Greetings, and welcome to the Euronet Worldwide Second Quarter 2014 Earnings Conference Call. [Operator Instructions] 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, Vincent. Good morning, and welcome, everyone, to Euronet's quarterly results conference call. We'll present our results for the second quarter of 2014 on this call. We have our CEO, Mike Brown; our CFO, Rick Weller; and Kevin Caponecchi, the President of Euronet Worldwide on the call. Before we begin, I need to make our forward-looking statements disclaimer. 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 technological developments affecting the market for the company's products and services; technical issues associated with the operation of our complex processing systems, including security breaches; changes in ATM and other transaction fees; and changes in laws and regulations affecting the company's business, including immigration laws and anti-money laundering regulations. 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 to the Investor Relations section of its website. Now I'll turn the call over to our CFO, Rick Weller.

Thank you, Jeff, and thanks to everyone joining us on the call today. I'll begin my comments on Slide 5. This was an excellent quarter for Euronet. We delivered revenue of $395 million, operating income of $34 million and adjusted EBITDA of almost $55 million. Our cash earnings per share was $0.58, $0.01 ahead of our guidance, another great quarter to continue our streak of consistent strong earnings expansion. This double-digit growth represents the sixth consecutive quarter, and except for a couple of quarters, the third year of quarterly results where we delivered double-digit year-over-year growth in cash earnings per share. We'd like to take a minute to reflect a bit on the $0.58. As you saw in our press release, our corporate SG&A expense in the quarter was $4 million greater than the prior year. This was the result of 2 nonrecurring items: a settlement related to a dispute resolution and acquisition-related share transfer costs. These 2 items accounted for about $0.06 or $0.07 a share. Offsetting this $0.06 or $0.07 was about $0.03 or $0.04 of tax benefit, about half of which is nonrecurring and the other half from favorable generation of earnings in low-tax-rate jurisdictions. So you can see that if not for the $4 million nonrecurring expense, offset by some tax benefits, the $0.58 could have been a lot stronger. Knowing the significance of these net nonrecurring charges, I hope you can gain yet a greater appreciation for the strength of the 3 business segments' results, the strength of which will fuel the third quarter. As it relates to the segments, I will provide more insight into the results as we get into segment reporting over the next couple of slides, but overall, another great quarter for EEFT. On Slide 6, we present the 3-year transaction…

Thank you, Rick. We're going to have our business overview right now, but I just got few kind of global comments I'd like to make. First of all, I've got to thank all the people in this company for all the hard work they've done. You can see that we have had tremendous results here in the second quarter, and we're expecting Q3 to just be wonderful. So that wouldn't happen without the work that we've done over the last several quarters preparing for this. But I'd like to thank them first. It was a great effort across all our segments, all our divisions. We had consolidated double-digit operating income growth. EFT and Money Transfer produced double-digit revenue and operating income growth. epay showed growth in the quarter. We had 2 significant transactions that take a lot of time and effort from everybody, and that was bringing live our Walmart-2-Walmart product and also acquiring HiFX. Both of these will continue to contribute to earnings in future quarters. As Rick mentioned, our $0.58 is really not even a full reflection of the strong performance in the business because of those -- some of those onetime fees. Our strong third quarter guidance shows that our momentum will continue, and it shows that we're on the right path with our strategy. Overall, the second quarter was a great quarter, and we've got a lot of momentum. So let's move ahead now to Slide #12. As you can see in Slide #12, EFT had another outstanding quarter. The team continues to add more ATMs and develop new innovative products that add value for both Euronet and our bank partner. The focus and the dedication to providing the best value and broadest product portfolio to our banks is what distinguishes Euronet from our competition. Let's…

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

Could you give us a bit of a feel, maybe a range of -- or quantify the revenue recorded in the quarter related to HiFX? I mean, would I be way off-base using something in kind of a $6 million to $8 million range in terms of acquired revenue in the quarter?

You probably wouldn't be way off-base.

Great. And then, can you talk about DCC opportunities, maybe a little bit of the launch of the duty-free locations? I've seen those in the wild, and it seems like a nice opportunity. Can you update us there, any other major contracts that are ramping? And then kind of give us an idea of what kind of revenue, I know it's a high-margin product, but as a percent of revenue, where you think you might be on a run-rate basis by the end of the year?

