or maintain their travel budget going into 2024. This further supports our optimism for the upcoming travel season since this is the opposite of the same survey done in June of last year, where 2/3 of the respondents said they were going to decrease their travel spend during 2023.At the beginning of last year, we were facing inflation led by rising energy costs, increased living expenses and travel costs were on the rise, while wage increases lagged. All indicators now are pointing to easing inflation, lower travel costs and improving wage trends, which together with our new market expansion and product diversification really drive our optimistic outlook for 2024.Now let’s go on to Slide 17 and we’ll talk more about the specific EFT highlights. Now that we’ve discussed the macroeconomic travel trends, let’s talk about how we’ve continued to grow and expand our EFT business. Our EFT business rebounded from a third quarter where we saw a 15% year-over-year decline in operating income to an increase of 53% in the fourth quarter when compared to the prior year. The key drivers of the rebound work and increase in our most profitable international transactions compared to the prior year, an increase in merchant acquiring of 15% compared to Q4 2022, and continued expansion into new markets. The growth is made possible by our continued focus on diversifying our business by expanding our market presence and product portfolio.This quarter, we were able to achieve this by the launch of a new independent ATM network in Mexico, our first ATM network in Latin America. We also expanded into Belgium, our 32nd market in Europe. With these 2 additions, we now have Euronet ATM networks in 38 countries on 3 continents. Additionally, we signed an agreement with GoTyme Bank to provide ATM managed services, one of the largest and the fastest growing digital banks in the Philippines.Moreover, you may recall that during the second quarter, we signed a cardless cash withdrawal agreement with the Bank of the Philippine Islands that we have now launched. This provides more convenient and secure access to cash for our customers in the Philippines.Finally, building upon our successful ATM deposit network in Poland, which last year crossed that $7 billion in deposits. We signed a network participation agreement with Raiffeisen Bank in Romania. This network provides additional flexibility for both merchants and consumers to convert physical cash to digital money.We entered 2024 with the momentum of the last half of 2023, along with new opportunities. Recent improvements in the domestic surcharge or interchange in Poland, Romania, Denmark and the Netherlands, growth recently entered new markets, outsourcing opportunities that we see all over the place, and improving travel trends. Hopefully, you will recognize the momentum that reduced these record fourth quarter results, and more importantly, can feel as I do that the continuation of this momentum going into 2024 and the optimism that brings to us. And let’s not forget, as we have said many times before, all of this is made possible by utilizing the power of our Ren platform.Next slide please. Now let’s discuss our ATM estate. As we discussed in the third quarter with travel at over 90% of 2019 levels, we took a hard look at the profitability of each of our ATMs. This resulted in the removal of approximately 1,300 ATMs in the fourth quarter. Throughout 2024, we expect to see increased profitability and cost savings as we remove and reallocate — relocate unprofitable ATM locations.We expect to see a temporary net reduction in our installed ATMs, which will result in slightly less revenue but an increase in profits and margins. As we move into 2024, we will continue to remove unprofitable ATMs, many of which will be redeployed into new profitable locations.As we build on the momentum of the fourth quarter, our plan is to deploy between 3,000 and 3,500 new ATMs for 2024. So to make it simple, we expect the net impact of this ATM optimization will be improved profit margins for EFT in 2024.Now let’s discuss epay. In the market, epay is well known as a leading distributor of mobile top-up and prepaid branded content. However, for those of you that have been following epay for a while, you’ve heard us discuss the significant investment we’re making to expand our business offering. By leveraging our world-class technology, we’ve become a leading solutions provider to our existing retail and content partners around the world.More specifically, our solutions enable customers to purchase the branded services they enjoy in the manner that’s most convenient to them. For example, this quarter, we launched Google Workspace at Curry, a large U.K. electronics retailer. Google is leveraging epay’s issuing platform called Conductor, which provides an end-to-end service ranging from balanced management, transaction processing, life cycle management and distribution. The sales pipeline for our issuing service is growing and we’re excited about its potential.Additionally in Brazil, we launched an online gift card marketplace for Nubank, the largest fintech bank in Latin America. We also introduced a similar offering for the popular Google Pay wallet in India. These are demanding partners and these launches highlight the global scalability and versatility of our technology.We also continue to expand our core distribution business into new markets, which I would like to reiterate, grew at a healthy double-digit