Euronet Worldwide, Inc. (EEFT) Q2 2013 Earnings Report, Transcript and Summary

Greetings, and welcome to the Euronet Worldwide Second Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would -- it is now my pleasure to introduce your host, Mr. Jeff Newman, Executive Vice President and General Counsel for Euronet Worldwide. Thank you. Mr. Newman, you may begin.

Thank you, Janine. Good morning and welcome, everyone, to Euronet's quarterly results conference call. We will present our results for the second quarter 2013 on this call. We have Mike Brown, our CEO; Rick Weller, our CFO; and Kevin Caponecchi, the President of Euronet Worldwide, on the call. Before I begin, I need to make a disclaimer concerning forward-looking statements. Statements made on this call that concern Euronet's or management's intentions, expectations or predictions of future performance are forward-looking statements. Euronet's actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors, including conditions in world financial markets and general economic conditions, technological developments affecting the market for the company's products and services, foreign currency exchange fluctuations, the company's ability to renew existing contracts at profitable rates, changes in ATM or other transaction fees and changes in laws and regulations affecting the company's business, including immigration laws. These risks and other risks are described in the company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Copies of these filings may be attained -- obtained via the SEC's EDGAR website or by contacting the company or the SEC. Euronet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances. The company regularly posts important information to the Investor Relations section of its website. Now I'll turn the call over to Rick. Go ahead, Rick.

Hi. Thank you, Jeff, and welcome to everyone on the call. I will begin my comments on Slide 5. We had another strong quarter, delivering revenue of $341.5 million, operating income of $27.8 million and adjusted EBITDA of $47.7 million. Our cash EPS of $0.48 was a 23% increase over the same quarter last year. Each of our 3 segments contributed to this consolidated growth, which I will discuss further when I get to the segment reporting in a few slides. As I reflect on the $0.48 cash EPS this quarter, I'd like to make a few observations that are not apparent -- as immediately apparent. The $0.48 is $0.01 ahead of our guidance despite FX headwinds. The $0.48 is a new all-time high for quarterly earnings. The $0.48 continues a trend of year-over-year quarterly double-digit growth since early 2011. And finally, it's consistent with our trend of meeting or exceeding quarterly guidance. In summary, we believe a very strong quarter. Next slide, please. Slide 6 shows the 3-year transaction trend by segment. EFT transactions increased 2% year-over-year driven by growth in Serbia, the Middle East, Pakistan and China. Tempering this growth was the transaction decline we mentioned last quarter related to the expiration of IDBI agreement in India. You may remember that according to Indian law, IDBI was required to go out for public bid since the contract with Euronet was more than 10 years old. Euronet processed a large volume of transactions through almost 1,600 ATMs for IDBI but did not generate a lot of revenue or profit. When a lower bid came in for these ATMs, Euronet did not pursue the renewal. As you can see in the financial results, this decline in total transactions and ATMs did not adversely impact our earnings. Without the IDBI decline, transactions and ATMs would have increased 9% and 11% year-over-year, respectively. Epay transactions grew 4% year-over-year primarily from growth in India, North America and Germany. This growth was partially offset by declines in the Middle East, the U.K. and Australia. Ria delivered another strong quarter of growth with total transactions increasing 20%. Money transfers grew 22% in the quarter with U.S.-originated transactions increasing 26%. The U.S. growth includes a 27% increase in transfers sent to Mexico. Transfers initiated outside of the U.S. grew at 15%, the fastest rate we've seen in several quarters. Next slide, please. On Slide 7, we present our financial statements on an as-reported basis. Foreign currency rates were relatively stable year-over-year with the mix of weakening and strengthening currencies resulting in no impact on revenues at about 1% increase to reported operating income and adjusted EBITDA, respectively. To exclude the impact of foreign exchange rates, I will discuss the segment results on a constant dollar basis on the next slide. On Slide 8, you can see all 3 segments continue to post year-over-year revenue, operating income and EBITDA growth. EFT had another strong quarter with revenue, operating income and adjusted EBITDA growing 23%, 43% and 34%, respectively. The revenue growth was primarily from improved performance of our brown label ATM portfolio in India and increase in sales of our value-added products, ATM network expansion and the January 2013 acquisition of Pure Commerce. The growth in EBITDA and operating income reflects the leverage in the business. Revenue per transaction increased year-over-year, and operating margins expanded year-over-year. Epay recorded growth in revenue of 6%, operating income of 23% and adjusted EBITDA of 7%. These increases were the result of continued expansion of our non-mobile products, particularly in Germany, growth of prepaid mobile sales in the U.S. and the acquisition of ezi-pay in New Zealand. Partially offsetting this growth were declines in Australia as well as start-up costs in Russia and Turkey. The larger increase to operating income also reflects the benefit of lower intangible expense in Spain, Brazil and Germany due to the net book value of certain intangible assets being fully amortized. Without the benefit of this lower noncash expenses in the second quarter this year, operating income would have been consistent -- our growth in operating income would have been consistent with revenue and adjusted EBITDA growth. Epay posted an increased revenue per transaction over that of last year as well as an expanded -- as expanded operating income margins. This is the second consecutive quarter we have seen the year-over-year growth rates restored to the epay segment, and we're optimistic our recent product additions will continue epay's growth. Money Transfer revenue increased 20%, operating income increased 30% and adjusted EBITDA increased 17%. This growth was driven by a year-over-year network expansion of 29% and Transfer growth in all markets. We have continued to see stable pricing within the segment. Money Transfer's revenue per transaction remained fairly constant with prior year, and its operating margins expanded with volume. Overall, all of our segments contributed nicely to our double-digit consolidated earnings growth in the quarter. With expansion across all businesses, we are well positioned for continued momentum in the second half of the year. Next slide, please. On Slide 9, we present highlights of our second quarter balance sheet. Our balance sheet remains very strong. The cash increase reflects free cash flows generated from operations, and our debt remained largely the same. As I conclude my remarks, I would like to comment on the guidance we provided in our press release. As you may remember, over the last couple of years, we started to see our third quarter earnings coming more in line with our traditional seasonally high fourth quarter. That is, the difference between third and fourth quarters will narrow not because of shifting but rather because of strengthening of the third quarter. You can see that the third quarter guidance we have provided, we expect this development to continue. We believe that our business has evolved, and we expect the second half of the year to include 2 seasonally higher quarters. With that, I'll turn it over to Mike.

