International Money Express, Inc. (IMXI) Q1 2019 Earnings Report, Transcript and Summary

Greetings. Welcome to the International Money Express Inc. First Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I would now turn the conference over to host, Sloan Bohlen, Investor Relations. Mr. Bohlen, you may begin.

Good evening. Before we begin, let me remind you that this conference call includes forward-looking statements, included -- including our outlook for fiscal year 2019. Actual results may differ materially from expectations. For additional information on Intermex, please refer to the company's SEC filings, including the risk factors described therein. You should not rely on our forwarding statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them, except as required by applicable law. In this conference call, we will also have a discussion of certain non-GAAP financial measures. Information required by Regulation G of the exchange act with respect to such non-GAAP financial measures is included in the presentation slides for this call, which can be obtained on our website. I am joined on the call by Chairman and Chief Executive Officer Bob Lisy; and Chief Financial Officer, Tony Lauro. Let me now turn the call over to Bob.

Thanks, Sloan, and thank you to our investors and analysts joining us for our first quarter conference call. This quarter, I would like to start with a review of some updates to our strategic priorities for 2019. If you turn to Slide 3, you can see that we are focused on the same initiatives that we spoke about on our fourth quarter call. I am pleased to report that we are on track on each of these key priorities. We remain focused on organic expansion both in our growth and stronghold states. As we have mentioned before, we continue to see a long runway for growth and believe our results this quarter offer further proof of the growth opportunity available to Intermex. Secondarily, I would like to provide you with a quick update on the new growth initiatives we have highlighted last quarter. As you may recall, we announced our plans to expand into Africa and Canada. We now -- we are now selling wires and processing them from the U.S. outbound to Africa and plan to officially launch our Canada outbound business in the second quarter. We would note that for both of these markets that we are progressing in line with our expectations, but we don't expect any material financial impact for Intermex from Africa inbound or Canada outbound business until 2020. As a reminder, we believe Africa will represent a market opportunity similar in size to Guatemala. In the case of Canada, we are focused on 4 or 5 of the largest key cities and believe that market opportunity is comparable to the state of Texas. Lastly, we do not have any incremental update regarding our infrastructure other than to say that Intermex back end is well positioned to support our competitive advantages as well as help grow our profitability and the scale in an efficient way. Let me now turn to Slide 4 for a high-level review of our quarter against key performance indicators. We are pleased across the board as first quarter 2019 continued to show strong momentum carried through from a successful 2018. Similar to last quarter, we have summarized our results across 4 main categories. First, as you saw in our press release, Intermex had another strong growth quarter with 22% growth in both our top line revenue and adjusted EBITDA. The growth was driven by both our stronghold states as well as our growth states, and we believe our success continues to stem from our differentiated approach and execution in serving our customers and agents. As a reminder, we don't believe that the retail -- that retail ubiquity is the most efficient way to grow revenues. We focus on adding agents based on customer demands and our ability to serve those customers in targeted, local and personal ways. The ultimate impact of the strategy is that we continue to gain market share and this quarter was consistent with that trend. On that point, let's frame our growth versus the industry. First, we look at the remittance volume in our U.S. to Mexico quarter. Industry grew at about 7.4% in the quarter, whereas Intermex grew at a rate of over 21%, almost 3x the rate of the market. Similarly, Guatemala overall industry volumes grew approximately 9.2%, while Intermex grew at more than twice the rate of the market at 20.4%. The best part about our market share is that we believe a significant amount of future potential for Intermex still is untapped in what we call our growth markets. Lastly, we'd like to note again that we are proud of the value we've delivered for our shareholders as Intermex shares have now appreciated nearly 20% since we were listed on NASDAQ back on July 27, 2018. Now let's turn to Slide 5 and review key metrics for first quarter. As you saw in our press release, we are pleased with our growth in both revenue and profitability. Starting at the top half of the page, we grew transactions and volumes by 24% and 23%, respectively, over last year, driven by both our expansion but also by healthy growth in the industry, as we have referenced. On the bottom left, strong volumes resulted in 22% revenue growth over last year. Lastly, on the lower right, we also grew adjusted EBITDA by 22%. Tony will give some additional color but here, I will note at a high level that we have less operating leverage in first half of 2019 as we had some expenses this year that were front-loaded, which normalize year-over-year in the final 2 quarters. The most important thing to remember is the 22% growth in EBITDA is well within the expectations relative to achieving our 2019 targets. Turning to Slide 6 before I turn the call over to Tony to review our financials and outlook, let's review our market share position that we've done in previous quarters. Through the first quarter, Intermex continues to expand our market share in both Mexico and Guatemala. As we have shown, Intermex more than doubled its market share to Mexico over the past 4 years and delivered similar growth to Guatemala. We're most focused on the recent trends, however, and we are pleased that we've continued to grow our market share during the first part of 2019. Specifically, we believe our market share in Mexico expanded to 18%. Similarly, in Guatemala, we increased our market share to 25.5%. Additionally, we've made significant increases in our market share in our secondary countries. While we don't target any specific market share, we are focused on penetrating both our existing and newer growth markets with our service models. We believe these results are proof that Intermex continues to create a value-added proposition through the differentiation of its service. With that, let me go ahead and turn the call over to Tony to review our financial results in more detail. Tony?

