Euronet Worldwide, Inc. (EEFT) Q3 2013 Earnings Report, Transcript and Summary

Greetings, and welcome to the Euronet Worldwide Third Quarter 2013 Earnings Conference Call [Operator Instructions] As a reminder, this call may be recorded. It is now my pleasure to introduce your host, Mr. Jeff Newman, Executive Vice President and General Counsel for Euronet Worldwide. Mr. Newman, you may begin.

Thank you, Sam. Good morning, and welcome, everyone, to Euronet's quarterly results conference call. We'll present our results for the third 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 with us today. Before we begin, I need to make a disclaimer concerning forward-looking statements. Statements made on this call that concern Euronet's or its 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 exchange fluctuations, the company's ability to renew existing contracts at profitable rates, changes in ATM and 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 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 on the Investor Relations section of its website. Now I'll turn the call over to Rick, our CFO.

Thanks, Jeff, and welcome to everyone joining us today. We had another strong quarter, delivering revenue of $360.6 million, operating income of $55.3 million and adjusted EBITDA of $53.8 million. Operating income includes a gain related to the reduction of contingent consideration on an acquisition. This is a noncash accounting gain, so in order to focus on the underlying performance of the business, we will center our discussion around adjusted operating income, which removes the impact of this noncash accounting related gain. Our cash EPS of $0.56 was a 33% increase over the same quarter last year, $0.02 ahead of our guidance and another quarterly record. All 3 segments contributed to this growth, which I will discuss in more detail when I get to segment reporting. I will also point out that while we have seen some FX tailwinds toward the end of the quarter, those tailwinds only contributed about 1/3 of $0.01 towards the $0.02 overachievement. In summary, as I stated in the opening comments on this slide, another very good quarter. Next slide please. On Slide 6, we present a 3-year trend of -- in transactions for all 3 segments. EFT transactions were flat versus the third quarter 2012. However, this flatness was the result of us not renewing the IDBI agreement in India as we shared with you last quarter. Excluding the transactions related to the termination of this agreement in India, transactions would have grown 10%. This growth was spread across a number of areas, including Serbia, Pakistan, Greece, Romania, China, India and Poland. Every -- epay transactions declined 3% driven by a decrease in transactions in the Middle East. You may recall in prior years, where we saw very strong Middle East transaction growth, but the value per transaction was a very low. Well, in the third quarter, we saw the Middle East volume decline because we were reluctant to match an unrealistically low competitive offer. After making a pro forma adjustment for the lost Middle East transactions, epay's transactions would have grown 4%, more closely aligned with the 6% revenue growth. The loss of these transactions did not significantly impact our business. Again, high volume, low price. The pro forma 4% transaction growth was largely generated from the United States, India and Germany. Finally, total Ria transactions increased 11% year-over-year from growth across all regions. Money transfers grew 17% in the quarter, including a 14% increase in transfers to Mexico and a 19% increase in transfers to non-Mexico locations. Transfers initiated outside the U.S. increased 18%. Non-U.S. growth was driven by a continued turnaround in Spain and Italy despite continued economic challenges. France, the U.K., Germany and the Nordics also contributed to non-U.S. growth. Next slide please. On Slide 7, we present our income statement on an as-reported basis. Foreign currency fluctuations modestly impacted this quarter's earnings not only on a year-over-year basis but also from guidance as I mentioned earlier. Year-over-year, the Australian dollar, the Brazilian real and the Indian rupee all decreased 12%, offset by increases in the Euro and Polish zloty of 6% and 3%, 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 that we continued our trend of consistently delivering strong growth in year-over-year revenue, operating income and adjusted EBITDA. EFT had an excellent quarter driven by revenue growth of 28%, adjusted operating income growth of 69% and adjusted EBITDA growth of 47%. These increases were driven by increased demand for our value-added products, strong performance of our brown label ATMs in India and continued network expansion. Operating income and adjusted EBITDA margin expansion resulted from higher-margin transactions, which are seasonally greater in the third quarter and improved leverage in the business. Epay delivered revenue, operating income and adjusted EBITDA growth of 6%, 19% and 6%, respectively. This expansion was driven by increased sales of value-added products in the U.S., non-mobile content, particularly in Germany, and the November 12 acquisition of ezi-pay. Partially offsetting these increases were declines in Australia and the Middle East, as well as from start-up costs related to our iTunes launch in Turkey and Russia. The increase in operating income also reflects the benefit from lower intangible amortization expense due to certain assets being fully amortized. Excluding this benefit, operating income growth would have been in line with revenue growth. Money transfer revenue increased 17%. Operating income increased 21%, and adjusted EBITDA increased 10%. This growth was from the increase in transactions I previously mentioned, which were the result of continued sales efforts and network expansion. Revenue and gross margin per money transfer posted increases over both the prior quarter and the prior year due to an increase in principal sent and effective rate management. I'll wrap up this slide -- in wrapping up this slide, I'll point out that each segment posted operating income margin expansions year-over-year while at the same time continuing to invest in more ATMs, more non-mobile product and online distribution. Overall, each of our segments contributed nicely to our double-digit consolidated earnings growth in the quarter. Next slide please. On Slide 9, we present our balance sheet for the quarter. The cash increase reflects strong cash flows generated from operations, as well as working capital changes related to timing differences in settlements within our epay and money transfer segments due to the quarter ending on a Monday. These increases were partially offset by debt payments. The 0x net debt to adjusted EBITDA multiple you see is a result of cash of about $250 million versus debt of about $250 million. This ratio benefited from strong free cash flow generation together with positive working capital changes due to the Monday quarter end. I expect this ratio will return to approximate historical levels going forward as the timing items change in the fourth quarter. Overall, this was a strong quarter for our business. I'll now turn it over to Mike.