rate. During the quarter, we signed an agreement with Google Play, to launch prepaid credits into Vietnam, a new high potential market with 65% penetration of Android-based phones. With a population of nearly 100 million people, Vietnam is positioned as one of the top 3 South Asian gaming markets in terms of revenue and ranked second in terms of gamer population size.I am extremely proud of the technology and product advancements our epay team has created. They continue to stay ahead of the market in order to provide our brand and retail partners, competitive advantages in the ever-changing payment landscape. And I am excited to take this momentum into 2024.With that, let’s go to Money Transfer. Slide #20. As I mentioned earlier, we had contributions from all 3 segments. Money Transfer’s contribution included back-to-back quarters of operating income and adjusted EBITDA growth of 20% or better. We accomplished this strong growth and profit while we continue to invest in our network, which now has expanded to an impressive 4.1 billion bank accounts and over 2 billion wallet accounts with 580,000 physical locations across 198 countries and territories.For 2023, we launched 97 correspondent banks and payment partners, 43% more than we activated in the previous year. In the fourth quarter alone, we launched 29 new correspondents in 25 countries, which was our best quarter of the year, which now represents — which gives us strong momentum as we enter 2024.The bottom line is that our network is the most strategic real-time payments network in the world, in terms of its geographic reach and how it encourages financial participation by enabling people to pay how they want to pay using cash or digital options and allows their beneficiary to receive money how they want to, either cash or digital.Our ability to expand the network over the years has led to our growth and it continues to unlock growth opportunities not only for our traditional money transfer business but also for our Dandelion customers. For example, while account deposit growth rates have surpassed cash pickup for many years, principal transfer to digital accounts represented only 20% of our total volume by the end of 2019 compared to 39% in the last quarter. That’s basically doubling and the growth rates for account deposit accelerated sharply in 2023 at a 34% rate versus 17% in 2022, another doubling.While our bank deposit reach extends to countries comprising nearly 95% of the world’s GDP, we spent the last 4 years expanding the product offerings of our network by extending our real-time account deposit reach to more than 60% of the world’s GDP and adding consumer and business payment capabilities to over 92% of the world’s GDP.As I mentioned last quarter, we spent some effort and money revising our marketing strategy to position ourselves for substantial customer acquisition and more efficient deployment of marketing dollars. These efforts have led to an acceleration in our digital growth, while it’s still relatively early in this journey, I can report that we’ve seen 3 months of record digital customer acquisitions through January, each month surpassing the previous month.We’ve also seen improvements in customer satisfaction and retention. And perhaps most importantly, our digital channel is profitable and with expanding bottom line margins, gives us room to pivot into investment opportunities as they arrive.When I think about the opportunities ahead for Ria and XE, perhaps none is greater than geographic expansion. Ria and XE have licenses to send money in markets that represent approximately 63% of the global market.Geographic expansion is something our teams evaluate constantly considering both organic and M&A and other avenues. We have eyes on additional markets that over time would expand our addressable market by 38% to 86% of the global sand market. While many of these markets are not imminent, expansion into several of these markets is underway by actionable plans that are in flight. As we entered 2024, I’m excited about our money transfer growth prospects and we expect to continue to outpace market growth. We have steadily taken market share from the competition over the years. And given the momentum built coming out of 2023, I’m optimistic as ever that our Money Transfer segment will continue to elevate itself to the top of the list.And now let’s turn to the next slide to discuss another money transfer business, our Dandelion network. Slide 21. Throughout the quarter, our Dandelion customers continue to harness the power of our money transfer network. The strong growth is attributed to our network ongoing enhancement, particularly in terms of mobile wallet coverage, which now spans as I told you before, 2 billion wallet accounts.As you can see on this Slide #21, this fourth quarter was our most successful quarter to date signing new customers. These signings were made possible because of the strength of our network. As I remind everyone, Dandelion is a network as a service. We signed several key agreements this quarter including an exciting agreement with Commonwealth Bank in Australia. Commonwealth is the largest bank in Australia with $831 billion in assets and 17 million customers. Commonwealth was attracted to Dandelion’s value proposition due to a desire to compete more effectively for the outbound payments flow from Australia.Another impressive agreement signed during the quarter is for PingPong. One of the first and the