Thanks, Bob. Let's turn to Slide 7 to review our first quarter metrics. As Bob noted, we had another strong quarter. The number of transactions grew 24% for the quarter and our dollar volume grew 23%, driven by high growth in our Tier 2 and Tier 3 markets. Overall, our growth continues to be very healthy relative to industry growth, which is at high single digits. Revenue growth of 22.1% for the quarter was driven equally by the combination of transaction growth and volume growth as fee revenue and foreign exchange revenue each grew approximately 22%. First quarter adjusted EBITDA also grew approximately 22% in the quarter, similar to last year's growth and in line with our expectations. We believe that operating leverage opportunity still exists but as Bob noted, there are some front-loaded items that will keep expenses moderately elevated in the first half of 2019. Specifically, public company expenses like D&O insurance, create high year-over-year growth in the first half of 2019 as we did not become public until July of 2018. Second, marketing efforts, particularly around the expansion of our loyalty program are front-loaded this year. Lastly, higher technology costs associated with our migration to an active network configuration have kicked in. Like I said, we see these items creating year-over-year expense growth in the first half of the year, but become normalized versus 2018 in aggregate in the second half. Lastly, we reported net income of $3.2 million or earnings per share of $0.09 per share for the quarter, which was up from a loss of about $540,000 or $0.03 per share last year. We note that there are reconciliations from GAAP net income or loss to adjusted EBITDA at the end of this presentation for your reference. Turning to Slide 8. We highlight our share of the market growth as we bulleted it on Slide 7. Here, you can see the market share gains split out between the Mexico and Guatemala markets. In Q1, Intermex growth accounted for 45% of the total growth to Mexico and over half of all the growth to Guatemala. These capture rates are higher than any of our impressive annual polls over the past 5 years. We strongly believe the success we have experienced is due in large part to the value and service level we deliver to our customers. As a result, we feel good about our ability to continue to grow share across all of our markets. Turning to Slide 9, as you saw on our press release, we are reaffirming our full year 2019 guidance for both revenue and adjusted EBITDA. Specifically, we still expect revenue in a range of $320 million to $330 million, we also maintain our view that adjusted EBITDA will end the year in the $54 million to $58 million range. I would like to take a minute to reiterate some comments I made last quarter about the quarterly cadence of our EBITDA this year. Because of the timing of the expense items I described a few minutes ago, we do expect that our EBITDA growth for the year will be tilted more towards 4Q than it has in previous years. Before I turn the call over for questions, let me quickly walk through some bullet points on our warrant redemption that completed on April 30. Here, on Slide 10, and as you can reference in our press release, Intermex exchanged $8.9 million or 99.5% of our outstanding warrants for cash and common stock consideration. In exchange for these warrants and in conformance with the offer, we issued approximately 1.8 million common shares and paid approximately $10 million in cash. As was noted in the past, the reasons for pursuing the exchange included a goal of increasing the liquidity of our shares and for the Intermex investment thesis to appeal to a wider audience of investors. Based on even the past few weeks, we believe the exchange offer has accomplished that goal and we are looking forward to meeting with additional investors as the year progresses. Lastly, for your modeling purposes, you should note that extinguishing the warrants leaves our stock options as the only material source of volatility in our share count. Based on achieving the consensus target of $17 by year-end, these options would add approximately 300,000 fully diluted shares to the current count of roughly 38 million. So with that, I'll end by saying that we're excited to have had another great quarter. And let me turn it back over to the operator to open the line for your questions.

[Operator Instructions] Our first question comes from David Scharf, JMP Securities.

Bob, I'm wondering, I had a couple of things to dig into but first, just in terms of the overall health of the U.S. to Mexico corridor, we're coming off of a couple above-trend years or at least based on Banco de Mexico data, north of 10% remittance growth, what are you seeing lately? I mean, did you feel like we're going to be reverting to the mean this year, more in sort of a low mid-single digits or just the first 4.5 months looking healthier?