Thank you, Rick. And thanks, everyone, who has joined us today. It's great to talk to you in a quarter where all 3 of our businesses continued to grow and where we delivered a strong 23% cash EPS growth over the same quarter last year. Let's move on to Slide 12, and I'll share with you how the EFT segment contributed to this. This was another strong quarter for our EFT segment. In the last year, we have launched ATM networks in 5 new countries. We have deployed more than 150 automated deposit terminals, ADTs, across 2, countries, added value-added products to both our customers and our own ATM networks and signed numerous other agreements across our markets. Our success in EFT is highlighted by our impressive 24% revenue and 46% operating income increase over the same period last year. In the second quarter, our EFT team continued their momentum, signing a number of new agreements, including additional ADT and ATM network participation agreements, card issuing and acquiring contracts, ATM outsourcing agreements and new customers for our value-added products. I'll tell you more about these in the next couple of slides. So we can move on to Slide #13. Our team in Poland had a very strong quarter. As the market leader, we continued to see strong demand for participation in our ATM and ADT networks. These networks provide participating banks' customers with the opportunity to withdraw or deposit cash at an extended network of ATMs without the bank incurring the initial or operating costs of installing their own ATM. This quarter, we signed network participation agreements with Idea Bank, Getin Bank and Invest Bank for participation in our ADT networks. Invest Bank also signed an agreement to join our independent ATM network in Poland. Our Polish team also enabled China UnionPay acceptance on our network. China UnionPay is the national card scheme of China and the market leader for payment cards in circulation. While usage on these cards is still below other major card schemes, UnionPay is rapidly expanding, and we are excited to offer this product at our largest ATM network. In Asia Pac, we also achieved a significant milestone by successfully migrating Standard Chartered Bank Malaysia and Singapore to Euronet's ITM switch in India. These are the 10th and 11th Standard Chartered countries using ITM, and successful integration is key to continued future expansion to additional countries. Moving on to Slide 14. In Italy, we extended our relationship with Forexchange to install additional ATMs. Forexchange is the largest foreign exchange provider in Italy with close to 100 branches throughout the country. We are analyzing each side individually, but we expect a substantial amount of foreign exchange branches to meet our expectations. Our pipeline for value-added services remained strong. During the quarter, we added these products through additional customer ATMs and POS networks in Slovakia and in Croatia. Additionally, our Pure Commerce team signed a number of new customers in the quarter. As you may remember, Pure Commerce is the acquisition we made at the beginning of this year focused on value-added transactions on POS terminals in locations like duty-free shops and airports, hotels and retailers. We signed agreements with merchant acquirer, Elavon in the U.S., Redeban in Colombia, Banco de Oro in the Philippines and Bank of the Philippine Islands to offer DCC to their merchant partners. Through new and existing acquirers, we have signed target-rich merchants, including leading airport duty-free shops, hotels and retailers in the U.S., Singapore and Korea. We ended the quarter with 17,242 ATMs. We added 865 ATMs this quarter, including 357 ATMs in India, 249 in Europe and 259 in the Middle East, Pakistan and China. As I close my comments, I'd like to address the article that was published last week on the EU proposal to cap card transaction fees. I want to let you know that this is only related to transactions initiated on POS terminals, and the proposal, if implemented, will not have a significant impact on Euronet. This was an absolutely outstanding quarter for the EFT business. Now we'll move on to Slide #16, and we'll talk about epay. Epay continues to reestablish its growth trajectory, delivering nice growth in the quarter. Our teams continue to focus on adding new content to our non-mobile portfolio while finding additional channels for distribution. As you can see in our results, these products are starting to take hold, offsetting softness in a couple of markets. Non-mobile content now makes up slightly more than 30% of epay's total gross profit and is growing about 30% year-on-year. This was a good, solid posting from epay. Let's go on to the next slide, and we'll see some of the highlights of epay's success, on Slide #17. During the quarter, we continued to expand the value-added services we provide to our mobile operators. We launched an agent incentive payment program for Prepayd Wireless, a Sprint MVNO. With this agreement, Prepayd Wireless can offer agent incentives for product sales, and epay will calculate and pay agent commissions on behalf of the company. In the first quarter, I told you about our launch of iTunes on the PostFinance mobile banking app in Switzerland. Our goal in integrating epay products in this channel is to help the bank achieve their objectives such as encouraging customers to perform more online or mobile banking transactions, which are more cost effective than a traditional branch transaction to the bank. This new channel of distribution has been very successful as demonstrated by PostFinance's continued support and marketing of this program. Additionally in the quarter, Boost Mobile and Wipit announced the launch of Boost Mobile Wallet. You may remember that in 2011, Europe -- Euronet made an investment in Wipit. The unique offering of Wipit was in line with our strategy to bring financial payment convenience to those who have not had it before. Most mobile wallets focus on payments at online or physical retail locations. With Wipit, those retail payments are made with a prepaid card tied to their mobile wallet accounts, and while the wallet focuses on quick, easy and convenient access to their most common financial transactions, which includes top-up bill payments and money transfer. Euronet also integrated within the wallet with top-up being powered by epay and money transfers being powered by Ria. In Germany, we signed an exclusive long-term renewal with Rewe Group. This is a key grocery store chain in the German market, and we're excited to continue to provide epay content within Rewe Group locations. On Slide #18, we'll move to, as we highlight the key developments