Thank you, Rick, and thanks, everyone, who has joined us today. This third quarter was a really a repeat of the second. We had a great second quarter earnings, and the third quarter was even better with each segment producing high-quality growth and high-quality earnings. This earnings growth resulted in a new quarterly cash EPS record of $0.56 for the quarter, a 33% increase over the same quarter last year. Overall, we're very pleased with our business performance in the quarter. So let's go on now to Slide 12, and we'll talk about the first of our segments, EFT. On Slide 12, you can see this was an exceptional quarter for our EFT segment. Over the last couple of years, we have seen a seasonal lift in our EFT earnings in the third quarter, which has been in addition to our traditionally strong fourth quarter. When I talked to you last, I explained that by executing our strategy of adding new ATMs in high-quality locations and pushing our value-added products to these ATMs, we would see an even greater earnings lift in the third quarter this year. Our teams executed flawlessly, resulting in earnings, which exceeded our expectations. This 69% constant currency adjusted op income growth is particularly impressive since, as you may remember, this is on top of the 80% constant currency earnings growth in the same quarter last year. These results established the third quarter as EFT's strongest quarter, which combined with the strength from the other 2 segments make third and fourth quarter about equal earnings wise. Now if we could only find a way to get that first quarter to a similar seasonal high level, we'll be even more excited, but I think that's going to be a stretch to do. But let's move on to Slide #13, and we'll talk more on the details. We continue to expand our -- on Slide 13, we continue to expand our reach in Poland. This quarter, we signed and launched outsourcing agreements with BPH Bank and BOS Bank to provide cash forecasting, cash fill and machine maintenance on their ATM portfolios. Also in Poland, we signed an agreement with Getin Bank to provide cardless payout services to getting customers. For the past several quarters, we have been highlighting similar agreements for the service, which utilizes our Ria payout technology. As banks seek new and innovative ways to engage their customers, we are seeing increased demand for cardless payouts. So I thought I would walk you through how this works. Customers can login online to their mobile banking app and stage a withdrawal before they reach the ATM. The banking app on the mobile phone will generate a PIN the customer can use for the transaction. When the customer arrives at the ATM, they choose the cardless transaction option on the screen, enter the PIN, and the ATM will dispense the amount requested in the previously staged transaction. This is just another way that banks in Poland can serve their customers who continue to use cash for 85% of their purchases. During the quarter, we extended our agreements with Raiffeisen Bank in several countries. These agreements will allow us to continue to provide ATM and POS driving, manage services and Visa and MasterCard gateways agreement in Croatia, ATM acquiring services in Serbia and ATM outsourcing in Slovakia. Raiffeisen is an important customer, and we are pleased to continue our partnership with them. Finally, we signed an agreement with Citibank in Hungary to install automated deposit terminals, ADTs, in their branch location. The rollout of these machines will begin later this year. Now let's jump on to Slide #14. We've continued to add additional value-added products to our ATMs. In the quarter, we launched e-commerce acquiring and 3D secure issuing for AIK Bank in Serbia. This agreement will allow AIK merchants to provide secure online transactions to their customers. We also expanded our relation with Hipotekarna Bank in Montenegro to provide Paypass issuing and acquiring Visa EMV migration and POS bill payment. In Poland, we signed an agreement with Orlen, one of Poland's largest fuel retailers, to launch our first dynamic barcode printing on a receipt campaign. This functionality