Euronet Worldwide, Inc. (EEFT) Q3 2014 Earnings Report, Transcript and Summary

Greetings, and welcome to the Euronet Worldwide Third 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, and you may begin.

Thank you, Charlotte. Good morning, and welcome, everyone, to Euronet's quarterly results conference call. We'll present our results for the third quarter 2014 on this call. We have Mike Brown, our Chief Executive Officer; Rick Weller, our Chief Financial Officer; 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 good morning, and welcome to everyone on the call. I will begin my comments on Slide 6. I'm sure most of you have had a chance to read our earnings release by now, and you know that this was another excellent quarter for Euronet. All 3 segments contributed to our double-digit consolidated earnings growth. We achieved revenue of $453 million, operating income of about $51 million and adjusted EBITDA of $73 million. I'll point out that the third quarter 2013 operating income included a gain recorded last year in the EFT segment related to a contingent earn-out not paid due to certain targets not being achieved. Consistent with how we presented our results last year, we have provided adjusted operating income throughout this presentation in order to exclude this noncash gain from our prior year results so as to provide a better comparison of the improvement in operating results for the quarter. Our cash earnings per share was $0.80, $0.07 ahead of our guidance and 43% increase over the third quarter last year. Despite about $0.01 of headwind from foreign exchange currencies since we provided our guidance, all 3 segments contributed to this strong result together with a better tax rate, driven by a favorable mix of earnings from lower tax rate jurisdictions. EFT realized seasonally higher cash withdrawals; epay experienced higher sales of nonmobile content; and money transfer growth came from a combination of more organic, Walmart-2-Walmart and HiFX transactions. HiFX contributed better-than-expected results due to the volatile FX rate, which Mike will discuss in a bit more detail. I would also like to mention that our $0.80 cash earnings per share represents a new quarterly record for Euronet and the 7th consecutive quarter we have delivered double-digit year-over-year growth in adjusted cash earnings per share. I will provide more insight into the results when we get into segment reporting over the next few slides, but overall, this was an outstanding quarter for Euronet. On Slide 7, you can see the 3-year transaction trends for each segment. EFT transactions grew 6%, with the largest growth in Europe. Epay transactions increased 19% year-over-year from growth in India, Germany and the Middle East, partially offset by declines in Brazil and the U.K. Transaction growth outpaced revenue growth, primarily as a result of increased transactions in India, which earn a much lower revenue per transaction than transactions in our European markets. Year-over-year, Money Transfer transaction growth accelerated to 56% in the third quarter. Money transfers increased 68%, driven by continued organic growth, the addition of Walmart-2-Walmart and the acquisition of HiFX. This represents the 14th consecutive quarter we have achieved double-digit Money Transfer growth. Non-money transfers grew 8%, largely from increased check-cashing transactions in the U.S. and Canada. Next slide, please. On Slide 8, we present our third quarter result on an as-reported basis. On a year-over-year basis, foreign currency fluctuations marginally impacted our results. For example, the average of this year's third quarter euro rate remained largely flat compared to last year's euro rate, but the British pound increased about 8%, the Indian rupee increased about 4%, the Polish zloty up 2% and the Australian dollar up 1.5%, while the Canadian dollar and the Hungarian forint each declined a little over 4%. So while more recently we have generally seen currency declines against the U.S. dollar, on a year-over-year basis, currencies were generally up a little. To normalize the impact of these foreign currency fluctuations, we have presented our results adjusted for currency on the next slide. So let's move to Slide 9 where we can talk about the results on a constant currency basis. Our EFT team continues to deliver exceptional results, achieving record quarterly earnings in the third quarter. Revenue increased 28%, adjusted operating income increased 34% and adjusted EBITDA increased 33%. This growth was driven by the continued expansion of our ATM networks in Europe and India, more point-of-sale dynamic currency conversion transactions and other value-added transaction. Operating income and adjusted EBITDA margin expansion resulted from higher-margin transactions, which are seasonally higher in the third quarter. Revenue growth outpaced transaction growth due to a reduction in Cashnet transactions in India and a concentration on high-value transactions. We may remember that cash -- you may remember that Cashnet is our shared net -- shared switch in India and accounts for a large number of transactions, which earn very little revenue per transaction. EFT produced improvements in most all performance metrics, from revenue growth down through to income and margin expansion. Epay achieved its second consecutive quarter of growth, delivering revenue, operating income and adjusted EBITDA growth of 6%, 2% and 1%, respectively. This growth was largely the result of increased demand for nonmobile content, particularly -- partially offset by mobile declines in certain markets. Revenue growth outpaced operating income growth as a result of higher SG&A cost in preparation for the seasonally higher fourth quarter sales and certain incentive expenses. These higher SG&A expenses were partially offset by cost-saving measures implemented in certain markets. Most of epay's metrics remained relatively stable. I would characterize epay as stable with signs of growth reemerging. Money Transfer also had a record-setting quarter. Revenue grew 58%, operating income grew 68% and adjusted EBITDA grew 64%. Organic growth across the business together with the full quarter impact of Walmart-2-Walmart product and the acquisition of HiFX drove this earnings growth. Overall, revenues per transaction increased a bit for Money Transfer year-over-year and operating income and EBITDA margins expanded. On Slide 10, we present our balance sheet -- or some summary of our balance sheet for the third quarter. During the quarter, cash increased approximately $43 million, largely from increased cash flows generated from operations and favorable timing differences in settlements in the epay and Money Transfer segments. These increases were partially offset by debt repayments and increased capital expenditures. As I close my comments, I think it's worth repeating that with earnings contributions from all 3 segments, this really was a great quarter for Euronet. Now, I'll turn it over to Mike.