within our non-mobile portfolio. In Australia and New Zealand, we added mobile phone security products, Eset, Mobile NQ and Trend Micro. With more smartphones than PCs worldwide, we believe this is an emerging product category and one we are pleased to offer our customers in those countries. Additionally, we launched iTunes digital codes at Yandex, Russia's #1 search engine and leading e-wallet. Yandex is the Google of Russia and accounts for 2/3 of all searches in the country. Customers in Russia can purchase iTunes through Yandex in 2 ways, either through the Yandex wallet or at a kiosk supported by Yandex. We see this as an exciting opportunity in this new epay country for us. You may have seen our press release last week announcing the launch of Google Play prepaid cards in Germany. Google Play allows Android phone users to shop for apps, games, music and e-books online or from their mobile phone or tablet. In Q1 2013, Android phones accounted for 75% of the total global mobile phone shipments according to International Data Corporation. We have seen great results with our non-mobile content in Germany, and with such great demand for Android products worldwide, this agreement unlocks the other 3 quarters of the mobile phone market. Finally, we signed electronic software download agreements with several content providers, including Xbox, Microsoft Office, Windows and Adobe. Now in addition to selling prepaid cards within the store, our retail partners will have the ability to sell these products on their websites or through their mobile apps. As I said before, this was a solid quarter for our epay business. We continue to see significant opportunities to grow and distribute our non-mobile content. Now we'll move on to Slide #20 and we'll talk about Money Transfer for a bit. We really hit on all quarters this quarter -- on all cylinders this quarter. We saw Spain and Italy, 2 markets where we have seen some softness over prior quarters, return to strong growth and our other major spend markets continue their rapid expansion. Our Money Transfer team is working hard to expand our network and product portfolio, and you can see the results in our earnings. Slide #21 provides the details of our 29% year-over-year network expansion. We're pleased to announce key -- a key addition to our network with the launch of Postal Savings Bank in China. These 1,300 locations are in key Chinese provinces. This is our first direct relationship with a correspondent in China, which, according to World Bank, is the second leading recipient of migrant remittances in the world, receiving an estimated $60 billion in 2012. I'd like to point out that Postal Savings Bank is our largest EFT outsource customer in China, and this collaboration between our EFT and Ria segments is another example of the synergies between our segments creating additional value for our business. We also launched 3,600 locations with Aktif Bank in Turkey. Turkey is an important corridor for our German business as 60% of Turkish immigrants live in Germany and adding these locations will drive additional volume through that corridor. We continue to have a strong pipeline of new correspondents. In the quarter, we signed 17 new agreements with correspondents, spanning more than 15,000 locations across 8 countries. Most notable of these are in India, Pakistan, Nepal and Latin America. Finally, we're excited to announce the launch of riamoneytransfer.com. New and existing customers in the United States can now send money to their families around the world from the convenience of their home. This new channel, which we have labeled our digital channel, is led by an experienced team of industry and non-industry professionals that we believe will bring new thought leadership to the online money transfer business. riamoneytransfer.com stands out because of the flexibility it provides customers, allowing them to use multiple payment methods, including ACH transfer, credit or debit cards. Customers can also choose from multiple payout locations, including bank deposits, home delivery and the most significant being our 204,000 global network locations. There is a growing demand for online money transfer, and we believe this new digital channel will be a nice complement to our existing agent base. Moving on to Slide #22. You can see Ria's transaction highlights. Our global Money Transfer transaction growth continued to accelerate with 22% growth, reflecting a new record of more than 7 million transfers in a single quarter. This is the 9th consecutive quarter we've delivered double-digit Money Transfer growth. U.S.-initiated transfers continued their momentum, recording a 26% increase year-over-year. This expansion was driven by a strong of 27% in growth in transfers sent to Mexico as well as 26% in transfers sent from the U.S. to non-Mexican locations. We've also seen market share gains in other countries, including El Salvador, Colombia, Honduras and Nicaragua. And our sends from the U.S. to emerging markets in Africa and Asia continued to grow at double-digit rates. Transfers initiated in markets outside the U.S. increased 15% year-over-year compared with 11% in the first quarter of this year. This increase is driven by increases in transfers sent from France, Germany, Italy, the Nordics and Spain. And Spain, more specifically, returned to double-digit growth in this quarter. Our non-Money Transfer transactions also grew at 15% year-over-year. We continue to see strong growth in epay top-ups sold through Ria agents with particular strength in the U.S. and Italy as well as check cashing in Ria PINless transactions. Our Ria team delivered a strong quarter with double-digit growth across all of our reported metrics. Now let's move to Slide #23 and we'll wrap up the quarter. Slide #23. Here, we delivered cash EPS of $0.48, which is a growth of 23% year-over-year and exceeding our guidance by $0.01. All 3 segments delivered nice quarters, contributing to our double-digit consolidated earnings growth. EFT benefited from growth of our brown label ATMs in India, continued sales of our value-added services and ATM expansion, particularly in Poland. epay continued its turnaround with increases in sales of non-mobile content and prepaid mobile products in the U.S. Money Transfer realized earnings growth from continued sales successes and more network expansion. As Rick said, our balance sheet remains strong with strong free cash generation. And finally, with all the segments hitting on all cylinders, we expect to have a very strong third quarter with cash EPS of $0.54. With that, I conclude my comments, and I will be happy to answer any questions. Operator, will you please assist?

