Euronet Worldwide Inc.’s EFT Processing and epay segments reported strong fourth-quarter transaction growth. However, the gains did not translate into increased revenue for the units.
As a company overall, the Leawood, Kan.-based electronic-payments processor, which conducts the majority of its operations outside the U.S., on Feb. 16 reported revenues of $283.8 million for the quarter ended Dec. 31, down 0.6% from $285.6 million a year earlier. The company reported a net loss of $60.7 million for the period; it reported net income of $8.2 million during the fourth quarter of 2009.
Total transaction volume was up 20% during the quarter, to 475 million from 396 million a year earlier.
Euronet’s EFT Processing segment reported revenues of $50.7 million, down 7.8% from $55 million. Transaction volume, however, was up 12.3%, to 210 million from 187 million.
In a news release, Euronet attributed the unit’s drop in revenue to a reduction in Poland’s ATM interchange rate announced last April. But the rate reduction also helped to increase transaction volume at the machines, Euronet said
Also, “increases in the EFT segment were driven by expanded ATMs under management and higher utilization of our Indian Cashnet network ramp up from [the] OMV rollout and the transactions from a small acquisition in Serbia completed in December 2009,” Rick Weller, Euronet executive vice president and chief financial officer, told analysts Feb. 16 during a conference call to discuss earnings. The expanded rollout with OMV Refining & Marketing GmbH, a major Central European oil and gas company, also contributed to the segment’s transaction growth in the third quarter (
The EFT Processing segment operated 10,786 ATMs as of Dec. 31, up 11% from 9,720 ATMs a year earlier.
Euronet’s epay segment, which processes point-of-sale transactions, reported revenues of $167.9 million, down 0.5% from $168.7 million. Transaction volume during the quarter totaled 260 million, up 27.5% from 204 million.
The company attributes the rise in transaction volume, in part, to double-digit volume increases in Germany, Italy and India.
“Epay transaction growth [also] was attributed to the Epay Brazilian acquisition completed in 2010,” Weller said. “Revenues were down largely due to … mobile operator rate decreases, which were passed along to retailers; the conversion of certain customers to transaction-fee arrangements rather than a commission-based arrangement; and transaction declines in certain economies, … most notably the UK and Spain.”
But the revenue decreases were almost fully offset by increased transaction growth in the Middle East, Germany, India and Brazil, he added.
As of the end of 2010, the epay segment supported 563,000 payment terminals at 276,000 locations in Europe, Asia-Pacific, Middle East, North America and South America.
The company’s Money Transfer segment reported revenues for the quarter of $65.4 million, up 5.7% from $61.9 million. It processed 4.9 million funds transfers during the quarter, up 6.5% from 4.6 million a year earlier.
Euronet attributed the unit’s revenue increase to growth in non-U.S. markets, except Mexico.
“You can see the growth is coming from transfers sent to countries other than Mexico, most of which originate outside the U.S.,” Weller told analysts. “That being said, U.S. transactions grew by 2% in total, despite facing headwinds in Mexico, where transfers declined by 6%.”
However, the company continues to be encouraged by the overall momentum in volume for the money transfer segment, particularly for non-Mexican transfers, he said. Euronet’s transaction mix steadily has shifted away from Mexico since its acquisition of RIA Financial Services Inc.’s in 2007, which has expanded globally into new markets and corridors, Weller said.
As of the end of December, the Money Transfer segment operated in 134 countries through a network of about 110,000 locations, up from 82,000 a year earlier.
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