Thank you, Rick. And thank you, everybody, for being on the call. I knew today was going to be a good day because we have exceptional results, but with the Royals win last night, I'm an even -- in an even better mood, let me tell you. But if we want to look at the quarter and get to the financials, I mean, what can you say? This was just simply an outstanding quarter. We had year-over-year cash EPS growth of 43%. We exceeded this guidance that we gave you 3 months ago by $0.07. And if you'll remember, back when we gave you that guidance, the consensus for third quarter was $0.05 less than what we gave you as our estimate. So if you add it all up, that means we're basically $0.12 ahead of the expectations that the market had for this company just 3 months ago. Again, simply an outstanding quarter. This is a result of each of the segments and their efforts to do what we do. I say this all the time. What do we do? We try to introduce more products onto more devices in more countries. It's just plain hard work, but it shows the dedication of our teams around the world to accept this challenge and implement. Now I do have a challenge, and it's first quarter. If we're not quite where we'd like to be with first quarter because there is some seasonality with respect to first quarter that I can't get around, and I just want to remind you of that now. First quarter last -- this year was 27% lighter [ph] than Q4 2013. This is a result of fewer ATM cash withdrawals, less mobile content that's being sold because the Christmas season is over, less mobile-phone calling, fewer migrant jobs in the Northern hemisphere, meaning that there are fewer money transfers sent. And so all these things kind of all add up to a perfect storm for Q1. So if I can only figure out how to get Q1 going, then we'd just have a perfect company here. The nice of it -- nicely, though, the analyst models do reflect this seasonal nature and it'll remain the same in first quarter of this year. But I can tell you, looking at Q3 and what we expect for Q4, we are certainly very well positioned for 2015. And I'd like to also point out, again, that our estimate for Q4's earnings of $0.72, comes with about a $0.02 to $0.03 headwind for foreign currencies based on where they were 3 months ago. So all in all, you can tell that when it comes down to the operations of the company right down to the countries and the local currencies that they're generating, we're definitely a lot better off than we were towards the beginning of this year, with a very strong last 2 quarters. So we've got nice, strong ATM growth. We've got all segments this quarter that contributed to our double-digit revenue and earnings growth and we've got a phenomenal set of numbers that I'll tell you about right now. So why don't we just jump to that, let's go to Slide #13 and we'll talk about EFT, our legacy and oldest segment. As I reflect on these year-over-year EFT results, I recall that our third quarter call last year where you asked if EFT could continue this growth. When I talk to shareholders now and again, sometimes, yes. But where are we on the runway? Are we at the end of the runway? Beginning of the runway? Where are we? Well, it's clear by these results and our recent earnings trends that these results aren't a fluke. EFT is on an exceptional run with operating income growth of 74% in the third quarter last year, followed this year by sequential quarterly growth rate of 12%, 94%, 44% and now 35% over the last four quarters. We are very pleased with these results, which are possible because of the great teams that continue to do well and work hard in both Europe and Asia. Moving on to Slide #14. We'll talk to you a little bit about the business highlights. We continue to expand our network across Europe. During the third quarter, we launched our ATM network in the United Kingdom. The first ATMs there were launched in partnership with Rontec, a fuel station chain, as part of an agreement to place ATMs on their premises. We signed 2 asset purchase and network participation agreements with Plus Bank in Poland, and the Libra Bank in Romania. These agreements will add 110 and 44 ATMs to our networks in Poland and Romania, respectively, all of which will be re-branded with the Euronet branding. We were able to complete the migration of several agreements we told you about last quarter. In Romania, we added Carpatica Bank's ATMs to our IAD network and we added the Citibank ATMs to our network in Hungary. We were also able to launch our IKANO Bank network participation in Germany. Finally, over the last several years, technology has been a real differentiator for this company. We continue to find new and interesting ways to use technology to bring additional value to our customers. For example, in India, the government has sponsored a project to provide electronic customer verification to comply with banks' know-your-customer rules. Customers are provided with a unique ID and their biometric information is recorded in an identification database. This quarter, we signed an agreement, or an electronic know-your-customer pilot, with the Development Bank of Singapore, which is located in India, using this technology. This is brand-new technology in the Indian market, but it has wide-ranging and varied potential. With real practical uses, access to this database provides Euronet with a unique value proposition to our customers in India. Let's move on to the next slide, Slide #15. As another example of technological leadership, we continue to develop innovative products that help our bank partners provide interesting options to their customers. One