Euronet Worldwide, Inc. (EEFT) Q2 2014 Earnings Report, Transcript and Summary

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 trends for each segment. EFT transactions grew 8%, or 11% excluding the loss of the IDBI agreement we told you about last year. This growth was spread across all markets, with the largest increases coming from Europe. The underlying 11% transaction growth was consistent with the 12% ATM network expansion. epay transactions increased 7% year-over-year, primarily from growth in India and Germany, partially offset by declines in Brazil, North America, the Middle East and the U.K. Finally, total transactions for Ria increased 29% year-over-year. Money transfers grew 35%, driven by organic growth across Ria's markets, together with the addition of the Walmart-2-Walmart product and the acquisition of HiFX. Non-money transfers increased 7%, largely from check-cashing in the U.S. and Canada. This represents the 13th consecutive quarter Ria has achieved double-digit money transfer growth. Next slide, please. On Slide 7, our results -- we present our results on an as-reported basis. The foreign currency fluctuations moderately impacted our results, driven by increases in the British pound, Polish zloty and European euro of 10%, 6% and 5%, respectively; while the Brazilian real and Indian rupee each declined by 7%; and the Australian dollar declined by 6%. To normalize the impact of these foreign currency fluctuations, we have presented our results adjusted for foreign currency changes on the next slide. Let's move to Slide 8, we will -- where we will talk about some constant currency results. Here, you can see it was another excellent quarter for the EFT segment. Revenue increased 22%, operating income increased 37% and adjusted EBITDA increased 24%. This growth was driven by a 12% expansion of our ATM network in Europe and India, point-of-sale, dynamic currency conversion transactions and other value-added transactions. The deployment of profitable ATMs and the continued expansion of value-added products and services drove an expansion in EFT for both its gross margins and operating margins year-over-year. epay revenue grew 1%, operating income grew 11% and adjusted EBITDA grew 10%. These results reflect increased demand for non-mobile content and cost-saving measures implemented in certain markets. epay's continued focus on non-mobile products drove a year-over-year expansion in gross margins and operating margins for the second quarter. Money Transfer delivered revenue growth of 31%, and operating income and adjusted EBITDA growth of 20% each. This expansion was driven by organic growth from the Ria business, the successful launch of the Walmart-2-Walmart product and the acquisition of HiFX. Revenue growth outpaced operating income and adjusted EBITDA growth due to continued investments in digital products, costs incurred to launch Walmart-2-Walmart product and higher professional fees. Average revenue per transaction improved slightly, as a result of the inclusion of higher-value HiFX transactions in this year's second quarter, partially offset by lower-value Walmart-2-Walmart transactions. Overall, a strong quarter for all 3 segments. Next slide, please. On Slide 9, we present a few highlights of our balance sheet for the second quarter. We ended the quarter with $408 million in cash. $116 million net increase in cash was largely the result of cash acquired in the acquisition of HiFX. The higher cash balance at HiFX -- higher cash balances at HiFX are the result of the timing of cash received from customers in advance of the settlement of the transfer obligation. While I'd always like to use this cash for general purposes, we need to retain it to meet the customer transfer obligation. Other net change activity in cash included cash flows generated from operations and temporary increases in operating cash, largely offset by cash used to purchase HiFX. Debt increased approximately $168 million as a result of revolver borrowings of $107 million to fund the HiFX acquisition and cash borrowed to fund other temporary operating needs. As I conclude my comments, I would like to provide a little more insight into the third quarter guidance we provided in our press release. As you may remember, last year, we told you we expected to see the third quarter coming more in line with the fourth quarter, and it did. Excluding the fourth quarter benefits from taxes last year, the fourth quarter last year was about $0.01 ahead of the third quarter. Throughout the last year, our businesses continued to evolve, and you can see from our strong third quarter guidance that we expect the growth in the third quarter earnings to continue. While we only give guidance 1 quarter in advance, it looks likes the third quarter will likely become our strongest quarter of the year. Overall, the second quarter 2014 was another great quarter, with strong consolidated revenues and earnings growth driven by contributions from all 3 segments. With that, I'll turn it over to Mike.