Well, Pete, we don't disclose that as a part of our consolidated results. But to talk a little bit more about that product, I mean, in some of our prior quarters, we announced some agreements with significant acquirers like First Data, for example. Mike mentioned this list of high-quality hotels that we've signed up over in the Asia-Pac market. We've talked about the DFS, duty-free stores relationship that we have, which is a part of the Louis Vuitton group. And you may be referring to the terminals in the wild that you may see like in either San Francisco or L.A., JFK; airports that, at least, on a U.S. basis, a number of us may go through. And so we're -- and Mike made a comment here as well about rolling the same technology into our European bank customers because this technology really gives the customer a much easier way to make that selection. It gives the retailers a much more efficient way to present the product to the customer, to move customers through the queues and things like that. And so we're excited about it. We continue to see more and more retailers signed up, more and more acquirers. So...

And it's the best technology out there. It's transparent to the customers, it allows higher opt-in rates for the retailers, so there's more money to be made by all people. Customers like it because they don't feel like they're getting nabbed by somebody with something they didn't understand. It's just generally good technology, but it takes a while to roll all this stuff out because you have to have, in conjunction not only with what we do, but we have to have an acquirer on board, the retailer's own POS or cash register system on board as well. So it just takes a little bit of time to connect all the blocks together. But we're rolling it out, as Rick said, in all these new retailers around the world more, so we're excited about this particular product.

Great. And then last question, I'll get back in the queue. But can you update us on the -- and I don't believe you gave it, but the ATM backlog in terms of outsourced ATMs that you're going to bring on to the network, as well as any idea of what you might do in terms of...

Well, we don't have much of a backlog right now. I mean, we've got about 1,000 or so in backlog. But our goal is let's see if we can get to that 20,000 by the end of the year, which would mean we'd have to add 700 ATMs in the last 2 quarters. That's definitely possible. So we're out, and we're at it.

And our next question comes from Mike Grondahl of Piper Jaffray.

Could you comment a little bit on the India ATMs and sort of how they've been progressing towards profitability kind of as a whole? And -- go ahead.

Well, I'll answer that one real quick first. Remember when we put in a bunch of them, 350-ish last quarter of last year, and in Q1, we saw a little bit of a -- or in Q4, actually, we saw a little bit of a dip in our earnings in the EFT segment because we threw in so many and they have a ramp-up. And at that time, I told everybody that the ramp-up was probably kind of like 6 or 7 months to get to breakeven. But I told you last quarter, that as we look backwards after the first quarter, our ramp-up was actually a bit shorter than that. We were kind of hitting breakeven in that kind of 4 or 5 months kind of timeframe, so kind of beating my estimate by about a couple of months. I think in general, that's kind of where we are. The new ATMs that we're putting in take about that time -- that long to get to breakeven. So they're burning cash, understand, they're burning cash until you get to breakeven, so they do drag down our results. But what we're finding is we still find good sites. We know what we're doing. We're getting into new territories. We're learning the ropes of the new territory, sometimes with a few knocks on our foreheads, but then we go back in and adjust what it takes to be successful in a given area. So in general, still good contributors. We're going to still keep putting them in because it looks like it's clockwork. We, of course, hit good ones a heck of a lot more often than we hit bad ones, and we want to make sure we minimize those bad ones.

Okay. In terms of the Money Transfer transactions, that division, the $11.5 million, can you break those out at all between core, HiFX and Walmart?

No. I wish I could, but for competitive reasons, we decline.

Okay, okay. And the cash on the balance sheet, how much of that you need to run the business?

With the HiFX in there, because that's added about $100 million there, I'd say probably in the ballpark of $200 million to $250 million.

Okay. And then you mentioned some cost-saving measures in epay. Can you just give a little bit of sense on what those are, what you're doing there?

Well, we take a combination of maybe markets where we've had a little decline in volume, that we go back and take a look at those operations, that's one. Two is we take a look at rationalization of different processes and activities across the countries as to get more...

Efficiency.

Yes, efficiency or consolidation of those pieces. No particular program or initiative like that, Mike, but just rationalization as we take a look at our business and trying to be thoughtful on bringing together operations for efficiency purposes.

And our next question comes from Tim Willi of Wells Fargo.

A couple of quick questions. First is, I saw -- I noticed in your slides around epay, you have Xbox in Brazil, and I think that was something you had knew was coming, maybe took longer than you would have thought for a variety of reasons. How do you guys feel, I guess, about Brazil now after sort of some fits and starts with the Ativi acquisition a couple of years ago, and what's going on with distribution? Do you feel like you're close to cracking the code or have cracked the code to really turn that into a profitable, growing market for you from this point?