of those products is a cardless cash withdrawal at our ATMs. I recently read an article where U.S. Banks were trying to figure out how to allow customers to withdraw funds on an ATM without inserting the card. Well, heck, we've been doing that in Poland for years now through our cardless payout product that we've mentioned previously. And our technology allows money transfer recipients to pick up their funds at any Euronet ATMs in Poland without a card by simply entering their transaction confirmation numbers. This quarter, we expanded that same technological solution to Raiffeisen Bank in Slovakia. Raiffeisen Customers can now use their banking applications to set up a cash withdrawal. When they arrive at the ATM, they simply enter the one-time authorization code and the ATM dispenses their money, giving them a more convenient and simple experience. As I continue with some noteworthy highlights, you may remember that last quarter, we launched China UnionPay card acceptance on Piraeus Bank terminals in Greece. According to the most recent global cards annual report, UnionPay is the world's leading debit card issuer based on volume. This quarter, we expanded UnionPay acceptance along with acceptance of American Express cards through our ATM networks in Italy, Romania and Spain, opening these ATMs to customers of the world's largest issuers. We also signed the POS DCC agreements with Vietin Bank in Vietnam and First Bank in Hawaii as well as Crowne Plaza, Holiday Inn and Intercontinental Hotels in the Philippines. During the quarter, we added 495 ATMs, bringing our total ATM count to 19,808. We expect to finish the year having added more than 2,000 ATMs. And even with the loss of the 1,600 IDBI very low-margin ATMs in India last year, we will exceed our 3-year goal of more than 20,000 ATMs under management by the end of the year. As you can see from these slides, our EFT team remains focused on adding more products to more ATMs in more markets. And their efforts are reflected with record earnings in the third quarter. Now let's move on to Slide #17, and we will talk a little bit about epay. On Slide 17, I can tell you that I was very pleased with epay because they posted a revenue and operating income growth for the second consecutive quarter. While we have seen declines across some of the business, in balance, our nonmobile strategy is working. I will tell you more about these successes in the highlights on the next page. So jump to Slide 18, please. In Germany, we extended our payment processing agreement with the Deutsche Telekom, which allows us to continue to process all payments made at Deutsche Telekom stores. In the U.K., we launched SIM distribution for Lebara. In Germany, we launched new Sim cards at Penny and Lotto Bayern stores. These products activate the SIM at the point of sale, reducing retailer risk of a SIM never being activated. Over the last year, we have become the leading mobile top-up aggregator in India, now processing more than 1 million transactions a day through both the traditional retail channel as well as the Indian banking channel. As Rick mentioned in his comments, we earn a significantly lower margin per transaction on our Indian-based mobile top-up transactions than our European-based top-ups. But despite the lower margin per transaction, we're proud of the progress that we have made in this very, very large market. Next slide, please. Here we see a lot of information here, I won't go through all of it, but we -- I'll select some of the highlights. We continue here, as you can see, the focus on expansion of nonmobile products which represent, this quarter, 39% of epay's total gross margin in this third quarter. We continue to execute well on our strategy to add distribution for key product areas, including software, music and digital gift codes. We extended our partnership with Microsoft to new markets in more retailers. In China, we launched Microsoft products with the country's second-largest online retailer, JD.com. JD.com is epay's first retail partner in China. We also launched Microsoft Xbox, Windows and Office in Media Saturn electronic stores in Germany. We signed a distribution agreement with McAfee. Through this agreement, epay will provide channel sales, distribution, logistics and merchandising for McAfee's security products using point-of-sale-activated cards, e-vouchers and digital codes. This is the first time McAfee will offer its security products in a post-a-form [ph] across Europe, the Middle East and Africa. We continue to expand our distribution of Google Play. This quarter, we launched Google Play at The Warehouse store locations in New Zealand and at Metro-Saturn (sic) [Media-Saturn] and Public stores in Greece. We also signed a direct agreement to distribute Google Play in Brazil through GPA, Brazil's largest grocery retailer, as well as other leading retailers. In the third quarter, we continued to grow our market-leading digital code distribution. Similar to the PostFinance agreement we told you about last year, we launched our first iTunes promotion with Finanz-IT/Sparkassen in Germany. We also signed similar promotional agreements to offer iTunes codes through Postbank and Deutsche Bank online banking applications. Finally, we have seen some nice product -- progress with Opal Card distribution in Australia. This quarter, we reached a milestone with 1,000 retailers now offering card top-up. We have seen increasing volumes with this product and are pleased with the progress we're making with this partnership down in Australia. Our teams continue to execute well on our strategy to add more content to more