It has been about a month since the last earnings report for Euronet Worldwide (
EEFT Quick Quote EEFT - Free Report) . Shares have added about 3.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Euronet Worldwide due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Euronet Beats Q1 Earnings Estimates
Euronet Worldwide reported first-quarter 2023 adjusted earnings of 87 cents per share, which outpaced the Zacks Consensus Estimate by 2.4%. The bottom line improved 26% year over year.
Total revenues amounted to $787.2 million, which rose 10% year over year or 14% on a constant-currency basis in the quarter under review. The top line beat the consensus mark by 2.3% and our estimate of $763.2 million.
The quarterly results received an impetus from improving domestic and international withdrawal transactions, recovering travel and expanding physical and digital distribution networks coupled with the strong performance of point-of-sale (POS) acquiring business. However, the upside was partly offset by rising expenses.
EEFT reported a net income of 39 cents per share in the first quarter compared with the prior-year quarter’s figure of 17 cents. Operating income of $45.6 million increased 24% year over year but came lower than our estimate of operating income of $46.7 million.
Total operating expenses increased 8.8% year over year to $741.6 million, surpassing our estimate of $716.4 million. The increase was due to a rise in direct operating costs, salaries and benefits and selling, general and administrative expenses.
Adjusted EBITDA came in at $92.8 million, up 16.7% year over year in the quarter under review and higher than our estimate of adjusted EBITDA of $88.5 million.
EFT Processing segment recorded revenues of $192.2 million, which climbed 32% year over year (up 40% on a constant-currency basis). The metric beat the Zacks Consensus Estimate by 6.3% but missed our estimate of $201.1 million.
Adjusted EBITDA of $29.6 million surged 85% year over year or 98% on a constant-currency basis in the first quarter but lagged our estimate of $38.7 million.
The segment’s operating income increased nearly two-fold year over year to $6.9 million. Total transactions of 1,838 million rose 38% year over year in the quarter under review but missed the consensus mark by 6.7%.
The segmental performance benefited from improved domestic and international withdrawal transactions resulting from the continued rebound in travel and growing POSprocessing revenues. Substantial volume increase in low-priced payment processing transactions within the Asia Pacific also accounted for the impressive segmental performance.
epay segment’s revenues inched up 1% year over year and rose 5% on a constant-currency basis to $237.4 million in the first quarter. The figure missed the Zacks Consensus Estimate by 1.9% but beat our estimate of $228 million.
Adjusted EBITDA of $29.1 million increased 4% year over year. The metric came higher than our estimate of $22.3 million.
Operating income increased 5% year over year or 11% on a constant-currency basis to $27.5 million in the quarter under review.
Transactions totaled 973 million, which rose 13% year over year but missed the consensus mark by 7.2%.
Growth in digital branded payments, an expanding digital distribution channel and mobile growth contributed to the sound segmental performance.
Money Transfer segment reported revenues of $359.4 million, which advanced 6% year over year (up 9% on a constant-currency basis) in the first quarter. The figure outpaced the Zacks Consensus Estimate by 3.2% and our estimate of $336 million.
Adjusted EBITDA decreased 3% year over year but improved 1% on a constant-currency basis to $41.1 million, higher than our estimate of $32.6 million.
Operating income of $32.6 million decreased 2% year over year in the quarter under review. Total transactions rose 12% year over year to 37.6 million, beating the consensus mark by 2.6%.
The solid segmental results were aided by 13% growth in U.S.-outbound transactions and 16% growth in international-originated money transfers.
Corporate and Other’s expenses of $21.4 million escalated 29.7% year over year due to elevated short and long-term compensation expenses.
Financial Update (as of Mar 31, 2023)
Euronet exited the first quarter with cash and cash equivalents of $1,065.8 million, down from $1,131.2 million at 2022-end. Total assets decreased to $5,010.6 million from $5,403.6 million at 2022-end.
Debt obligations, net of the current portion, came in at $1,642.7 million. The figure advanced 2.1% from the level as of Dec 31, 2022.
Equity of $1,272.1 million increased from $1,244.4 million at 2022-end.
There was roughly $715 million left under EEFT’s revolving credit facilities at the first-quarter end.
Management anticipates adjusted earnings to be around $2 per share in the second quarter of 2023, which indicates an improvement of 29% from the prior-year quarter reported figure.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
Currently, Euronet Worldwide has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Euronet Worldwide has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Euronet Worldwide belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Virtu Financial (
VIRT Quick Quote VIRT - Free Report) , has gained 2.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Virtu Financial reported revenues of $373.08 million in the last reported quarter, representing a year-over-year change of -26.1%. EPS of $0.74 for the same period compares with $1.27 a year ago.
Virtu Financial is expected to post earnings of $0.57 per share for the current quarter, representing a year-over-year change of -21.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.
Virtu Financial has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.