[Operator Instructions] And the first question is from Greg Smith of Sterne Agee. Gregory Smith - Sterne Agee & Leach Inc., Research Division: Just wanted to make sure on the guidance and the commentary around 3Q and 4Q. You're basically just saying that 3Q is now seasonally stronger than it's been before. So there's no taking of anything from 4Q going into 3Q, is that correct?

That's exactly right. We try to be clear about that because some people might think we're actually stealing from Q4 and putting it in Q3. But the reality is, based upon the evolution of our business, we have -- particularly in the EFT segment, we've really stoked up our results in Q3. So now, Q3 is there competing with Q4 as to be our seasonally highest quarter, which we're excited because it's what -- basically it's all newfound money. Gregory Smith - Sterne Agee & Leach Inc., Research Division: Yes, got it. Okay. And then the digital channel that you're rolling out on the Ria side, is there any chance that's going to require any significant stepped up investment that could impact the margin there at all?

We are -- Greg, as we speak, we are spending more money on that. We don't expect that it will dilute from the margins, but we are using some of the extra margins we're contributing from the great growth that we see in that business to invest in that particular channel. So we shouldn't see a depression in the margins, but we will obviously be spending against that initiative.

And you may not have -- you don't see it was kind of mapped by the spectacular growth in Ria over the last 1.5 year, 2 years because we've spent a lot just on the R&D side to bring those products to fruition. But luckily and nicely, Ria has just exceeded everybody's expectations. So there's a little extra profit for us for back end of the business. Gregory Smith - Sterne Agee & Leach Inc., Research Division: Yes, okay. And then just one last one for me. Just, Mike, you commented on the interchange regulation in the EU not impacting Euronet. But is there any chance that the lower interchange rates at the point of sale bleed into the ATM side and potentially pressure ATM interchange and then hitting you?