provides advertisers with an option to assign a value to a barcode, which is printed on the receipt at the time of their ATM transaction. Customers can then redeem the barcode at physical locations or for online goods, services or loyalty rewards. In the quarter, we deployed 553 ATMs, bringing our total ATM count to 17,795. In the end, Poland contributed to the largest of those increases. We continue to be pleased with the performance of our brown label portfolio in India, and we'll deploy additional ATMs as we find high-quality sites. Our EFT team remains focused on executing their strategy to expand our network and deliver additional products on our ATMs. Their success is highlighted in this quarter's seasonally high earnings results. It's worth saying again that this was a darn great quarter for EFT. Let's move onto Slide #16, and we'll talk about epay. Epay continued to grow in the quarter, delivering solid earnings. While at first look epay transactions decline may be concerning, this decrease was the result of the decrease in high-volume, very low margin transaction as Rick mentioned before. Excluding these transactions, epay would have been approximately a 4% growth, more closely aligned with the revenue. Continued focus on expanding our mobile operator solutions and non-mobile content resulted in earnings expansions again this quarter. Let's move to Slide #17, and we'll discuss the results in more detail. On Slide #17, you can see that we continued to expand our relationship with Sprint to include additional value-added products. The value-added products we provide to our mobile operators provide them with enhanced visibility to their retail doors. In the quarter, we introduced an additional product that allows Sprint to streamline their payment processes with their retailers. We will continue to focus on developing new value-added ways to work with our mobile operators. During the quarter, our team in the U.K. launched a bundled mobile top-up and sim card product for Lyca Mobile in Carphone Warehouse. By bundling these products, mobile operators will achieve higher sim card activation rates. Finally, in Italy, we have signed another large retailer, Basko Spa, a hypermarket chain. In addition to selling our suite of mobile top-up products, we added prepaid TV, which is a popular choice among Italian users, particularly during the soccer season. Now let's move onto Slide #18, and we'll talk about the non-mobile product expansions in the quarter. Last quarter, we announced the launch of Google Play in Germany. Since the launch, we have been able to expand this content to our existing retailers within the country. We have seen nice traction from Google Play sales in the quarter, and going forward, we believe this content will contribute nicely to earnings expansion. With the addition of Google play, we now distribute 2 of the most powerful brands, Google and Apple, serving the strong majority of the world's smartphones and tablets. We added our existing gaming and software content into new retailers across Europe. Contents such as Microsoft Xbox, Microsoft Office and Adobe are starting to take hold, and we're beginning to see increased sales of these products. In Brazil, we launched a gift card model with Vivo, a large mobile operator. By partnering with epay, Vivo will be able to innovate their store offering and increase sales in their retail locations. We also signed an agreement with Steam to provide prepaid top-up of Steam accounts across most of Europe. Steam is the world's largest gaming platform, allowing users to choose from more than 2,000 games. With Steam credits, users can purchase virtual products such as lives, shields and other power ups within their game. As you can see, we have been effective in our strategy to expand our content. This successful execution, combined with our value-added mobile operator solutions, resulted in solid growth for the third consecutive quarter. Overall, a nice quarter from our epay team. Now let's move on to Slide #20, and we'll talk about money transfer. Over the last couple of years, Ria has delivered consistently strong earnings growth. In