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Euronet (EEFT) Dips 13% on Q1 Earnings and Revenue Miss

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Euronet Worldwide, Inc.’s (EEFT - Free Report) shares have declined 13.3% since it reported first-quarter 2022 earnings on Apr 26, wherein earnings and revenues lagged the Zacks Consensus Estimate. Investor sentiments might have been hurt by an elevated expense level, resulting from 9.6% and 5.5% increases in salaries and benefits, and direct operating costs, respectively.

Nevertheless, the quarterly results of Euronet benefited on the back of a rebound in travel (resulting from the easing of COVID-19 restrictions), leading to solid growth in EFT transactions. Physical and digital distribution networks contributed to the sound performance of the epay and Money Transfer segments.

Q1 Update

Euronet reported first-quarter 2022 adjusted earnings of 69 cents per share, which lagged the Zacks Consensus Estimate by 2.8%. Notably, the bottom line increased three-fold year over year.

EEFT reported a net income of 17 cents per share in the first quarter against the prior-year quarter’s net loss of 16 cents.

Total revenues of nearly $719 million rose 10% year over year or 15% on a constant-currency basis. Yet, the top line missed the consensus mark by a whisker.

Operating income amounted to $36.7 million, which increased more than three-fold year over year in the quarter under review.

Total operating expenses of $681.8 million escalated 6% year over year.

Adjusted EBITDA rose 52% year over year to $79.5 million in the first quarter.

Euronet Worldwide, Inc. Price, Consensus and EPS Surprise

 

Euronet Worldwide, Inc. Price, Consensus and EPS Surprise

Euronet Worldwide, Inc. price-consensus-eps-surprise-chart | Euronet Worldwide, Inc. Quote

Segmental Performance

The EFT Processing Segment reported total revenues of $145.6 million, which soared 67% year over year (up 77% on a constant currency basis).

Adjusted EBITDA was $16 million against the prior-year quarter’s negative figure of $18.1 million.

In the quarter under review, the segment’s operating loss of $6.3 million narrowed from the year-ago quarter’s loss of $40.1 million. Total transactions of the segment witnessed a 44% year-over-year rise to 1,328 million in the first quarter.

The segmental performance was driven by better domestic and international withdrawal transactions stemming from the continued rebound in travel and the relaxation of COVID-led travel restrictions throughout Europe. Substantial volume expansion in low-value point-of-sale transactions within Europe, coupled with low-value payment processing transactions from the Asia Pacific market, also contributed to the strong segmental performance.

Revenues of the epay Segment slid 3% year over year but rose the same percentage on a constant-currency basis to $235.8 million.

Adjusted EBITDA was $27.9 million, which fell 11% year over year in the first quarter.

Operating income declined 10% year over year to $26.2 million.

Transactions witnessed a 30% year-over-year increase to 864 million.

The segment was aided by consistent digital branded payments and mobile growth, coupled with the continued expansion of the digital distribution channel. Data privacy concerns, leading to a government ban on an array of apps across India, and a previously disclosed key European customer loss partly dampened the segment’s performance in the first quarter.

The Money Transfer Segment’s total revenues amounted to $339 million, which advanced 4% year over year (up 8% on a constant-currency basis) in the quarter. Revenue growth was led by 10%, 38% and 11% increases in U.S.-outbound transactions, direct-to-consumer digital transactions and international-originated money transfers, respectively. The top line was somewhat hurt by the softer U.S. domestic business.

Adjusted EBITDA dropped 5% year over year to $42.2 million in the quarter under review.

Operating income of $33.3 million decreased 6% year over year. Total transactions grew 7% year over year to 33.5 million in the first quarter.

Corporate and Other reported expenses of $16.5 million, which escalated 17.9% year over year due to increased short and long-term compensation expenses.

Financial Update (as of Mar 31, 2022)

Euronet exited the first quarter with cash and cash equivalents of $986.5 million, which decreased 21.7% from the 2021 end. Total assets of $4.9 billion increased 3.2% from the 2021 end.

Debt obligations, net of current portion, elevated 24.1% from the level as of Dec 31, 2021, to $1.8 billion.

Equity of $1.1 billion dropped 8.9% from the 2021-end level.

At the end of the first quarter, around $400 million was available under its revolving credit facilities.

Net cash provided by operating activities was $5.7 million against the prior-year quarter’s net cash used in operating activities of $2.6 million.

Share Repurchase Update

Euronet bought back shares worth $70.5 million in the first quarter.

Q2 Outlook

Adjusted EBITDA is anticipated to be between $150 million and $160 million for the second quarter, the mid-point of which indicates that it will double year over year.

2022 Guidance

Management expects the epay segment to witness low-double-digit earnings growth this year.

Operating margins of the Money Transfer segment are likely to improve in the second half of 2022.

Owing to the second-quarter guidance and the continued rebounding of the tourism sector, management remains optimistic about 2022 earnings remaining in line with the 2019 reported level in spite of the recent FX headwinds.

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 Finance sector players that have reported first-quarter results so far, the bottom line of Synchrony Financial (SYF - Free Report) , Intercontinental Exchange, Inc. (ICE - Free Report) and Discover Financial Services (DFS - Free Report) beat the Zacks Consensus Estimate.

Synchrony Financial reported first-quarter 2022 adjusted earnings per share of $1.73, which surpassed the Zacks Consensus Estimate of $1.53 by 13.1%. The bottom line of SYF remained flat with the year-ago period.

Synchrony Financial’s net interest income increased 10.2% year over year to $3,789 million for the quarter under review. It beat the Zacks Consensus Estimate of $3,764 million. Other income of Synchrony Financial declined 17.6% year over year to $108 million.

Intercontinental Exchange reported first-quarter 2022 adjusted earnings per share of $1.43, which beat the Zacks Consensus Estimate of $1.42. Also, the bottom line increased 7% on a year-over-year basis. Intercontinental Exchange’s revenues, less transaction-based expenses, of $1.9 billion increased 6% year over year on higher revenues from Exchanges and Fixed Income, and Data Services.

The top line beat the Zacks Consensus Estimate by 0.7%. ICE’s net revenues from Exchanges were $1.1 billion, up 11% year over year. Fixed Income and Data Services revenues were $509 million, which increased 9% year over year. Mortgage Technology revenues decreased 13% to $307 million.

Discover Financial reported first-quarter 2022 adjusted earnings of $4.22 per share, which beat the Zacks Consensus Estimate by 17.9%. However, the bottom line plunged 16% year over year. DFS’s revenues (net of interest expenses) were $2.9 billion, which improved 4% year over year.

The top line of Discover Financial missed the consensus mark by 2.5%. Operating efficiency of Discover Financial was 38.9%, which improved 20 basis points (bps) year over year in the first quarter.