retailers through more channels in more geographies. Overall, this was a solid quarter for epay segment and we are well positioned for solid fourth quarter results. Now let's move on to Slide #21 and talk about Money Transfer. Okay. Last quarter was exciting with the launch of Walmart-2-Walmart and the acquisition of HiFX. Now we can look at these numbers, which include nearly 60% revenue growth and 68% op income growth, and they're simply awesome results. The growth reflected in the above results is no accident. We have introduced 5 new substantial markets and distribution strategies. They are: the high net-worth individuals, small- and medium-sized enterprises, online senders, U.S. domestic payouts and large retail. The Money Transfer team is working very hard to integrate these new assets and leverage them into commercial and network opportunities on both the send and the payout sides of the transaction. Just like most businesses, no one thing drives growth like this. It's the result of several factors coming together that drives this growth. This quarter, the hard work to introduce these 5 new markets came together and produced this quarter's record earnings. Jump to Slide #22 and you can see the 3-year transaction trends in the Money Transfer segment. I kind of like that bar on the far right, don't you? Money Transfer transactions grew 56% over the prior year, driven by organic growth across our markets, the launch of Walmart-2-Walmart and the acquisition of HiFX. Nonmoney transfers increase 8%, primarily from growth in check-cashing transactions in the U.S. and Canada. And we'll jump now to Slide #23. We can talk a little bit about the details of our network expansion, which are so key to our future growth of this business. Network growth remains strong, as the Ria team continues to work on expanding the ubiquity of its network in key remittance markets and regions. Total network locations increased 16% to 241,000 versus prior year. Key additions in Q3 include 1,200 locations with Banque Centrale Populaire, or BCP, in Morocco. BCP is one of the largest banks in Morocco, and this addition will continue to fuel Ria's already strong growth to this important remittance market. Ria also launched over 2,100 locations with Asia United Bank in the Philippines. Asia is the fastest-growing remittance market in the world, and the Philippines is the second largest market in Asia, growing at over 6% so far in 2014 according to the World Bank. With such a large opportunity, we continue to focus on building our network and improving our service. Two additional important Q3 launches were with Bank of Ceylon and Ceylon Bank in Sri Lanka, for nearly 700 locations. Remittances to Sri Lanka are growing at 12% in 2014 and even faster for Ria, so this market is a key focus for us. Finally, we added over 2,000 locations in Russia, nearly 1,200 in Nepal, 300 in Senegal and over a 1,000 locations in the Commonwealth of Independent States of the former Soviet Republic, all with existing correspondent partners. Ria also signed an important strategic agreement with Earthport. The U.K.-based Earthport operates an open network for global low-value bank payments. Many of you may not know that Ria already has one of the most robust cash-to-account and account-to-account service offering in the Money Transfer industry. Earthport offers access to bank deposit services in over 50 countries, and this agreement will enable Ria to expand its affordable bank deposit service as serviced to several new markets. We also anticipate that as we continue to integrate HiFX into the Money Transfer segment, we can leverage this agreement to create additional value for HiFX's customers as well. As this is the first full quarter we have reported HiFX's earnings, I would like to take a minute and give you some additional insight into this business. While the strengthening of the dollar, relative to the other currencies, has put pressure on our consolidated earnings, it has been economically beneficial to our Money Transfer segment. As foreign currencies experience periods of volatility, HiFX customers tend to send more money, thus driving additional transactions in revenue for the Money Transfer segment. This volatility resulted in a strong quarter for HiFX, which contributed to better-than-expected results. So to summarize, the Money Transfer segment had an outstanding quarter with strong momentum going into the last quarter of the year. Congratulations to our Money Transfer teams around the world on their record-setting quarter. Now we'll move on to Slide #24, and we'll wrap this up. Well, we achieved adjusted cash earnings per share, as I've said before, of $0.80, a 43% increase over Q3 2013; $0.07 ahead of our guidance; $0.12 or more than the analyst consensus just 3 months ago; and a new quarterly record for the company. EFT growth was driven by seasonally high transaction volumes, made possible by our continued focus on product and network expansion; Epay contributed to revenue and operating income growth for the second consecutive quarter; and Money Transfer realized expansion from strong organic growth, the successful launch of Walmart-2-Walmart and the acquisition of HiFX. Plus, we added another $43 million to our cash balance, reducing our debt by almost $33 million and our balance sheet remains strong and getting stronger. Finally, we expect our fourth quarter adjusted cash earnings per share to be $0.72, assuming foreign currency exchange rates remain consistent through the end of the quarter. With that, I'll conclude my comments and open it up now for questions. Operator, will you please assist?