the third quarter, the U.S. maintained its growth trajectory, and we continue to experience expansion in important European markets like Spain and Italy. These results highlight the great efforts our teams around the world have made to expand our network and improve brand awareness. Let's move onto Slide #21 so that we can discuss the details. Slide #21 shows the growth in our Ria network in the quarter. Our network now includes 207,000 locations, a 22% increase over the same quarter last year. We are excited to announce the launch of bank deposit service to India through our partnership with Kotak bank. I would like to take a minute and explain why this is such an important agreement for Ria. World Bank estimates that remittances to India will reach $71 billion in 2013, making it the world's largest remittance corridor. This agreement with Kotak represents our first reliable service to India and allows it to deposits funds into any bank account in the country. Additionally, different than our traditional cash-preferred customer, many Indian immigrants prefer to use technology to send funds home. This agreement, combined with the recent investment in launch of RiaMoneyTransfer.com, provides an added component to our service beyond what we have historically provided. After the addition of Bank Rakyat earlier this year, we have seen strong demand from our Indonesian customers. During the quarter, we partnered with Bank Negara to add cash pick-up service to 4,600 locations, as well as cash deposits to accounts within the bank. The new agreement will strengthen our footprint in this important corridor that receives more than $7 billion in annual remittances. We also continue to capitalize on synergies between our segments. This quarter, we are able to use Euronet's bank relationships to add more than 700 cash pick-up locations in Poland. We also continue to add money transfer payout to our ATMs and now have several thousand machines offering the service. In addition to these launches, we signed 16 correspondences in 12 countries during the quarter with the most notable locations in Latin America, the Caribbean and Africa. Next slide please. On Slide #22, you can see a breakdown of Ria's transaction growth in the third quarter. Rick highlighted money transfer growth in his comments, so I won't repeat that here. However, I would like to expand on a couple of items. Our money transfer growth of 17% to 7 million transactions was a new quarterly record for Ria and also represents the 10th consecutive quarter we have delivered double-digit money transfer growth. Non-money transfers also continue to perform well. The decline of 4% represents the discontinuation of a high-volume, low-margin product that we were distributing in Spain. Adjusting for the removal of these transactions, non-money transfers grew 40% over the same period last year. The bulk of this growth was driven by a 42% increase in check cashing transactions in the U.S. and strong growth of our prepaid top-ups in the U.S. and Italy. Our Ria PIN-less product contributed to 2/3 of the growth of top-ups in the U.S. for Ria for example. Overall, this was another strong quarter for our money transfer segment. Now let's move onto Slide #23 to wrap up the quarter. On Slide #23, you can see that we have delivered cash EPS of $0.56, a 33% increase over the same quarter last year, and we exceeded our guidance by $0.02. This record cash EPS was made possible by contributions from all 3 segments. EFT benefited from seasonally higher sales of value-added products, brown label ATMs in India and continued network expansion. Epay continued to grow through sales of non-mobile content and prepaid sales in the U.S. Money transfer earnings grew from network expansions and transaction growth in all send markets. Our balance sheet remains strong with good cash flow generation. And finally, our fourth quarter adjusted cash EPS per share, assuming constant foreign exchange rates, is expected to be $0.57, getting us within tick of $2 for the full year. With that, I conclude my comments, and I'll be happy to answer any questions. Operator, will you please assist?