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 go on to Slide #13, and we can get down to the nitty-gritty. Across Europe, we continue to focus on ways to expand our independent ATM networks. During the quarter, we signed asset purchase agreements with both Citibank in Hungary and ProCredit in Romania. In Hungary, we purchased ATMs and automated deposit terminals from Citibank. Additionally, in Romania, we signed an agreement to purchase ProCredit's ATM estate. As of July 1, ProCredit became the sixth member of our shared ATM network in Romania. Both banks can now offer customers a slightly larger ATM network and expanded product portfolio, while at the same time, enjoying reduced operating expenses and a stronger balance sheet. In Greece, we added bill payment and China UnionPay card acceptance to Piraeus Bank POS terminals. The most recent global cards annual report ranked UnionPay as the world's leading debit card issuer based on volume. This agreement with Euronet now allows Piraeus Bank's retail partners the ability to accept UnionPay cards, giving these retailers access to the world's largest user-based card. Finally, we signed a terminal installation and switching services agreement with a large local supermarket chain in Greece. We won this agreement because of the add-on services we were able to provide, which I will explain more in my comments on epay. Next slide, please. Slide #14 provides some details on select value-added services and agreements in our ATM deployments in the quarter. Our EFT team continues to add new and innovative ways to help our bank partners achieve greater profitability on our ATMs or their ATMs. In April, we added a new customer relationship management feature to our IAD network for Allior Bank customers in Poland. This feature allows Allior to use the Euronet IAB as an extension of their direct sales team. Allior can now offer select qualified customers with the option to increase their limit on an existing card or take out a micro loan against their current bank account. This product allows the bank to increase their interaction with the customer without increasing their cost, and it's now available on all Euronet ATMs across Poland. In Pakistan, we expanded our relationship with Muslim Commercial Bank by launching an interbank fund transfer service for their customers. Through 1LINK, a domestic ATM transaction gateway in Pakistan, MCB Visa Debit cardholders and MCB Lite mobile wallet account holders can transfer money directly into an account holder of other participating banks in Pakistan. Pure Commerce continues to expand its presence. This quarter, they launched their point-of-sale dynamic currency conversion service with several leading hotel chains, including Sofitel and Fraser, which complement the launches with the Grand Hyatt, Marriott, Holiday Inn and Novotel we announced last quarter. We have also introduced the Pure Commerce technology with our EFT Europe bank partners in several countries, including Raiffeisen in Croatia, Piraeus Bank in Greece and several locations through our cross-border acquiring business. This technology promotes more effective customer adoption rates, which, in turn, create more efficient and profitable solutions for banks and retail partners. During the quarter, we added 755 ATMs, bringing our total count now to 19,313 at the end of the second quarter. The largest increases were in India and Europe, kind of as usual, and on our -- and if you remember on our Q4 2011 earnings call, you may recall that one of our analysts, you remember who you are, Mike, asked if we could get to 20,000 ATMs over the next 5 years. I replied that it would be -- it would absolutely stun me if we didn't get to 20,000 ATMs. With less than 700 ATMs left to deploy to meet what, at the time, seemed like a fairly challenging and lofty goal, and despite walking away from 1,600 IDBI ATMs in India, with good execution, we have a pretty fair chance of hitting that 3-year goal. Our EFT team continues to work hard to deliver more ATMs and POS terminals and more products on those ATMs and terminals, which you can see are reflected in our excellent financial results. Overall, this was an outstanding quarter for the EFT team. And with the great momentum going into the second half of the year, we're very excited. Let's move on to Slide #16, and we'll talk about epay. Overall, we're pleased with the direction and the results of epay in the quarter. The segment contributed to the consolidated revenue and operating income growth, while continuing to roll out content in new and existing geographies, which I'll talk about in the next few slides. Slide #17. Here, on this slide, we show the second quarter development at our epay business. We successfully executed an agreement to provide RadioShack franchise locations with gift cards, wireless replenishment and other prepaid services in