That's a good question. We keep asking the regulators as we've met with them many times. I can't say that it never could, but the reality is, everybody around the world is focused only, it appears, on the POS side. You try to get their attention on the ATM side, and they just say they've got other fish to fry.

And Greg, I would add to that is that if you recall here a few years ago, we had a VISA rate, MasterCard reduction in Poland, our largest market, where we obviously benefit from ATM withdrawals. And if you did some math based upon kind of the average size of a charge card spend and what they've put the caps out at, you would see that those numbers aren't too different. And so I don't see that there's that much of a difference in the pricing that we've got for interchange on cash withdrawals in that part of the market compared to what this new set-down rate on POS charge card transactions would be.

The next question is from Mike Grondahl of Piper Jaffray.

The first question is really about margins. It was great to see overall margins expand a little bit this quarter. Could you kind of talk about the main driver of that and sort of how we should think about margins going forward?

I think the driver is as simple as volume. We did see a little bit of some mix. I think for particularly if you look at the EFT, I mean, the epay segment there, our revenue per transaction went up a little bit more. As Mike said in his comments on EFT, we were successful on continuing to sell value-added services. Those are more margin-rich products. So it's really volume together with continuing to put some better margin products in the portfolio.

And you know too, Mike, you've run the numbers, as volumes goes up, you're -- depending on -- each of our segments has a different kind of flow-through average margin. But when you add them all up and you just have higher volumes, you're just going to end up with better corporate blended margins.

Got it. Because for several quarters, margins were sort of flattish. It looks like this quarter they stepped up a little bit.

We've been making some investments. We just mentioned how we're working on riamoneytransfer.com. We've been putting ATMs in India by the hundreds, and those suckers take a full 6 months to ramp up, so you see some -- that puts pressure on the margins. But once they're in and 6 months start -- finally gets there, then we start to see these things start to produce. So we're not afraid of making investments, but -- and I think those investments are paying off now quite handsomely.

Yes, one of those others that was in that mix, and we could probably have -- cite a few others here, Mike, but in -- you may recall about 1 year ago when we talked about the brown label rollout in India that was having some compression on our margin. And this year, I mean, this quarter, we've actually seen a little lift in our margin and -- because of the successes we're having in India on the brown label products. So it's just a number of factors across-the-board that Mike articulated.

Great. And then on India, it sounds like that's ramping up well. I think last quarter, you guys said you were slightly profitable on those ATMs. How would you characterize the contribution from the Indian ATMs?

More profitable now.

Yes.

If we were in a baseball game, sort of what inning are we in?

Oh, I don't know. I think we're probably in maybe the fourth, kind of, fifth. In terms of the profit per ATM that we have now, in terms of the continued opportunities over there and how many more ATMs, I think we're probably in the earlier stages.

Great.

And Mike, too, remember, every time we put in another 300 or 400 ATMs in a quarter or in a half of a year, those ATMs started at inning 1. So as long as we keep seeing opportunity where we can make good money in India, we'll still put in brown label ATMs. You've got to put a blended bank. So if we end up -- just theoretically, if we end up with 2,000 or 3,000 of these things and then we'll only put in 300 in a quarter, then you'll see less impact. But now, with our numbers, you'll see more as we're stoking up the number of ATMs.

The next question is from Tim Willi of Wells Fargo.

Are we losing you, Tim? [Technical Difficulty]

Can you hear me okay?

Yes, you're fine.

Yes.

We can now, yes.

Great. Operator error there on my part. So EFT, if I missed it, I apologize. But did you talk at all about sort of budgets or plans around that ATM rollout for the rest of the year? I know you just referenced a couple of hundred a quarter. Is that indicative of what you're thinking you'll do through the balance of the year? Or is that just an illustrative example?

Well, I think that -- let me remind everybody that it's an ATM by ATM battle here. So if we can find a good site, we're going to put an ATM in. And if we don't, we won't. We're not just going to put them in to hit numbers, to hit quantities. But our guess is, and it's kind of a guess right now, is that we'll put in 450 to 500 more brown labels this year and maybe around the same number across the rest of our patches in Europe, Middle East, China and everything. So with a little luck, we'll put in 1,000 between now and the end of the year. I don't know if we'll get that lucky, but I hope we do. Because every time we can secure a good site -- and understand, too, that it's not just me deciding that this is a great site in downtown Madrid. If you've got to have all the authorities and the architectural guys approve, I mean, it just takes a while to get to that point where you've got it installed. And you never know. Those are all -- everyone -- ATM by ATM, it's all -- you never know, so.