Well, it's hard to predict the next 8 or 9 months. April numbers are not even out yet, they come out right the first week in June. So we have numbers through first quarter. And where those numbers represented a bit of a downturn from the overall average for 2018, they actually were better first quarter growth this year than it was last year. So first quarter has tended to be a little slower, not in terms of absolute numbers, but in terms of year-over-year growth, seems like the market has revved up a little bit as the year has gone on. Now it's not a prediction that, that will happen in 2018 -- or 2019, rather, but it's a little too early to say that because first quarter, the growth was slower than the overall year in '18 that, that will continue. We're still seeing good growth, though. I mean, we're still seeing growth in the 7% range, 6%, 7% range depending on the country or even higher in some countries. But again, last quarter was somewhat slower, so we're still expecting it to begin to rev up this we get into the second and third quarter.

Got it. No, it still seems like there certainly aren't any signs of the brakes going on at the macro level. Different topic. In terms of Africa, I appreciate you kind of giving us some context for the opportunity of the received markets that you provided, comparing it to sort of the Guatemalan opportunity. I'm wondering, from the standpoint of building out those send agents, how concentrated are sort of the key geographic areas in the U.S. for transfers to those 4 countries? I'm wondering, is this just a sort of 200, 300 agent build out, and that's all you need to do? Or is it more dispersed and a longer build than that?

It's going to be a -- and I'll let Randy also add to my answer. Randy, our Chief Marketing and Sales Officer is here with us. But it will be a much more concentrated marketplace. The African population in the U.S. is more concentrated within, let's call it, 5 or 6 different regions of the country, more so than obviously, the pervasive nature of particularly Mexico and Guatemala. So particularly along the Mid-Atlantic region and up into New York and a little bit in L.A., some in Minnesota. But in looking at that, I think there'll be a combination of our overall network, some of those stores, some of those retailers will do a few wires, some of them are on borderline of neighborhoods where Africans live, particularly in places like Bronx, New York and the rest. But there'll be a dedicated of group of agents, and I think [indiscernible] probably the need will ultimately be somewhere between 300 to 500, depending on some of the other countries that we'll add in Africa as we go forward. Some of which are not as much geared or maybe French-speaking and stuff that will be countries that will add to our outbound list after the group that we started with. I don't know, Randy, if there's anything you'd like to add to that?

No. I think you covered it pretty well. David, I would just say one other thing, which is, we were really pleased with the early attachment rate that we saw to Africa, primarily with the fact that about 80% of the agents that were transacting from the U.S. to Africa came out of our existing agent base. So we were really pleased to see that there was a good cross over there.

Got it. Okay. And then just lastly, then I'll hop off. Is there any update on the GPR card and that launch, how that's progressing?

We have the GPR card out in our branches. As you know, we have 32 brick-and-mortar locations of our own, and we're testing the GPR card and launching it there and called it -- Telstra launch is a small launch. It's very early on. We're also looking at the GPR card as an opportunity for us to sell that commercially to people who may employ a lot of immigrants across the same plants, farms and the other thing, even maybe some organizations that handle H1 visas. So there's a lot of routes for us to go. It is out and being tested. Right now -- when I say tested, I mean, it's a miniature launch, right? So we're testing through live customers up through our branches, but we will be rolling it out throughout the year through our agents network.

Our next question comes from Mike Grondahl, Northland Securities.

Two questions. One, can you comment what same-store sales were kind of in your core states, the growth states or the legacy states or the combined? And then I know Mother's Day is kind of a huge holiday for money transfer, just curious how the recent weekend went?

Well, relative to the same-store information, we think -- we don't usually comment a lot on that but our same-store overall has been running in the middle, somewhere to the middle single -- double digits, rather, in terms of same-store year-over-year. And that's the country as a whole. It'd be higher than that, typically, in our more established states because we have more same-store business. And then a little bit lower sometimes in some of the newer states, although the newer states are moving by the number of agents that are reaching up from 1 year to 2 years. So actually that actually helps that number. So same-store still drives a lot of our growth but typically, [indiscernible] we see that about half of our growth comes from same-store, about half of our growth comes from new store and then you take the sort of the turn away from that, right? So together, they represent a number higher than our overall sales, and then you have a churn, and those are obviously retailers who did transactions last year and don't do transactions this year. So it continues to be really healthy. And one of the biggest opportunities and one of the biggest growth things for any retailer is that second and third year because we usually see retailers with a Tier 1, by the time they are year 2 or 3, a very big increase in terms of year-over-year wires.

Got it. And then just -- if you could comment on Mother's Day weekend, how that went?