The thing that was the -- that we had 2 kind of bad things happen at the same time, one of those perfect storms. One is the -- that some of the mobile operators actually fully changed their distribution channel and decided they didn't want national distributors, they just wanted a whole bunch of little local guys. So that was a piece of it. And that was kind of what took away the earnings we were making at the time we bought them. We have always been excited about Brazil because it's a large market for these non-mobile products. Then what went haywire there is the Brazilians passed the law that made it very expensive to bring content -- royalty-based content into the country. And so the taxes on that became so burdensome that the large content providers like Apple, Google, et cetera, et cetera, Microsoft, just decided they weren't going to distribute down there. And so now, I think that that's starting to crack. Brazil's a big market, they've got to figure a way to get in there and so they have been dealing with these issues. We're ready to distribute right now. I mean, we're connected to the largest retailer in Brazil and to all their cash registers, I'd love to distribute more products. So we'd see a start to -- maybe there's a change in the nasty armor, and this is going to come back. I don't see it as changing our results markedly over, say, the next 6 to 12 months, but we're keeping our fingers crossed. As soon as that dam breaks, I think there's going to be some decent growth for us.

Great. And then my second question, again, staying on the non-telephony. With Google Play, I guess, you're probably now 3 quarters or so into your first rollouts. You continue to add more countries. In terms of the ramp of volume at maybe some of those original rollouts, and if you can think about benchmarking it versus what you see with the iTunes franchise, is there any way just to sort of think about how steep that curve is, how quickly it's occurring, especially as you continue to add new countries and how quickly those could ramp to pretty decent volume levels for you?

Well, so the first Google market that was launched in Continental Europe was Germany through us. And we launched in July of last year, if I remember correctly. And so it was -- and that product was available then through Christmas time last year. So the German -- our German numbers are not bad numbers, okay? Understand that, for Google in particular, it's an Android product, Android phones usually are less expensive than iPhones. So you see a higher propensity or higher balance of Android versus iPhones in Southern Europe. And so as we launch in countries like Italy, Spain, et cetera, that should be a benefit to us. But we're just starting to ramp up. These -- the customers in these countries almost haven't even seen a gift card yet, let alone a Google gift card. So it takes a little while to ramp up, but the early signs are very promising. If you take Germany as the yardstick, it looks like people are going to get into it. Another thing that we mentioned to you is the App Annie report. Now what that says here is even though we were selling Google Play a year ago, there weren't very many applications that you could buy. Most of the applications were the free ones. And so -- but they've -- about -- I think it was about double their number of revenue in the first quarter, which means that these new apps are available. And so there's going to be more ubiquity of kinds of products and more potential to sell more stuff. So we're excited. We're getting it all in, in kind of the first and second and third quarters of this year. So that we -- maybe people will know about it by the fourth quarter, and fourth quarter is always a good market for gift cards.

Great. And then I'll just ask one last one and hop off. With HiFX, I know you talked about market expansion with that platform when you acquired it. So just sort of curious as we think about the 3Q guidance and try to extrapolate a bit further on that acquisition, are there investment costs that we should think about in the Money Transfer business that would have any kind of impact around margins? Or would expansion costs for that platform not really show up in the P&L to any great degree?

I don't think to any great degree, no.

Our next question comes from Chris Shutler of William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: First one is just on the -- on the Q3 guidance and the comments on Q4, Rick, could you just kind of review for me the puts and takes on why Q4 would be potentially a little bit lower than Q3?

Well, I think it really speaks to the strength of the seasonality in the third quarter that we're seeing. It's across our -- we see good strength in all 3 of our segments in the third quarter and then that starts relaxing, but maybe a little bit -- well, certainly, a lot more strength out of our EFT segment in the third quarter from higher vacationing, traveling-type of movements that you see in the business. And that drives more transactions, more value-added transactions, more purchases in airports as people are going through them and things like that. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay, got it. And then...

And you might remember, Chris, it was -- I made a comment on my Q3 call, I think last year, where I said that Q3 was going to give Q4 a run for its money, even last year where we're just a couple of pennies off of Q4. So as Q3 -- and as our EFT division continues to have these stunning results, it's just -- it does push more into Q3. My only goal in life right now is to try to figure out how I can make my ugly Q1 look better. So it's a bit of -- it's just seasonality and it's growth. We're throwing out more ATMs, and we're getting more revenue from them. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay. And then sort of a related question, Mike, I guess kind of following up on Pete's question earlier on DCC. The constant currency revenue growth in EFT was 22%, I think, in the quarter; transaction growth was 11%, if you exclude the India issue. So to what extent does that delta do to DCC or other value-added services? And to what extent is it related to maybe rolling out more company-owned machines? I'm sure it's a combination of both, but is it considerably more related to one or the other?