[Operator Instructions] Our first question comes from the line of Peter Heckman from Avondale.

Following up on your comment on the first quarter, Mike, I think you -- the business, you've done a nice job of qualitatively guiding The Street, talking about increasing seasonality to the third quarter, somewhat less seasonality in the fourth. And now, a more pronounced effect in the first quarter. Just trying to interpret your comment, do -- you note that the current consensus does reflect that seasonality. Were you saying that you were comfortable with the first quarter consensus number as it is today? Or were you saying that maybe the seasonality is somewhat -- even though the seasonality is reflecting the consensus number, that seasonality of the business as it is now might be even greater than what's reflected in consensus?

No. Well, I'll tell you, I don't comment on the consensus and haven't. All I'm doing is pointing out kind of the facts. So the facts are, in the old days, say 3 or 4 years ago, Q4 was by far a seasonal quarter. And Q1, for the last 20 years, has been exceedingly weak for us because when we started out as an EFT-only company, everybody spent all their money and almost didn't even go to the ATMs in January. So we were kind of limping along with 2 months into the first quarter of work and that's it. This has continued as we bought epay. We -- in this business, lots of gift cards, mobile top-ups, new phones and everything are bought around the Christmas season so you get, traditionally, a very weak Q1. And then you coupled this with Money Transfer. Money Transfer, and the reality is, in the Northern hemisphere, there's just less jobs for immigrants in the first quarter. So it's just -- it has continued to become more pronounced every year. And we just want to say that last year, we were down 27% over Q4, and that's not inconsistent with the kind of facts that we see moving forward. I have said in the past, too, that what we've done now is we've kind of changed the company into a company now that has an exceedingly strong last half of the year. Pretty good Q2, but a weak Q1. So I just want to remind people of that, because I don't want everybody to add 43% kind of growth in Q1 or something like that just because we might have done that in one of the current quarters. So we'll let you know what we think Q1 will do when we give you the results for Q3 -- I mean, Q4.

Okay. That's helpful. And then your commentary on HiFX, would that suggest that HiFX materially -- or contributes materially more than...

No. For sure not materially, but more. I mean, that's a nice thing. It's a nice little piece of our Money Transfer segment. The guys are working their tushes off there to integrate themselves with us and do well for the company. And then you get -- we got a little bit of a benefit in the latter part of the third quarter because of some currency fluctuations that they were able to bring straight to that bottom line.