Yes, okay. Fair enough. And then a couple of questions on epay. First is you referenced start-up costs for Turkey and Russia. I think that's the first time I've ever heard you mention those markets. They're pretty sizable populations. I mean, could you maybe talk about how much money has been invested? Where you're at with that? Would that be something that might go on for a couple more quarters before it stops weighing on what the ultimate margin in U.K. is and then how you think about those countries? Is that more of a '15 kind of plan for contribution? Or you think it's something you can actually start to see move pretty quickly? You have partners there on the telecom side. How does that look?

I'll let Kevin answer that.

We announced our -- Apple announced that they went in Turkey and Russia end of last year. We've been Apple's partner in those 2 markets. I would -- it's fair to say that most of our focus -- while we've launched both markets, most of our focus has been on Russia given its size and 9 time zones. We don't specifically discuss how much we're investing. The focus is all on non-mobile. We're not doing any telco in these markets, and they're both ramping up as we would expect.

The -- will this expand beyond Apple products? Or will you talk about the investments you're making? Is this laying ground for more and more comps in around the gaming and the software? Is this just expanding Apple's?

We obviously won't talk about investment, but we will be adding other global content, and we're also signing up local Russian content. So when we -- as we launch, it'll be a combination of the world's best brands along with content from the local market.

Okay, great. and then my last question on epay was just looking at all the launches and the signings you had with some big retailers like Tesco and with some big brands like Microsoft, et cetera, it seems like a pretty impressive slide, I think, even relative to some prior quarters. I guess, just to make sure we've got our heads around all these announcements you've put on that slide, are any of these in and of themselves pretty big deals. Like something with the Tesco, you say, "Yes, a very large retailer in the U.K." Or should we just think about these as all very nice pieces of business, none of them individually being a big deal as opposed to just all of them in aggregate demonstrating the momentum in the business?

Well, probably -- I'm probably best -- it's best for me not to answer that directly just for competitive reasons, Tim. But you've seen and we announced this time that our non-mobile margin -- gross margin was 30% of our total epay this time, and it's growing about 30% a year. And really, we don't have any one singular killer in any place. What you really want to do is just to put as many of these products out in as many countries as you can because that's your value proposition to the retailer. Sometimes, a retailer for the more well-known products, that might be Xbox and iTunes and now Google Play, those might be more well-known kinds of things, but they're going to want these other ones that aren't very voluminous [ph] because they want a full offering for their customers. So, well, you kind of got to look at this as the group, and that's what's improving our margins.

Our next question is from Chris Shutler of William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: On Pure Commerce, I know you said a couple of quarters ago, Mike, that you wanted to wait a little before talking about that business in a whole lot of detail. But -- I know you mentioned some wins in the prepared remarks, but just any more color you can provide there, especially on -- I know there were some cross-selling potential given that Euronet and Pure Commerce had somewhat different geographical and customer footprints, but just any more color there on how that's progressing?

Well, I'll tell you, it's -- actually, this little company could be a little barnburner for us. Everything is working well with the -- within the corporation of them and then our current, you might say, footprint and assets. They continue to sign more and more business. They actually are signing business faster than they can implement it. And so what we're doing is utilizing the assets we have in the rest of the company to help them implement this quicker. So I'm not prepared to give numbers on that quite yet, but this is turning out to be a really nice asset. The leader there, Daniel Lavecky, is a very smart guy and working well with our people. So we'll be able to tell you more, I think, towards the end of the year, but we're very pleased with how this has rolled out. Just -- and one of our customers just recently that we rolled out here in the U.S. was a duty-free shop, DFS. It was built by Louis Vuitton, and they thought they basically -- we've rolled out in 4 key airport duty-free shops here in the U.S., and that was in Honolulu and SFO, LAX and JFK. And that took just a lot of effort by everybody to get that all to work, but it's going to be a very, very nice account for us as an example of how we work together. Christopher Shutler - William Blair & Company L.L.C., Research Division: All right, great. And then separately, on the Google Play agreement in Germany, can you guys talk about, I guess, how you're thinking about additional countries there? And I guess are there other companies out there like epay doing the same thing in some of those other countries with Google?

I'll let Kevin answer that.

So we -- again, we won't, for competitive reasons, reveal the markets we're going to go into. But one could assume that we'll expand the Google Play product into the other epay markets across the world. There are others that do it. Again, for competitive reasons, we won't discuss who has which markets and how Google Play is playing it, but I think what ultimately plays out is the epay -- or the non-mobile market all depends on who you're connected to, which retailers you're connected to. And what we're doing is we're leveraging the connections we already have with existing retailers. So we don't really worry about the other guys. We just focus on getting these new products through to the retailers that we have, which, as we've reported many times in the past, we're connected to some of the best large retailers in the world. So we're real excited about the product. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay, great. And then just last question. And I guess at a high level, obviously growth rates across the company are strong right now, but just walk us through how you're thinking about growth in each of the 3 segments, not just over the next 1 or 2 quarters but over a more medium-term horizon, Mike.