the U.S. In addition to major metro areas, RadioShack has a significant presence in smaller towns and have a high-volume of wireless transactions. Conversion to epay will provide RadioShack franchisees with the access to epay's entire suite of products to help them gain additional foot traffic and sales. This was a great win for the epay team. We expanded our mobile presence in the U.S. through an exclusive agreement to sell mobile top-up and activation of TracFone SIM cards in 2,600 Rent-A-Center locations in the U.S. Finally, in the EFT highlights, I told you about a POS terminal switching and services agreement that we signed with that large grocer in Greece. As an addition to their agreement, we are distributing mobile top-up and iTunes gift cards in each of their 50 stores. As we look across our individual segments, there are many areas where we have the ability to cross-sell agreements, as an excellent example of the partnership between the segments. Now let's move on to Slide #18. Here on Slide #18, you can see the development in our non-mobile business during the quarter, which accounted for 38% of epay's total gross profit. We expanded our distribution of Google Play, with launches in Italy and France, which represent the fifth and sixth countries we have brought live with Google Play. This is an important product in our non-mobile content portfolio. According to a recent App Annie report, the number of apps in the Google Play store grew by around 60% between July 2013 and June 2014, basically, the last year, which in turn, more than doubled Google's app revenue for the first quarter of 2014. We will continue to expand this product through our strong retail base and expect nice contributions in the coming quarters. The epay team continues to lead the market in digital gift code delivery. During the quarter, we signed several new agreements that expanded our digital gift code distribution with existing customers, as well as in new markets. Last year, we told you about our digital gift code distribution through the PostFinance mobile banking application in Switzerland. PostFinance has been pleased with the performance of iTunes on their mobile banking platform and has now added Xbox and Sony as additional options to their mobile platform. Additionally, they have expanded the iTunes content to their online banking platform and to the 970 PostFinance ATMs. This is an excellent example of our leading delivery of digital gift codes technology. During the second quarter, our team in Asia brought our digital gift code technology to the region. In India, we launched voucher distribution for ICICI Bank. ICICI customers can now purchase 17 digital and more than 100 physical gift cards through the ICICI online banking platform. Content includes top brands across fashion, dining, entertainment, with additional content to follow. This is the first digital gift code distribution project that has ever been implemented in India. Additionally, we have signed an agreement with Flipkart in India. Flipkart is India's Amazon equivalent and is the largest player in India's e-commerce industry, with approximately 20% market share of all e-commerce in that country. Through this agreement, we will distribute Flipkart digital codes through our banking channel content. These are great achievements for our team in Asia, and we are pleased that we can provide our bank and brand partners with this leading-edge technology. We continue to make important strides in introducing our content to more retailers, in more geographies and through new technology. This was a solid quarter for epay segment, and it gives us momentum to build upon as we move into the second half of the year. Now let's move on to Slide #20 -- actually, it's Slide #19, and talk about Money Transfer. We created our Money Transfer segment, as you might remember, with the purchase of Ria in April 2007. At that time, Ria consisted of 42,000 locations, and earned an annual revenue and adjusted EBITDA of approximately $175 million and approximately $26 million, respectively. As I told you last quarter, our Money Transfer segment has entered a new chapter and now includes Ria, as well as HiFX, a provider of online-initiated international payment and foreign exchange services. The combined Money Transfer segment now consist of 235,000 locations, and for just the first half of 2014, has produced $218 million in revenue and $24.8 million in adjusted EBITDA, in addition to receiving a vote of confidence from the world's largest retailer, which I will touch on in a few more minutes. Slide #20. As you know, this was a very exciting quarter for our Money Transfer segment. In April, we announced the launch of Walmart-2-Walmart powered by Ria. This new innovative money transfer service offers competitive pricing and convenience for the 95% of Americans who live within 15 miles of a Walmart