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MoneyGram's (MGI) Q1 Earnings Miss Estimates, Revenues Top

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: MoneyGram’s (MGI - Free Report) Q1 results reflect an increase in operating expenses, partly offset by revenue growth.
MoneyGram’s (MGI - Free Report) Q1 Earnings Miss Estimates, Revenue Top
MoneyGram International Inc. (MGI - Free Report) sustained first-quarter 2021 loss of 6 cents per share, wider than the Zacks Consensus Estimate of a loss of 2 cents. Moreover, the year-over-year loss worsened by a cent.
Earnings suffered a rise in operating expenses with outdid revenue growth.
The company’s total revenues of $310 million surpassed the Zack Consensus Estimate by 3.3% and were also up 7% year over year.
Among the components of revenues, money transfer revenues were $285.4 million, up 12%, or 8% on constant currency basis, driven by double-digit transaction growth. Investment revenues were $2 million, down 80% due to lower prevailing interest rates. 
Total operating expenses were $136.4 million, up 11%, induced by higher transaction and operations support and compensation and benefits.
Interest expense of $22.3 million fell 6.3% year over year.
Adjusted EBITDA margin of 16.1% fell 160 basis points year over year.
Adjusted EBITDA decreased 3% to $49.9 million or 11% on constant currency basis. This was due to reduction of $17.4 million in relation to the net benefit of Ripple market development fees and weak investment income due to lower prevailing interest rates
In the Global Funds Transfer segment, total revenues increased 10% year over year to $296.2 million. Within the segment, money transfer revenues grew 11.5% year over year to $285.4 million while Bill payment revenues dropped 19.4% year over year to $10.8 million. Operating margin improved 30 basis points from the year-ago quarter to 6.1%.
The Financial Paper Products segment reported total revenues of $13.9 million, down 35.6% year over year due to a 14% decline in money order revenues and a 63.2% plunge in official check revenues. Operating margin deteriorated 1360 bps from the year-ago quarter to 21.6%.
Liquidity
The company ended the quarter with cash and cash equivalents of $152.8 million, down 22% from the level at 2020 end.
As of Mar 31, 2021, the company had a payment service obligation of $3.7 billion, down 1% from the level at 2020 end.
Second-Quarter 2021 Outlook
The company anticipates total revenues in the range of $315-$325 million based on continuing growth in its money transfer business. The company anticipates an impact of up to $10 million from the introduction of a competition in the Walmart Marketplace, the rollout of which began at the end of April.
Adjusted EBITDA is expected in the band of $50-$55 million. This range takes no benefit from the Ripple incentive fees, which were $8.8 million in the second quarter of 2020.
Department of Justice Update
The company got a green flag from the government stating that it complies with the anti-fraud and anti-money laundering mandates as required by the rules and the regulations.
MonyeyGram is steadfastly transitioning itself into a digital payments company. Notably, at the end of March 2021, digital transactions accounted for 32% of all money transfer transactions, approximately double the percentage at the start of 2020. The company expects its digital business to cross 50% of all money transfer transactions in 2024. Meeting the compliance protocols also speaks about its quality of service. These will enable the company to win over consumers and capture a considerable market share.
MoneyGram currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Another company in the same space, PayPal Holdings, Inc. (PYPL - Free Report) , also beat on first-quarter earnings by 20.8% but the bottom-line results of others like Western Union Inc. (WU - Free Report) and Green Dot Corp. (GDOT - Free Report) missed estimates by 2.22% and 10.8%, respectively.
https://ir.moneygram.com/news-releases/news-release-details/moneygram-international-reports-first-quarter-2021-results
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MoneyGram International, Inc. (MGI - Free Report) sustained first-quarter 2021 loss of 6 cents per share, wider than the Zacks Consensus Estimate of a loss of 2 cents. Moreover, the year-over-year loss worsened by a cent.
 
Earnings suffered a rise in operating expenses, which outdid revenue growth.
 
The company’s total revenues of $310 million surpassed the Zack Consensus Estimate by 3.3% and were also up 7% year over year.
 
Among the components of revenues, money transfer revenues were $285.4 million, up 12%, or 8% on constant currency basis, driven by double-digit transaction growth. Investment revenues were $2 million, down 80% due to lower prevailing interest rates. 
 
Total operating expenses were $136.4 million, up 11%, induced by higher transaction and operations support, and compensation and benefits.
Interest expense of $22.3 million fell 6.3% year over year.
 
Adjusted EBITDA margin of 16.1% fell 160 basis points year over year.
 
Adjusted EBITDA decreased 3% to $49.9 million or 11% on constant currency basis. This was due to reduction of $17.4 million in relation to the net benefit of Ripple market development fees and weak investment income due to lower prevailing interest rates

Segments in Detail

In the Global Funds Transfer segment, total revenues increased 10% year over year to $296.2 million. Within the segment, money transfer revenues grew 11.5% year over year to $285.4 million while Bill payment revenues dropped 19.4% year over year to $10.8 million. Operating margin improved 30 basis points from the year-ago quarter to 6.1%.
 
The Financial Paper Products segment reported total revenues of $13.9 million, down 35.6% year over year due to a 14% decline in money order revenues and a 63.2% plunge in official check revenues. Operating margin deteriorated 1360 bps from the year-ago quarter to 21.6%.
Liquidity
 
The company ended the quarter with cash and cash equivalents of $152.8 million, down 22% from the level at 2020 end.
 
As of Mar 31, 2021, the company had a payment service obligation of $3.7 billion, down 1% from the level at 2020 end.
 

Second-Quarter 2021 Outlook

 
The company anticipates total revenues in the range of $315-$325 million based on continuing growth in itsmoney transfer business. The company anticipates an impact of up to $10 million from the introduction of a competition in the Walmart Marketplace, the rollout of which began at the end of April.
 
Adjusted EBITDA is expected in the band of $50-$55 million. This range takes no benefit from the Ripple incentive fees, which were $8.8 million in the second quarter of 2020.

Department of Justice Update

The company got a green flag from the government stating that it complies with the anti-fraud and anti-money laundering mandates as required by the rules and the regulations.
 

Our Take

MonyeyGram is steadfastly transitioning itself into a digital payments company. Notably, at the end of March 2021, digital transactions accounted for 32% of all money transfer transactions, approximately double the percentage at the start of 2020. The company expects its digital business to cross 50% of all money transfer transactions in 2024. Meeting the compliance protocols also speaks about its quality of service. These will enable the company to win over consumers and capture a considerable market share.
 
MoneyGram currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
Another company in the same space, PayPal Holdings, Inc. (PYPL - Free Report) , also beat on first-quarter earnings by 20.8% but the bottom-line results of others like Western Union Co. (WU - Free Report) and Green Dot Corp. (GDOT - Free Report) missed estimates by 2.22% and 10.8%, respectively.
 

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Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.


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