Well, I guess we could say that the rate of growth that we're seeing in both Money Transfer and in EFT, those are our 2 strongest growth areas with plus 20% growth rate, both of them. We can't tell for sure what's going to happen, but I -- but it does not look like that's abating anytime soon. On the epay side, we're getting high single-digit kind of growth rates there. I think that can continue. And we really don't see this stuff slowing down. Actually, as the economy -- I mean, we got to understand we're still in a depressed world economy. As any improvement there occurs, it helps us a lot. When you just think about our epay segment and you think about markets like Spain or U.K. or whatever, in Spain, something like 50% of all kids under 30 don't have a job right now. So obviously, they're spending less on their phones than they did before, and they're spending less on apps and less on everything else because they don't have money. As these economies start to strengthen, all of a sudden we're going to look like geniuses even though we're really aren't doing anything different other than join the secular improvement.

Well, and benefiting from the assets that we have out there.

Yes. I mean, that's the deal. We've been making big investments even when times were tough. A lot of our competitors didn't do that. And the result is, and you can see this absolutely for sure in Money Transfer, the result is increased market share.

Our next question is from Jason Nacca of Sidoti & Company. Jason Nacca - Sidoti & Company, LLC: Okay, regarding the epay segment, can you guys provide me a little color regarding Australia and Brazil and also the strategy you employed this quarter and going forward to results -- reverse some of the results in these regions in previous quarters?

Yes, Jason. Well, first of all, in Brazil, we've seen that trend flatten out. So we're pleased to do that. We -- our strategies to do that have included a number of things of repositioning ourselves with some of the mobile operators, repositioning ourselves with some of the retailers, some expense management and I guess all the kinds of typical things that you would expect. We are cautiously optimistic that as we and some content providers overcome some what I'd call like local tax hurdles, that we will be able to take a stronger suite of non-mobile products into that market, and then -- and anticipate that, that will begin to show up in our results as we leverage the large retail relationships that we've built there. So that one's really been a multi-front approach where it's been repositioning with retailers, mobile operators, managing expenses and just working through the traps to get non-mobile in there. Australia, we've not been quite as successful in kind of bending the needle on that one yet. We continue to work, obviously, with both our mobile and non-mobile products, work with our mobile operators to change the direction of that trend. We're cautiously optimistic that we will see some nice non-mobile growth come from the implementation of our transport products that's rolling out there. That product is well on its way to roll out. They rolled that out to more of the transportation venues such as buses, trains, et cetera. We expect to see that start to gather a little bit more momentum starting the first part of 2014. And so I guess it's fair to say more work to do, obviously, in both of those markets, a little bit more success here on getting after -- been changing that direction in Brazil, and we're optimistic that we'll change that direction in Australia in the not-too-distant future. Jason Nacca - Sidoti & Company, LLC: Okay, great. Now switching gears here to Money Transfer. With U.S. and Mexico transfers continuing to be pretty strong, would you say that you're starting to see recovering in housing is driving this growth or even possibly taking some market share there?

I'm sorry, Jason, can you repeat that? Jason Nacca - Sidoti & Company, LLC: Yes. So within the Money Transfer segment, U.S. and Mexico transfers continuing to be pretty strong, would you say that you're kind of picking that up from some recovering in -- recovery in housing? Or would you say it's also driven by some market share gains as well?

Yes, I would say if you take a look at the Bank of Mexico remittance numbers, they're kind of in the sub-5% growth rate. And I'm sure that's the industry. So when we're over here with multiples of that, we're obviously grabbing market share from competitors. Now one of the things certainly is helping and that's probably added to that 5%, the reason we have the 5% growth, is the construction. And new home construction in particular, I imagine that, that is quite helpful. But the reality is we're growing -- our transactions to Mexico were 4x faster than Bank of Mexico's numbers. So that just tells you that somebody's losing and we're gaining.

Our next question is from Peter Heckmann of Avondale.

Couple of follow-ups, Rick, on Pure Commerce and ezi-pay just in terms of trying to quantify the acquired revenue impact. Would they have contributed about $7 million in the aggregate in the quarter? Is that fair?

Oh, not to far off, Pete.

Okay, that's great. And then as regards the Ria digital effort, is that something that's live currently? And can you talk about some of the target markets and some of the ways you may market to future customers?