largest China-based cross-border digital payment providers with transaction volume of $18 billion. PingPong has partnered with 100-plus major e-commerce platforms, website operators and cross border ecosystem service providers, which include Amazon, eBay, Walmart, Wish, Shoppe, Shopify and Rakuten. With these agreements, Dandelion continues to bolster our global presence and real-time digital payment capabilities.Let’s go to the next slide, and I’ll briefly give you an update on our Ren development. Slide 22. As you all know, Ren is the technology backbone that powers diverse businesses at Euronet. It has proven to support different use cases, whether it is routing cash, withdrawal transactions to the card scheme, issuing prepaid cards for global brand or routing or routing remittance transactions through the real-time payment rails of a country into a consumer’s bank account.We believe Ren is well positioned to allow banks, fintechs and governments to keep pace with the ever-changing environment across the world of card-based and now account-based payments. We started our go-to-market strategy in the emerging markets of Asia and Africa, where we secured marquee wins with players like Standard Charter Bank, Grab Bank of the Philippine Islands, and we are now expanding our presence into these accounts by supporting new use cases and new market expansions of these clients.As an example, we added additional functionality to the Bank of the Philippine Islands real-time payments implementation by launching person-to-merchant services on the bank’s wallet and mobile banking app. Additionally, in Malaysia, we launched Grab’s Digital Bank, there is second digital bank in market after Singapore. Grab, as you may know, is Asia’s leading super app providing everyday services like mobility, deliveries and financial services.As part of their financial services vertical, they launched digital banks in these 2 countries. Their goal is to convert their super app users to banking clients by accepting deposits and making loans. Grab selected Ren as their SaaS-based issuer processing platform for both markets. Additionally, following a very successful first phase of the project with SIMO in Mozambique, we are expanding our relationship with them by building a national QR code system to power daily micro payments.As part of the geographic expansion of Ren into new markets, we have entered into the Americas region and continue to see strong interest in our Ren technology from banks and processors in South America as evidenced by the deals that we have announced and signed in the previous quarter.Initial interactions with prospects in the United States are also very positive. We are excited about the modern cloud native technology that we are offering to banks and financial institutions in the U.S. to help them modernize and keep pace with a rapidly changing payments landscape. Now let’s go on to Slide 23 to wrap up the quarter. As I conclude my remarks, I am proud of Euronet’s results for the fourth quarter and the full year. What a quarter. Adjusted EPS of $1.88, a 35% over the prior year fourth quarter. And here’s why I’m optimistic about 2024. First, delivering a momentum, driving record fourth quarter results across all financial metrics.Second, the inflationary pressures, which impacted EFT in 2022 and 2023 appear to be easy, which together with improving in wages will increase discretionary travel spend. Third, we continue to diversify our business as about 2/3 of our adjusted EBITDA comes from outside ATM transactions. Fourth, epay is becoming a solutions provider, delivering double-digit operating income and adjusted EBITDA growth in its core business.Next, Money Transfer enters 2024 finishing 2023 with back-to-back quarters of operating income and adjusted EBITDA growth at or above 20%.Finally, all segments of our business are driving growth, both revenue and in profit. These are tangible reasons for optimism as we launch 2024. So how does this influence our expectations for 2024. As we mentioned in the third quarter, we will provide full year earnings guidance rather than quarterly guidance. For 2024, we expect adjusted EPS and earnings growth in the 10% to 15% range. But as Rick said, we are driving the business to produce even better results than that. With that, we’d be happy to take questions. Operator, will you please assist?
Operator
(Operator Instructions) The first comes from the Pete Heckmann lineage of D. A. Davidson.
Peter James Heckman
In terms of your ATM footprint review, you talked about 3,000 to 3,500 deployments in 2024 was your target. I guess, what are you thinking as a net number in terms of what additional units you target it. Does that include units that are removed and then redeployed or I’m trying to think about…
Michael J. Brown
So kind of how we look at it is we see 3,000 to 3,500 new opportunities for new sites for ATM and then we will also continue to call our network. Remember, we didn’t until just recently get back to — you might say, the travel volume that we had in 2019. So we were a little bit hesitant to just take out tons of ATMs before we knew how many travelers would really be there and if the sites are still good based upon travel changes and so forth.So we took out those ATMs, a bit over 1,000 ATMs in the fourth quarter. We’ll probably take out another 1,000, maybe even — somewhere between 1,000 and 2,000 this year. But outside of that, we will place 3,000 to 3,500 new ones.