Great, great. Last question, I'll get back in the queue. Just -- and this -- it may be too early, but just wanted to see if there was any risk or opportunity. I saw Citibank was talking about exiting 11 international retail banking markets, and I think you are currently running ATMs for Citi in Hungary and the Czech Republic. Do you think there might be an opportunity to purchase those networks? Or...

Well, you have to remember, we mentioned that we did bring the Citibank network under our kind of flag in one of those markets anyway, already. We'll look to do more of that. We'll just see what opportunities there are. I can't tell you what I -- in dealing with any bank in any country, it's given me gray hairs and shortened my life span. So I'll let you know those deals after they occur.

Our next question comes from the line of Mike Grondahl from Piper Jaffray.

The first one is really on the Money Transfer business transactions up 56% to $13.9 million. Mike, is there any way you can just kind of help us with what the Ria core growth was? And what you saw at Walmart or HiFX? Or at least, some more qualitative comments?

Yes. So our core growth was still at the double digits. Walmart, of course, we had 3 months of that, rather than no months of that last year, and just 2 months of that, really, in the first quarter. So that helps. HiFX, like we've been mentioning, was kind of screaming through the end of the quarter. So what we got really was a nice, balanced, excellent contribution from all 3 kind of pieces, organic and acquisitions and the new Walmart-2-Walmart.

Could you talk about...

And I think that the core grew at double digits, so we're still in a great mood [ph].

At Walmart, sequentially, have you continued to see monthly increases?

Yes, Mike. We have, that -- as that product gets rolled out in a complete fashion across the business and we think continues to have greater consumer appeal, because of its affordability and simplicity.

Yes. I mean, there -- I mean, you just look at it, the price differential of doing a domestic money transfer for -- particularly for sends above $200, has fallen tremendously. And not only are we getting users, we believe, that went to Walmart and did it maybe through our competitor before, and that's what everybody tries to always focus on, but I don't really care about them, the fact is that we've got something that the American public likes. It follows right there down that -- the fairway of Walmart because they love everyday low prices. And we've -- we save customers substantial money. Tens of millions of dollars have been saved since we turned on this product, coming right from -- that would've come right out of the customer's pockets and now no longer do so. So we can continue to see that grow because more and more people are finding out about it. We'll learn more about this. We didn't know any of the numbers before we started, and we're learning more about the product everyday, who sends, why they send, how frequently they send. But it's pretty clear that word of mouth is getting around.

Okay. And then, in the EFT business, or the ATMs, United Kingdom was a country, I heard, for the first time...

Yes. Wasn't that nice? Actually if you were following us maybe like 10 years ago or 12 years ago, you would have noted, we actually did have a small network of ATMs in the U.K., and then we ended up selling that network and using the cash proceeds to buy epay. But we're back in the U.K. again. So it's like déjà vu. And we did that with a small gas station chain, and we still believe that even though there's lots and lots of ATMs -- pretty well ATM-ed in the U.K. -- we still think there are some choice sites left.

Okay. And then, on the epay side, China was mentioned on the nonmobile side, that seems like it's a first. What's your...

Well that, we did that with the online retailer, the -- named JD.com, and we're real excited about that. It'll be really interesting to see. I mean, there's been a lot of hype about online search engines and retailers and everything like that in China over the last year or so. So we're happy to be in that partnership with Microsoft doing software distribution for them.

Okay. And then just lastly, the Indian ATMs, is that profitability continuing to ramp? Are you happy with respect to...

Yes, I mean, we continue to throw in new ATMs, we've put in something like 260 ATMs in India in the third quarter. They still got the same kind of ramp that we've talked to you before. They get to breakeven in somewhere between 4 and 6 months, depending on the ATMs. We still see there's lots of opportunity for new sites, the profits are definitely up in India. Because when we first started in India, if you actually think about it, the first 1,000 that we've put in, they've got this long ramp-up time, they're sucking cash out of my EFT segment. I had Europe kind of covering for them. Well now we've got enough of an installed base, that as we add more and more ATMs every quarter, it becomes a smaller piece of the total, so the guys that have been there for 6 or 7 or 8 months, who are delivering profits to us, they become much more demonstrative. And so we end up with higher profits in that particular segment. Our India team has done a great job with that.