Well, it is live, and we will continue to roll it out with more corridors and more send countries. But we've just -- we've basically just turned it on. So we're just doing hundreds of transactions a month, not millions. But we believe that over time, this could be a significant piece of our business. We don't really see it as a cannibalization of who we have because our agent model is a different customer altogether than kind of the well-heeled software engineer in Silicon Valley is sending money back to his family in India, or that nurse or doctor who was educated in the Philippines and sending back their money. It's a different guy than a lot of the immigrants who use our agent way to collect the money. But we do believe it's complementary, and I'd like to attack all the markets, not just most of the markets. So we will spend more money as time goes on, as we go into more and more markets, but we hope to -- we don't expect that's going to necessarily crunch our margins. And if we can keep growing Money Transfer as we have been, then there's a little money left over in there.

Yes, fair enough. Then I was intrigued by the comments on the digital wallet initiative with Boost Mobile. Seems like that, that's -- it's a different way certainly than most who are approaching mobile wallet or digital wallet. Do you have other initiatives that we may hear about in future quarters? And do you think there's a real opportunity for Euronet there given your strong point-of-sale presence with retailers?

Oh, absolutely. Actually, we love all wallets because, especially in our overseas markets, we need -- those wallets need way to get charged up. And in markets with less credit cards than the U.S., cash collection seems to be -- at the point of sale seems to be the way to do that. It's just ours is an interesting combination of both the wallet and content, I mean, a way to pay certain bills and do money transfers and so forth. Maybe we can do more of those in other markets. But at a minimum, when somebody says, "Our wallet is a threat to you," I'd say, "No, wallets are my best friend." The more, the merrier. I mean, when you think about it, iTunes is the most successful wallet out there.

We're addressing, Pete, the -- a lot of wallets focus on how you're going to use the wallet to buy something. We have not reinvented that with this product. You use a card, a MasterCard [ph], a prepaid card. The wallet in our model is principally being used for financial services, and we think that idea appeals to the cash preferred consumer and that there are opportunities with other partners.

[Operator Instructions] The next question is from Mike Grondahl of Piper.

Just 2 follow-ups. One, Mike, could you talk a little bit about what you're seeing overall in Europe? You mentioned, I think, that Spain money transfers grew again. Just kind of what are you seeing in that as an overall market? Is it beginning to come back a little bit?

Actually, there was an article that I read this morning that said that the European economy seems to be strengthening up a bit. Maybe we're seeing a little bit of that. But we're -- it's a -- we've been doing so good competitively, particularly in money transfer overseas. I can't quite tell if it's just improvement in their economies or just improvement in our market share position. Generally, we -- it looks like it may -- we've already seen maybe the bottom of the trough with respect to the European economy. We're getting a little bit of growth rate. I think Germany's weighted [ph] at about 0.5% and Poland is at about 2% growth, GDP growth rate this year. So maybe those guys are pulling out. And I'll tell you when they do, we're going to be really happy.

Okay. And then lastly, could you just -- I don't know if I heard any comment on the U.S. mobile top-up business. How did that trend in the quarter?

Well, I think we pointed out in the comments in the press release that U.S. was one of the nice contributors to the epay results this quarter. So net-net, it was a good contributor in there, Mike.

Yes, the U.S. epay group has actually done -- has been quite innovative in a number of solutions that they've provided to certain of these very large mobile operators, like Sprint, with Boost and T-Mobile, et cetera. There has been a couple of MVNOs as well. And I think their innovations, which were a lot more than just doing a transaction, just doing a top-up, these innovations have locked us into these customers, and we're providing these customers with ways to continue to market their products and be more competitive. This has resulted in them making more money and us making more money. Yes, I think we've got time for one more question, if there is one. Otherwise, we'll sign off.

The final question is from Chris Shutler of William Blair.

Okay. Christopher Shutler - William Blair & Company L.L.C., Research Division: I just want -- there has obviously been speculation in the press regarding acquisitions, and I just wanted to give you guys the opportunity to give us your current thought process on acquisition potentially, particularly larger ones.

Okay, I'm trying to figure out if -- what do you mean by larger ones? Christopher Shutler - William Blair & Company L.L.C., Research Division: In the several $100 million-plus range.

Okay. Well, I guess I could safely say that we have -- well, we're looking at acquisitions of all sizes. There has been some scuttlebutt running around about particularly MoneyGram. And at this point, we're not in any process, haven't participated in it and have no interest, if that's what you're talking about.

I am showing no further questions in the queue at this time. And we'd like to turn the conference back to Mr. Mike Brown, CEO.

Okay, that's all I've got. Everybody, I thank you for taking your time, and we'll look forward to talking to you after next quarter's results. Take care. Bye-bye.

Ladies and gentlemen, thank you for participating in today's program. This does conclude the presentation, and you may all disconnect. Everyone, have a good day.