Peter James Heckman
It is ok. It is ok. And then I wanted to ask: No. . . I don’t think it’s an exhibition. But I’m sure you’ve noticed what’s going on with Paytm in India. And I guess, what do you think about that? What would be your exposure to Paytm?And do you think that to the extent that regulators get in the way, consumers will simply turn to one of the other global wallets?
Michael J. Brown
This is exactly what would happen if this were to happen, but I find it difficult for them to shut down on a large scale. So, the fact is that we have all the wallets in India. And then you just see the volumes move.
Peter James Heckman
Logic. It is ok.
Michael J. Brown
And apart from the other people I’ve talked to, many other people in India already have more than one wallet on their phones, so it wouldn’t even be much of a challenge.
Peter James Heckmann
That makes sense.
Operator
Next up will be Darrin Peller of Wolfe Research.
Darrin David Peller
Travel still generates around 0. 33 of EBITDA if you look at the numbers. And Mike, if you look back a few years, it’s a little bit of a broader question, but if you just look at the drivers of expansion, a lot of which have been a little bit less cyclical or maybe less Array-like. Just give us an idea of what you’d expect from the mix?When you think about EFT, it continues to grow or resume its expansion at a fairly healthy rate. What kind of contribution do you think the company will see in a couple of years?And for the more productive of their knowledge, I mean, EFT will expand well too, I imagine. So maybe if you keep that in mind?
Michael J. Brown
Well, it’s hard to know which of our segments will grow the fastest and once it reaches a steady state, but what’s genuine is that this year, despite each and every one, we’ll get to the point where we’re going to be standing as far as spending and spending goes. And once that’s there, I mean, just take a look at the opportunities that we have in EFT, it’s going to grow rapidly. And so, the 3 divisions and the other opportunities Along with Ren and Dandelion, they all struggle to test and stay awake. I mean, it’s going to be a healthy race to see who grows the fastest, but we’re really excited about each and every one of our efforts.
Rick L. Weller
Darrin, I would go up that if you take a look at our history, all of our businesses have consistent, very smart and solid expansion rates, at or near double-digit expansion rates. We are not predisposed towards expansion. We have a culture of expansion. . Therefore, we have opportunities all over the world and we are seeing continued expansion in all 3 segments. So while we may see other rates of expansion in each of the segments as we execute our plans, we have a very consistent track record of double-digit rates or near-double-digit expansion across all 3 segments. And we’re seeing that the opportunities to achieve that around the world continue to be just as attractive, if not more so, as we move forward.
Darrin David Peller
It is ok. I’m just looking at the cyclical nature of the business going forward.
Michael J. Brown
So, cyclicity is actually – when you look at seasonal cyclicality, we’ll still have it because it mostly occurs at the time and in the third trimester. But in terms of macroeconomic changes, now that we’ve resumed Array, I don’t think we’re going to go to the bottom of the charts. As Rick said, all 3 segments have a very strong history of expansion and that’s why we’re looking for something now that, like I said, we’ve strengthened the related aspects. Really excited to be where we are. Remember that in 2019, 58% of our EBITDA was in the EFT segment. They were all vending machines, okay? And that’s it: we have diversity as our key, and it’s now only a third of our business, while the other businesses have seen a marked expansion in recent years. That’s what gives us optimism.
Darrin David Peller
Mike, what percentage of your new ATM deployments will be outdoors in Europe?And I mean, I know we’ve also noticed the additions from Belgium and Mexico. Can you help us assess the effects or implementation timelines there?
Michael J. Brown
Yes, about half.
Darrin David Peller
It is ok. So it’s really, I mean, more and more diverse. And a lot of that also happens in Asia, the APAC spaces that you’ve created. . .