[Operator Instructions] Our next question comes from the line of Chris Shutler from William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: So I wanted to focus on EFT for a second. First, I think, Rick, it was you that mentioned the reduction in the Cashnet transactions in India, and I was just hoping that you can maybe give us some sense -- I'm trying to get to a -- figure out revenue-per-transaction trends if you exclude those kind of low-value transactions. Can you give us some sense of the number of transactions in India in the current quarter and in the year-ago quarter?

Well, we don't disclose those specific transactions, but I would tell you, it was in the couple-million transaction range, then it tailed off. Christopher Shutler - William Blair & Company L.L.C., Research Division: On a year-over-year basis?

Yes. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay, got you. That's helpful. And then also, on kind of revenue per transaction. So I mean, it was up, pretty impressive, 22% in the quarter in the EFT, and that's on top of last year's Q3 of -- which was up 29%. So can you talk about the drivers there? Is it fair to assume that a significant majority of that is DCC? Or is there -- or is it a -- I'm sure it's a combination of things, but I'm trying to figure out how much of it is ultimately DCC.

Yes. Well, Chris, as you know, we don't disclose that product in itself there. DCC, clearly, was an important part of that. But as Mike said, we're just putting more product and more high-value transactions on ATMs, whether we're selling a top-up transaction or we're selling an iTunes transaction or a Google Play transaction or we're putting advertising on it or we're doing a like a CRM type of transaction to help a bank make a loan to a customer. Those are transactions that we get more than your -- what you might call your average interchange rate out there. So clearly, DCC -- and it's DCC at the point of sale and DCC at the ATM that have contributed to that. So it was a leading contributor to that, but it wasn't the only contributor.

And don't forget, too, Chris, I may have mentioned this before that like DCC only works when you've got a card that has a different currency coming into your ATM or your POS terminal, right? But if, say, a German guy with a German Euro card comes to my Italian ATM and uses it, I do get paid an interchange rate, which is called the international Mastercard abuse [ph] interchange rate, which is over twice as large as the typical domestic one. So it's not just DCC, it's just when you get a lot of European travelers, and everybody's very religious about their travel in the third quarter, we just start making money in a lot of different ways. Not just through DCC. Christopher Shutler - William Blair & Company L.L.C., Research Division: Yes. Okay, makes sense. And then in -- let's see, in epay, the transaction growth there seems to be accelerating quite nicely. So just wondering what's behind that trend? And then, the reason for the delta between the transaction growth of, I think, 19% and the 7% revenue and that low single-digit profit. Just what's the reason behind the delta there?

Well, as we said in there, the -- we got a lot of transactions coming in from the India business there that we're making a very small number there. So that was a key piece of it. And then as we said, we had a little bit more spend here in the third quarter in an anticipation of our fourth quarter, which is seasonally strong during that holiday sailing -- selling season and some of those expenses we rolled into the first quarter to be prepared for it. We obviously knew that we had an exceptional third quarter to be -- to put more energy into making fourth quarter a great quarter. Christopher Shutler - William Blair & Company L.L.C., Research Division: Yes. Okay. And then just last one, if you don't mind. The -- also in epay, and just an update on the pricing front. Anything that you can -- I mean, do you feel like pricing is sort of -- is it going to stabilize? Or anything that you could -- do you -- how confident do you feel that you can actually stabilize or grow the revenue looking out to next year in epay? I mean profit, sorry.

Yes. Oh, I think we feel confident, very confident, that we can continue to grow the profits in that business. We haven't seen necessarily any kind of dramatic price impacts across our business. And as we have historically done, if we see some rate pressure from a mobile operator or somebody else, is we essentially push that to the retailer. So we feel good about seeing this kind of volume come through the business. About getting more product into the retailers, getting more product into our suite of products, as Mike said here on this JD.com thing, that's a great example of helping a huge content partner like Microsoft distribute product. As that game changes and you see more and more software product go through a point-of-sale activation rather than a shrink wrap and a costly distribution system, we see that we'll benefit from that. So we feel good about that, as I commented, it looks like we've got some of the signs of the reemerging growth trend here. But I'll also repeat what Mike said there, too. Everyday, it's just hard -- plain old hard work, but our teams are out there getting it done, and we feel that we'll continue to get it done next year there.

Thank you, and that completes our Q&A session for today's conference. I would like to turn the call back over to Mr. Brown.

Again, thank you for all of you who've joined us today. We had a great quarter. Look forward to talking to you in our -- in -- after Q4's results. And go, Royals. Talk to you later. Bye, bye.

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