Well, it's actually kind of both of them because, I mean, our network expansion has been a key to this growth. As we add more ATMs, then we have more ubiquity around the continent. And in India, we're just acquiring more ATMs -- I mean, more transactions. So I'd say at the -- but also, DCC is a -- Pure Commerce is actually starting to account for something this year. Last year, it didn't give us really anything. And this year, it started to mature. We're starting to get these installations in at these airports and so forth, which take, like I said, a while to do. But once you get them on, you turn on the switch and you got a transparent method to extract revenues from customers. So all this is kind of hitting at the same time. I wouldn't say one's tremendously bigger over the other, it's just all these together.

Yes. I think when you put all of it into the mix there, whether it's rolling out a value-added product like the loan product that Mike mentioned in Poland, like the iTunes and Google Play kind of products that we're rolling into the banks, those are other kinds of products that we can get nice margins and revenues off of that really complement the, let's say, lesser value, what I might call, a basic interchange-type of transaction. So it's consistently looking for the way to find a way to make more money per transaction across all of our transactions.

We're trying very hard not to be a one-trick pony. Christopher Shutler - William Blair & Company L.L.C., Research Division: Yes, understood. And then just 2 questions on Money Transfer, if you don't mind. First is just the -- can you guys quantify the impact of the investments that you've made in -- I think you called out digital, Walmart and professional fees. Can you quantify that, and how much of that is kind of nonrecurring as we head into Q3?

Well, I think we've said in the past that we've had somewhere upwards to a couple of million dollars a quarter going into our digital investments. We haven't specifically said what we're putting into the Walmart-2-Walmart program there. But I think in the first quarter, there was a delta of, call it, $3 million to $4 million in there. And we've said it's probably about half Walmart-2-Walmart and half digital there. So that gives you a little bit better perspective around it. We would expect that there -- that the expenses to support the Walmart-2-Walmart product will be yet a little higher in the third quarter because, a, we'll have a full quarter of it in there; and b, we continue to do things to make sure that we're properly positioned to support the product the way that we should. So a little bit more, but not in a significant fashion in terms of incremental spend there on the support of the Walmart-2-Walmart product. Christopher Shutler - William Blair & Company L.L.C., Research Division: Most of the incremental compliance and customer service cost is already in the Q2 number, correct?

Oh, absolutely.

Absolutely.

And not only that it really kind of goes up as your quantities grow, as Walmart-2-Walmart becomes a bigger and bigger product for Walmart, you need a little bit more compliance horsepower because there's customer service calls and compliance checks and that kind of thing. Christopher Shutler - William Blair & Company L.L.C., Research Division: Yes, makes sense. And then just last one, guys. Mike, any kind of anecdotal evidence that you can share with us on the Walmart-2-Walmart product driving conversations with additional retailers?

Well, it certainly has. I mean, the reality is any big retailer out there ought to be paying attention to the largest retailer in the world. And the largest retailer in the world, I'll tell you, I've dealt with these guys, they're very professional and very smart. So we are talking to the people, both here and abroad, and we're using this as a -- if they're not calling us, we'll try to call them. But this was a long close cycle and a long kind of education cycle for that retailer himself, and so -- or itself. And so we'll just continue to do that. We don't see any -- I don't expect another Walmart-2-Walmart kind of a big deal to close in the next several weeks, but we're working on it.

We have a follow-up question from Mike Grondahl of Piper Jaffray.

Two questions. One, what's the investment that you guys have to make in sort of RadioShack or Rent-A-Center, and how do you think about transactions going forward from that? And then, can you just comment if HiFX and Walmart added to operating income in Money Transfer?

Let me take a couple of easy ones here. HiFX, from a consolidated basis, didn't add much to our business because we had deal fees to largely offset the income that came in there. We did get a little contribution into the business from Walmart-2-Walmart business. And then as it relates to the RadioShack and Rent-A-Center type of stuff, I put those guys in the category of good, like a lot of our other customers, that they in and of themselves are not home runs per se. But it's just a great customer with national kind of exposure, and it's something that we can bring to them more than what they've had heretofore in terms of product. So I wouldn't put anything in the category of being over the top, but it's like building a brick building, you got to have a lot of parts that add into the piece there. And as Mike said, it's not -- whether it's in epay or EFT, it's not being a one-trick pony, it's having lots of products with lots of retailers to have a good, strong business.

All right. Well, that will end our call for today. To all the people who listened in for the last hour, I thank you for your time. And we will look forward to talking to you in about 90 days. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your program. You may all disconnect. Everyone, have a great day.