Michael J. Brown
Asia, North Africa and now south of our border. And I would like to remind you that the vending machines we install outside Europe are probably twice as successful as those in Europe. And the explanation is that there are cards. Access or accept Europe to cover your maximum expenses. You just need some money to buy in Europa. No you need a lot, but in those other markets, they are most commonly spot markets. So good luck having lunch with a letter from Los Angeles. You’ve got to pass, you’ve got to use cash. That’s why ATMs are so much busier.
Operator
The next one will come from the lineage of Andrew Jeffrey of Truist Securities.
Andrew William Jeffrey
Thanks for answering the question. Mike, I wanted to ask you about cash transfers. That’s pretty impressive agent growth. So I guess right off the bat, Ria Euronet is now the largest agent network in the world? I just need to identify a safe level.
Michael J. Brown
We do, yes. And when you look, well, I don’t know if you call that agent expansion, we go on to just say point expansion because we have agents on the shipping side, and then we have others, and then we have payment matching. on the other hand. And adding with them, in addition to the correspondence, which was regularly from banks or giant stores in some of those markets. Now we have direct bank accounts, where other people don’t have to go in, that go directly into their bank account, and we have four billion of them. But the new distribution channel is the wallet. Because in emerging countries, everyone now has a wallet. This allows us to deposit cash directly into a $2 billion portfolio. And that’s a merit that we have and that no one has.
Andrew William Jeffrey
Yes. And that sort of dovetails on my next question, which is your digital growth strategy and the success you seem to be having, is the 20% digital transaction growth at baseline from which you’d expect to grow such that you’re going to see or we should expect segment revenue growth to accelerate over time? Or do you feel pretty good about sort of generally you are around 10%, high single digits?
Michael J. Brown
I think we’re going to generate expansion in either case. I don’t know which one is going to generate funding. Well, right now, virtual is developing faster and will continue to do so. And I think one of the reasons our virtual expansion strategy is so successful is because of our virtual compensation. We’ve told them how much cash we invest in our bank accounts and wallets.
Andrew William Jeffrey
Okay. And one last one, if I might sneak it in. Just with regard to Ren. Is sort of the — what appears to be an accelerating shift to open banking and RTP globally going to reach a tipping point such that you think that Ren growth accelerates? Or is it going to be sort of a more steady or linear compounding?
Michael J. Brown
No, no, no. It’s — we’ve already got the beginning of the hyperbolic curve because when you think about it, we’ve got a new — we had a new technology that we released 3 years ago. Nobody on the planet had it. And so we had to get those early adopters in there. And we got the early adopters who are all in Asia because the Asian banks were more progressive and they were also threatened by the wallets at the time, okay? They wanted to stay relevant to their customers. So they were the early adopters.We then became — once you get a couple of those, then the next ones come and the next ones come. And the fact of the matter is their legacy platforms can’t support the kind of solutions that customers are acting. In other words, their legacy platforms don’t talk wallet. And so once we established ourselves in Asia, then we took that same product and we went to South America, and we’ve been going now to North America as well. And finally, things are happening. I mean you just last July, as you know, FedNow was launched. It was an RTP network in the United States. It’s running roughly 10 years behind India. But finally, we’re getting our act together. So more and more people are going to be wanting to do account-based real-time payments. And this idea of just card-based payments is going to be very fast day and 10 years from now.
Operator
The next one will come from the lineage of Charles Nabhan de Stephens.
Charles Joseph Nabhan
I tried double-clicking on the non-ATM component of the EFT. If I look at your information, it looks like 13% of EBITDA comes from this non-ATM item. And if I don’t forget correctly, about 20 to 25% of the profits in this segment are generated through those sources. I guess, first of all, my question is: can you tell us about the trends you’re seeing in Piraeus?I know you talked about some expansion in the last quarter. And then secondly, if my calculations are correct, I get a margin greater than 30% and I tried to verify that my calculations are at least average because if I think about it, this can be just a smart tailwind for margins with an EFT in the future?