[Operator Instructions] Our first question comes from Peter Heckmann of Avondale Partners.

Mike, could you comment on Ria.com? Was it active during the quarter, actually, sending transfers? And is this something that you're still incubating a bit and retaking volume or you can get it but not actively marketing? And if so, when do you plan to start actively marketing the service?

We are taking some transactions now, but they're measured in hundreds of transactions in a month as opposed to tens of thousands or millions. We're still kind of bringing it through its paces. Probably, we'll do so through the end of the year. There's new version of it that we're going to release, that we probably could release in December, but we'll probably wait until January until after the holidays. And then we'll start to do a little bit more aggressive marketing with it, so kind of small, not big contributors so far, but everyday, we learn more even with small numbers.

Great, great. And then as regards Steam, seems like an interesting new content provider. Were they previously using a competitive vendor? Is this a takeaway? Or is this a new method of distribution for them?

No, their new to Europe, and they're a big play. I don't know how much time you spend on your gaming console, but they're big. So it's going to be a nice, new piece of content that we'll add to Europe.

Okay. And then last question, I'll get back in the queue. Can you give an update on the Pure Commerce acquisition? And did that have -- that contribute to the strong margins and strong revenue growth in EFT?

So they've got -- actually, as it turns out, the pipeline that they had when we bought them seems to be quite valid. We're closing those deals as we can. We're implementing them. Implementation is always a challenge because there's always things in and out of our control. But we should leave this year with a pretty good run rate. It didn't contribute much at all this quarter. We should see more contributions really in Q4 with the stuff that we brought live throughout Q3.

It's been a good pipeline.

Yes. And once again, Rick reminded me. I mean, they've got a great pipeline. So we're still really excited about this opportunity.

Our next question comes from Mike Grondahl of Piper Jaffray.

First question is really, if you broke your ATM business in to sort of couple of buckets, India, the tourist opportunity, Central Europe and really Western Europe, can you kind of talk about how each one performed against your expectations? And maybe specifically, with India, can you comment on what the operating profit was from those?

Well, we won't -- we don't really break down the op profit of the 3. We hold this as kind of competitive information. But I'll give you some kind of generalities. First of all, India's just hitting right where it's supposed to hit. Those guys made a plan for this year, and they're right on top of it. So we're real happy we'll see significant growth in op profit generation this year over last. So we're happy with it. We kind of stumbled a little bit, didn't get out of the gates as quick as we could of about 2 years ago, but things are working really nicely now there. With respect to the other markets, when we do outsourcing agreements, you saw that we renewed all those Raiffeisen ones, we added a few in Poland. We'll continue to do that everywhere we can because those outsourcing agreements are the slickest money we can earn because we have overhead that's pretty much paid for, and so it's all kind of incremental earnings to us. With respect to our own implementations and rollouts in all these countries, we don't necessarily shoot for just tourist locations. We just try to shoot for busy locations. The one thing that has struck us is that there's a lot of opportunity across Western Europe and even still in Central Europe for new ATMs. And it's a -- really, it's a one at a time battle. So people ask, "How many will you put in a year?" I could say, "Well, I'd love to put in thousands and thousands." But I think the reality is you can only put in what you can put in. We're growing out our sales teams to find more sites, to put them in quicker. Every country has its own nuances and challenges whether for permissions and so forth. It's pretty tough in Italy to cut a hole in a 15th century building to put an ATM through it. So we kind of deal with all of them but still see -- I mean, I still see a lot of virgin turf us. We're the first guys on the block. I think we're doing our own ATMs at something like 13 or 14 EU countries, so we'll just continue to build them out. You'll just see more of that every quarter. But as you mentioned with tourists, it's not just tourists, but it's just travelers. They could be guys from their own country utilizing our ATMs in a new city or whatever. That's one of the reasons why Q3 is strong, is because there's a lot of travelers running around. They need to get cash for their vacations, and our ATMs are in great locations.

Commuters as well.

Yes, commuters. I mean, it's not just foreigners. It's locals. But the point is when people are out with their families on their "holiday" over there, they need cash.

Got you. And then Google Play, can you comment a little bit how that rollout went in Germany and kind of what your plans are to expand that over the next year?

Well, our -- okay, with respect to Germany, it's now pretty much rolled out over most all of our retailers in Germany. And it was, one retailer at the time, one store at a time, et cetera, just like you'd rollout any new product. But we pretty much got Germany covered. When you look at where we make our money with some competitive products to that, it's not just in Germany, but it's in other countries as well as you might -- as you're kind of intimating here. We expect to start to roll this out in multiple countries after Germany, beginning in the first quarter of next year, and a lot of this is just based upon Google being ready to do so.

Our next question comes from Chris Shutler of William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: So first on the EFT segment, Mike, really just curious that, that exceeded your expectations, exceeded ours. Just what were the primary drivers of the incremental outperformance there?