store. Towards the end of May, we also completed the acquisition of HiFX. HiFX offers account-to-account money transfer services, which is an adjacent market to Ria's traditional cash-type [ph] transfer. Despite the late May close to the transaction, HiFX performed nicely and within our expectations for the short period in the second quarter that it was part of our Money Transfer segment. These 2 developments, combined with Ria's investment in the digital channel, give our Money Transfer business access to 4 new large and exciting markets: High-net-worth individuals, small business customers, online centers and domestic payout. These new markets provide us great opportunities to continue the growth trends of Money Transfer. Now let's move on to Slide #21, which provides some details of our network expansion in the quarter. The Ria team continues to strengthen our network and footprint in key remittance markets and regions. Total network locations increased 15% to 235,000 over the second quarter of 2013. This increase includes the launch of Walmart-2-Walmart in more than 4,000 Walmart stores around the U.S. Walmart has fully supported this product, and we have been pleased with the performance of this service. We are also excited to announce our expansion in India. You may have seen in the press release we issued yesterday, we added 17,000 cash pickup locations through our partnership with Instant Cash, a member of the Emirates Post Group. This agreement increases our presence throughout India by allowing customers to receive funds from any Instant Cash location, which includes the India Post location, while offering the same reliability and quality of service our customers have grown to expect from Ria. India is the world's largest remittance market, receiving more than $70 billion annually according to the World Bank. And this agreement further strengthens our value proposition to this important market. I would like to update you on the performance of RiaMoneyTransfer.com, our digital solution. As Rick mentioned during his comments, we continue to make investments in this channel in order to meet the growing demand for the ease and convenience of online mobile transfer -- online mobile money transfer. Customers can now send money from the convenience of their phone, tablet or PC, view transaction history, save receipt information or quick send during their next visit. We have seen a nice pickup in our digital transactions since launching the new site in April. And while the transaction counts are still small, we believe that we are well-positioned to meet the growing digital demands with a high-quality, easy-to-use product. We have also introduced a new open-payment service on transfers to Nigeria, Ghana and Mauritania. This service provides recipients the option to collect funds from any Ria agent in the country, making transfers more convenient to the recipients of the funds. Next slide, please. On Slide #22, I'd like to make a little announcement here. We're pleased to announce that Walmart has selected Ria as their Walmart Services Supplier of the Year. This award is a true testament to the strength of our partnership with Walmart and to Ria's compliance, technical and customer service capabilities. This award further highlights the value Ria can bring to both large and small retailers, as well as individual customers around the world. Next slide, please, Slide #23. Here, you can see the transaction trends for our Money Transfer segment. In the quarter, Money Transfer transactions grew 35% from organic growth in Ria's business, the launch of Walmart-2-Walmart and the acquisition of HiFX. Non-money transfers increased 7%, primarily from significant growth in check-cashing in the U.S. and Canada. The second quarter was exciting for our Money Transfer segment, and we expect to see the momentum continue through the second half of the year. Now let's move on to Slide #24, and we'll wrap up the quarter. On Slide #24, you can see that we achieved adjusted cash earnings per share of 58% (sic) [$0.58], a 21% increase over Q2 2013, a $0.01 ahead of our guidance and the sixth consecutive quarter we have achieved double-digit cash EPS growth. EFT had an outstanding quarter, driven by increased demand for value-added products and a 12% ATM network expansion. epay contributed to both revenue and operating income growth. Money Transfer delivered excellent results, driven by solid organic growth from Ria, the successful launch of Walmart-2-Walmart and the acquisition of HiFX. Our balance sheet, as usual, remains strong, with good cash flow generation. Finally, we expect to have a strong third quarter, with cash EPS of $0.73, which will likely be our strongest quarter of the year. With that, I will conclude my comments and open the call to questions. Operator, will you please assist?

[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.