Michael J. Brown
It is ok. So we have several things going on. So, within EFT, the factors are, of course, the ATMs and that would be primarily our standalone deployment of ATMs. Secondly, there would be the subcontracting agreements that we have entered into and all of that is similar to ATM. And then the other component of EFT will be Ren and acquisition. The acquisition has margins of around 25%. When we install Ren, we’ll probably get margins of 60% to 80% depending on when it works. And then the vending machines themselves probably are: they have a 30% margin, a 33% margin there, a little less now because we don’t have the productivity we had in 2019 before the crisis, but it’s coming back. So when you combine all of that, I think we can reach only 30%, but depending on how quickly our business grows and acquires, 25% can limit it a little bit. Rick just looked at all of his numbers, so he’ll give you. . . It will give you 3 significant digits for this answer.
Rick L. Weller
Oui. Et yes, their number is pretty much there. It’s approaching 30% for the year. Our most productive margin years were 2019. So I think as we see the recovery in travel, it will continue through 2024. And as Mike said in his comments, we’ve noticed pricing opportunities when it comes to trade-in and surcharges imaginable. , we have noticed concrete results, announcements in 2023. We would possibly expect more in 2024, so all of this will only further help the continued expansion of margins in this business.
Charles Joseph Nabhan
Got it. If I could sneak in a quick follow-up. It’s nice to see the margin expansion within money transfer, especially considering your — the way you’re expanding the network. I wanted to drill into that a little bit and just get a better understanding of what specifically is driving that expansion? Is it a mix shift within the business? Or is it just simply scale on your existing network? Any commentary around that would be helpful?
Michael J. Brown
So remember, as we grow, we have about a 35% incremental EBITDA margin on that next transaction. So obviously, as you have more volume, it’s going to average you up. And we’re just doing, as we mentioned, too, on the digital side, we’re being — we’ve got kind of a new approach to our digital marketing that’s making it more effective. So kind of everything added together, I would say.
Operator
Next up will be Mike Grondahl of Northland Capital Securities.
Michael John Grondahl
First, the 1,300 ATMs were redeployed in the fourth quarter, and then 1,500 or so by mid-2024. Could you give us a little bit of color, like: aren’t they profitable?Or is it like what we call the back 5%? Just looking for a little bit of color, depending on the threshold?And then secondly, maybe for Rick, what’s the merit of the exchange rate and the tax rate compared to your $1. 75 forecast for the quarter?
Rick L. Weller
Well, let’s see in the case of ATMs, what we’re essentially seeing are ATMs that don’t meet our return expectations, okay? And they range from almost breaking even to wasting money. So ultimately, if we already have an ATM in place and it generates more profit, we probably wouldn’t be motivated to have to remove it. But if it doesn’t produce benefits, then it makes sense for us to remove it. And as Mike said, at the same time that we were looking at how travel resumes after COVID, we were a little less competitive in purchasing a device because we didn’t really have smart visibility into exactly what this traffic was going to look like. So we think we’re getting close, and that’s just smart management. But net-net are non-consistent training devices, as opposed to inconsistent training devices. And then in terms of tax or currency benefits, we beat our earnings guidance by about $0. 13 per share. I would tell you that part of that came from taxes, and the other part was split slightly between currency and trade.
Operator
The next one will come from the lineage of Ken Suchoski of Autonomous Research.
Kenneth Christopher Suchoski
I just wanted to ask about the additional EBIT margins in the EFT segment. I mean, how we think about them given the business mix and how it’s evolving. I think 2023 has had sort of an incremental EBIT margin of about 15% compared to something much higher historically, it has the expansion of the non-ATM tranche in EFT. So, some moving parts there. So, would it be very useful to think about higher margins in this segment in the future?
Rick L. Weller
Yes. As I mentioned earlier though, we anticipate that they will continue to improve. As we said last quarter, we’re going to hold off in giving a whole series of exact details. I think, hopefully, you can appreciate that producing an earnings growth in the quarter that was a 30-plus percent year-over-year number and our full year number of 15% is that we’re going to have ebb and flows throughout the segments. But we consistently produce these very strong double-digit growth numbers. But more specifically in that EFT segment, we will continue to see those margins expand. Again, as I said earlier, because of travel recovery, which is going to bring those more high-margin transactions. As Mike said earlier, as we go outside of the European markets where we’ve seen very good response — very good returns on these ATMs. That should be very helpful.And then again, we’re seeing some rate increases on the interchange and surcharge front. So — and all that together with just good expense management. So we’ll improve the profits because of ATM profit management pairing out the lesser performer one, some rate increases, some geographical expansion, some travel recovery, all signs point to improving margins. We will refrain on telling you what that number is. Again, we want to focus on the earnings of the consolidation as opposed to any one particular part.