Well, I mean, we've got more ATMs into the quarter live or maybe we'll say in second quarter and then the first part of the quarter faster. So we were able to get some revenues. We just saw just a lot more travelers running around Europe from all over the world. That was helpful. It was kind of just across the board, Chris. There wasn't one country, one thing that did it, but it looked like this was truly hitting on all cylinders of good hard work and a little bit of good luck, too. And let's not forget, too, that India now is -- they're really coming into their own. We've got a strong manager over there. He's doing a great job, and he's just -- they're just -- they're ripping it up there, too. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay. And then on the $19 million noncash gain that was related to the continuing consideration in EFT, can you give us a little bit more detail? Was that related to Pure Commerce? Or what was that related to?

Yes. And it -- Chris, it's really just more of a nuance to way the accounting rules are written related to booking that kind of contingent consideration, so...

That's the reason we left it out because it's not cash either away, so we just kept it out. Christopher Shutler - William Blair & Company L.L.C., Research Division: Yes. But does that mean...

You do have to -- by GAAP, you have to report. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay. But that doesn't mean that Pure Commerce is underperforming your expectations?

No, no, I mean, as Mike said, we've got a nice pipeline, and the business is signing up a number of really nice marquee type of customers, and so we continue to be pleased with that business.

Yes, their CEO over there and his staff are just consummate, really intelligent sales guys. They're able to continue to bring in these new customers. They're just doing a great job for us. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay. And then last question for me on the epay segment, just wondering how the pipeline really looks for the new -- for new non-mobile content in countries. And then secondly, in the U.S., the -- you've seen pretty good prepaid mobile growth there. Just to what extent do you think that, that growth can continue over the next several quarters?

Well, we're -- we -- it's funny, you keep breaking these records, and then you got a bigger hurdle to go next year. But we have a lot more non-mobile content to put out into a lot more countries. As we mentioned, a prior question was just on the Google Play stuff, so there's, what, 4x, 5x, 6x as many Android phones as there are iPhones in most of the European countries. We've only rolled that out in 1 continental European country, Germany, so lots of rollout there, lots of new things like Steam and other ones that we're coming up with. So we'll just keep on punching at it. Christopher Shutler - William Blair & Company L.L.C., Research Division: And then in the U.S.?

Yes. Kevin might have an additional comment.

Yes, I was just going to say, Chris, the additional services that we've continued to bring to Sprint and expand with Sprint, we're obviously pitching those types of solutions to differentiate our offering across mobile operators in Europe. It's a long sales cycle, but we're cautiously optimistic.

[Operator Instructions] Our next question comes from Jason Nacca of Sidoti & Company. Jason Nacca - Sidoti & Company, LLC: So first, as you guys continue to diversify revenue by offering some new content, could you approximate what percentage of epay revenue is now made up of non-mobile content?

Yes, it's a little bit over 30%. Yes, a little bit over 30%. And that's really -- we measure that, Jason, on gross profit as opposed to revenue because in some cases, we have to do gross accounting revenue, et cetera, but the real money that we make is on a gross profit basis. So it's a little over 30%. Jason Nacca - Sidoti & Company, LLC: Got it. All right. Also, I'm trying to get a better idea of the performance of the money transfer segment, and I'm trying to break down the growth in revenue this quarter. So was it more of a function of growth in locations, the operating environment or maybe some market share gains as well?

Well, you can see by our growth numbers and you can go check World Bank numbers or Bank of Mexico numbers or whatever, we continue to grow market share. And we do that because we are adding new locations. We're adding new corridors. The stronger euro certainly didn't hurt because as our European customers send money to their relatives around the world, a stronger euro buys more of the local currency, so all these things add up to -- added up to a good quarter. Wasn't a one thing all by itself, but just basically, good hard work, market share gains, everything we've been talking to you about over the last 10 quarters, the solid growth there really just continued. Jason Nacca - Sidoti & Company, LLC: Okay. And regarding those market share gains, did you say it's more a function of some the market share gains from larger players or just the overall pie?

I can't tell you that for sure. I mean, if you can -- when everybody produces their numbers this quarter, you can find out how much they grew versus how much we grew. And if we grew faster, probably we took a little from them. But it's a big market out there. The 3 or 4 -- the 3 biggest players, ourselves, and MoneyGram and Western Union, probably control 25% of the world's market. So that means there's 75% of other market share to be gained. So there's just -- it's a big, wide world out there and we continue to be quite competitive and grow nicely.

