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MoneyGram (MGI) Q2 Earnings Match Estimates, Revenues Up Y/Y

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MoneyGram International, Inc. (MGI - Free Report) reported second-quarter 2021 adjusted earnings per share of 1 cent, which matched the Zacks Consensus Estimate. The metric came in line with the prior-year quarter’s figure.

However, shares of the company fell 8.3% on Jul 30.

The company’s results were driven by strong Money Transfer revenue owing to improved digital transactions and rise in cross-border volume, partly offset by escalating operating costs.

Quarterly Operational Update

The company’s top line advanced 18% year over year to $329.3 million in the quarter under review, courtesy of higher fee and other revenue.

The two revenue components include fee and other revenue, and investment revenue. While fee and other revenue climbed 18.8% year over year to $327.3 million in the second quarter, investment revenue plunged 53.5% year over year to $2 million due to a lower interest rate environment.

Total operating expenses of $129.7 million increased 23.6% year over year primarily due to uptick in compensation and benefits, transaction and operations support, and occupancy, equipment and supplies costs.

Interest expense dipped 0.9% year over year to $22.5 million in the quarter under review.

Adjusted EBITDA of $54.8 million fell 3% year over year due to the $8.8 million linked with Ripple incentives and investment income incurred in the prior-year quarter.

Adjusted EBITDA margin contracted 360 basis points (bps) year over year to 16.6%.

MoneyGram International, Inc. Price, Consensus and EPS Surprise

MoneyGram International Inc. Price, Consensus and EPS Surprise

MoneyGram International Inc. price-consensus-eps-surprise-chart | MoneyGram International Inc. Quote

Segments in Detail

Global Funds Transfer

The segment reported total revenue of $315.3 million, which grew 19.5% year over year driven by 20% rise in Money Transfer revenue. The Money Transfer business of MoneyGram continued to perform well in the quarter attributable to 66% surge in revenues of its direct-to-consumer digital business, MoneyGram Online (MGO). Digital revenue climbed 47% year over year and attained a record figure of $67.9 million in the second quarter. Digital transactions formed 33% of total money transfer transactions as of Jun 30, 2021.

Besides, bill payment revenue slid 3.7% year over year to $10.4 million.

Financial Paper Products

In the segment, total revenue declined 11.9% year over year to $14 million in the quarter under review. While money order revenue of $10.6 million dipped 1.9% year over year, official check revenue slumped 33.3% year over year to $3.4 million. 

Liquidity Position

MoneyGram exited the second quarter with cash and cash equivalents of $117 million, which reduced 40.3% from the level at 2020 end. It has an undrawn revolving credit facility of $32.5 million due 2025.

The company’s payment service obligation as of Jun 30, 2021, came in at $3.6 billion. The figure declined 2.6% from the level as on Dec 31, 2020.

The company generated adjusted free cash flow of $6.5 million in the second quarter, which plunged 73.7% year over year.

3Q21 Guidance

Total revenue is forecast in the range of $323 million and $333 million on the back of robust digital growth and the potential impact resulting from extension of Walmart marketplace across a full quarter.

The company estimates adjusted EBITDA to lie within $52-$57 million. The range does not include any benefit from Ripple incentive fees of $8.9 million and the one-time FX gain of $6.3 million incurred in third-quarter 2020.

Zacks Rank

MoneyGram 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

Among other players in the finance space, which have reported second-quarter earnings so far, the bottom-line results of American Express Company (AXP - Free Report) , Synchrony Financial (SYF - Free Report) and Columbia Financial, Inc. (CLBK - Free Report) have surpassed estimates by 70.73%, 44.22% and 28.57%, respectively.