Kenneth Christopher Suchoski
Yes. Okay. That’s helpful, Rick. And for my follow-up, I just want to ask about money transfer. You mentioned an increase in marketing efforts in certain geographies. I was just wondering if you could talk about what you’re seeing from a competitive standpoint because some of your competitors are being aggressive with promotional activity in the market. And I was hoping you could talk about how retention rates and customer acquisition costs are trending. I think you mentioned some strong digital customer acquisition in recent months. So any thoughts on customer acquisition cost trends for new customers would be helpful.
Michael J. Brown
Okay. So with respect to money transfer, I mean, you got to understand, there are probably 10,000 money transfer companies in the world, okay? And you know the names of a handful, okay? So as an industry, this is a bare knuckle street bite every single day, maybe a knife fight, okay? So competition really hasn’t changed. There are some of our competitors are saying they’re going to be more aggressive here or there. We’ve seen little instances of that in one market or another for shorter periods of time. We don’t see, in general, it’s much more competitive than it ever was.We do see, as I mentioned in previous calls, that just the inflationary pressures that we’ve seen in the United States and we see abroad have actually brought down the average amount sent per transaction. And remember, we make an FX spread on this. And so if maybe our average FX spread is 0.6%. And instead of — and on average, our spend amount is down, call it, $20. That cost us $0.12 a transaction, which is pure margin.So that’s where we’ve seen the pressure, not necessarily because of competitiveness but just because the reality is these immigrates who have got mostly blue-collar jobs working hard, gas on their truck costs more than it did a year ago. Groceries cost more. They just spent a little bit less back to their mom, but they still send it every month. So that’s kind of what we’ve seen.We’ve got one more question, operator, and then we’re going to be at the top of the hour. So we’re already there, but…
Operator
And the next one comes from the line of Andrew Schmidt of Citi Global Market.
Unidentified Analyst
This is (inaudible) for Andrew Schmidt. What drove the reaccelerating money transfer transaction trends quarter-to-quarter in APAC and Middle East originated transfers?
Michael J. Brown
I think it’s just a matter of general economics and that’s probably the most important thing.
Rick L. Weller
And you may remember that in the third quarter we talked about some currency movements in Pakistan that were erratic and that drove transactions up and down the black market. We’ve noticed this kind of size change. That helped a little bit. But as Mike says, it’s just a popular marketing activity. But Pakistan is the only genuine call to action.
Unidentified analyst
If you allow me to continue here. Regarding value increases in the EFT segment, I wonder if you could give us more main points about this opportunity.
Michael J. Brown
Well, that’s precisely what we said before: in the last year, 4 countries have taken a step forward in the industry or allowed surcharges that weren’t allowed the year before. Lately, several countries have been discussing these two issues. So if one of them comes to a head over time, we never know when it will come to a head. But when they do, you get the auto-step feature to the benefit when they do. So that’s where we’re at.
Rick L. Weller
And let’s take a look at the dynamics of this arrangement in the world of payments. The exchange rate is fixed-rate, as are our extras, in many ways. But let’s take a look at what’s happened to inflationary prices in recent years: rents are up, cash deliveries are up, maintenance is up, prices for hard work are up. If the figures in the charge aspect increase across the board, we can’t just swoon and increase the exchange rate. So it’s not just us, however, banks around the world are feeling this in a very particular way and there’s a lot of discussion about how banks are moving into that profit stream to be able to hedge prices. And so, as those discussions developed, we’ve noticed that this kind of phenomenon has been spreading more and more in recent years. And those discussions are alive and well, and we hope they continue. Therefore, there is a need to increase rates just to compensate for the increase in prices in recent years.
Michael J. Brown
The fact is, it’s not just a matter of wishing those numbers would go away. We’re running with the banks in our idea process. But with that, I think we’re going through to end our call today, I need to thank everybody. Here’s to your time on the call and I look forward to speaking with you next quarter. Thank you.
Operator
Thank you for attending today’s conference. This concludes the program. You can now log out. Let everyone have a day.