Our next question is a follow-up from Mike Grondahl of Piper Jaffray.

Is there any update or any new learnings from the Swiss Post mobile banking opportunity that you guys had earlier in the spring?

No update other than -- I don't know, Kevin, do you have any extra?

No. It's continued to perform well. We're very pleased, as I've said on previous calls. We're in discussions with them about adding more content to that channel and we're in discussions with other banks.

The nice thing is we've got a great marquee customer, so we're going to try and pitch that to other folks.

Got you. And Kevin, are the banks coming to you kind of seeing that product in the marketplace or big banks kind of across Europe? Or what are you targeting there?

Yes. It's a mix. So one of the things that made PostFinance so successful is the fact that they saw strategic value in doing it. So we actually have probably more interest than we want to do. So we're being -- we have the opportunity to be selective about who we pick as our partner. And we vet that through our sister entity with the EFT division. And so we will collaboratively work together on figuring out how we take that to market.

Great. That's a good position to be in. And then, well, I think it was a little over a year ago when you guys bought back a couple million shares, and I knew there were some limitations on the credit facility that, I think, it was about December of '13 when you could be back in the market buying shares. Can you just update us on where that stands and just kind of your thoughts on capital allocation?

Well, we always look at share buybacks as a potential use of the excess cash that we're throwing off. We have to live within, as you described, within the terms of the credit agreement. We're not quite opened yet, and more will open between now and the end of the year, so we would have that flexibility. We haven't made any decisions to do so yet, but for sure, by the end of December, I think maybe in the beginning of December, we would have that ability to do so to a large extent.

Yes, technically the math goes through to December 31, just the way the calculations work in the agreement. But fourth quarter, that will lap that when we closed the fourth quarter and first quarter will be back to the prior position.

Okay. And then lastly, I think last quarter or the quarter before, you were talking about, in regards to the Pure Commerce, some of the duty free shops in airports that were rolling out and whatnot, how did that go?

Okay. Well, let me just tell you about -- I'll tell you about our largest rollout this year. And that was with, Louis Vuitton owns this company called DFS, which stands for duty free shops. And they basically ran out all the real estate of a duty free shop area within an airport, okay? and then they turn around, and then they rent that to all the people, Ferragamo or Coach or Louis Vuitton or whoever it might be. And they received the concession for 4 large airports in the U.S.: SFO, LAX, JFK and Honolulu. And we rolled those out. It was a joint effort of the Pure Commerce staff plus people from Ria, people from epay and about anybody else we could pitch in because it was such an enormous rollout challenge in the -- mostly in the second quarter of last -- this year. And that went out just, I guess you could say pretty much flawlessly. Although it was the first big one in the U.S., and there was a lot of challenges technically to get around a lot of barriers that we had. But we've rolled it out, and we'll continue -- and so that's the big one, and we've got lots of other ones in the process, nice strong pipeline. So if you go to LAX, go borrow some foreigner's card and go buy something, will you?

I'll try, Mike, I'll try.

And make sure you choose the -- choose our foreign currency option.

And then don't let the better part of restraint hold you back on the volume.

Yes, yes, think about your wife and all the perfumes she wants.

Our last question comes from Peter Heckmann of Avondale Partners.

I just have one follow-up. I'm seeing you roll out cadooz in France. Is that something because France is a market that's more accepting of vouchers? Or is that something that was a cross-sell with an existing customer in Germany?

Kevin?

Yes. So no, we picked -- we were trying to figure out how to expand cadooz and which market we want to do it in. Obviously, we want to do it in a market that the competitive landscape was such that it made sense and also that there was a large employee incentive culture. So France was the right combination. So that is a pure organic expansion of the cadooz business into France and then, obviously, leveraging some of the existing relationships we have in France with merchants.

All right. Thank you, Pete, and I think that's it for the day. I thank everybody for their time. Operator, thank you, and I'll look forward to talking to you in about a quarter.

You're welcome, sir. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.