It went very well. I'm not sure how much we really are comfortable in saying that, that's the second quarter, but we're pleased with our activity, we had some very strong days, highest day ever, but we would expect that. The thing to remember about our business, where Mother's Day is a bit of a test in terms of your ability to handle a lot of wires quickly, your call center, your technology and all the rest of it. Remember, our business is not one that's like retailers at Christmas time, where a huge amount of our sales come from Thanksgiving or just before through to the first of the year. We're a pretty balanced business. So our biggest month might only bring 1.5% or 2% bigger as a percentage of the year than our weakest months. So we had a great Mother's Day, but the fact is June, July, August, September, right on through now, November being really the only month in that the rest of the year that's somewhat less than par with the rest of them. This is kind of our season when you get into April and May. So we should be clipping along and every one of these months will be equally as important to make, overall.

Got it. Any update on the competitive environment? Are you guys seeing anything different there?

I'll let Randy go ahead with that, I think he's certainly more tuned in than any of us relative to competitors.

Yes. Similar to what we reported last quarter, Mike, is with respect to last weekend, I'll just add to Bob's comments, that a lot of our competitors really do discount during that time, that Mother's Day period, and we held true to our margins and still grew very, very well. So -- but just reinforces the fact that we really do add value and that consumers and agents alike trust us and want to use us even when competitors are discounting.

Our next question comes from Brad Berning, Craig-Hallum.

A couple of follow-ups in some of the details there. Just curious, what is your average ticket growth rate look like? I'm just wondering about how labor inflation might be showing up in the volumes?

So you mean the average principal amount, I guess?

Yes. Yes.

It's been relatively flat year-over-year. So it really will be more buoyed by not so much the inflationary rate, but it will be buoyed more by changes in the trading rate of the peso. So the peso starts to become very weak, our consumers perceive pesos to be on sale and they'll send larger principal amounts. The solidness of the business, meaning the number of transaction growth year-over-year seems to be more dependent upon economic conditions. And then the principal amount has a lot more to do with the trading of the peso. When peso weakens, and it goes to MXN 21 per dollar versus MXN 20 per dollar, that signals to the consumer, the sender that it's on sale, and they'll usually send larger principal amounts.

Understood. And the legacy markets that you've been in longer, can you give us a refresher a little bit on what your market share looks like for both Mexico and Guatemala? Just wanted to get some context to how we think about where the overall company could trend towards potentially over time if your newer states are as successful as some of the legacy states?

Yes. We've -- Bob said a few times in terms of the information and like, for instance, in the -- our stronghold, right? And not every state necessarily in that group. But our stronghold really would include states in the southeast where, in many cases, we have market shares that are 35% to 40% between Mexico and Guatemala combined. There are very strong state for us like the states of Georgia, North Carolina, certainly Tennessee, Kentucky, among others, amongst Florida and others. And so overall, those market shares tend to be quite a bit higher, obviously, than our strong -- than our growth states. We think that, for instance, it's sort of dimensionalize in California today in the state of California, we're doing about 5 million wires a year, between 5 million and 6 million wires a year, trending towards the 6 million. And we think that market can be 2x to 3x as large, and that would certainly be consistent with today. Our market share in California is probably around 11%, something like that. And we think that we can certainly attain that size of a market based on attaining market share in California and Texas, a smaller number but similar kind of opportunity. So when you look at states like California, you have an upside of hundreds of thousands of wires per month, millions of wires on an annualized basis. Texas, a little smaller, but still, we can think Texas has the ability to be as big as California is today for us, which again, is 4 million, 5 million wires a year. And even some of the other states out West, whether they be Colorado or whatever, we still had great growth opportunity in the Northeast in states like Illinois in the Midwest. So the growth opportunity is kind of abound and they're throughout the country. And a good thing that's interesting for us is that even in our established states, almost every single one of those states and I think this quarter, every single one of those states, we grew the market faster than the market growth, which means we're continuing to gain market share in states where we already have a really high market share. So even though we have a really big market share in the Southeast in certain areas, if you look at that, that's no way is the terminal market share, right? That's continuing to grow. Whereas the West and Southwest had an opportunity to continue to grow towards what we have in the Southeast or even the Northeast, but they're not fully ramped up either because we continue to gain share in those markets as well.

Yes. Appreciate that, that was going to be my follow-up, is -- and it's good to hear that the legacy markets are still haven't plateaued yet. On the newer African corridor as far as -- help us think about the cost of acquisition versus your legacy business? And just help us think about as you try to get into that market, how you're thinking about that?

Yes. Brad, it's Randy. Cost of the acquisition will be very similar as to what it is for Latin American business. There is one caveat where our brand is not recognized in the African community. So we're going to have to really demonstrate and improve ourself and spend a little bit more, increasing our brand recognition and gaining brand loyalty. But it'll be very similar to that of Latin America.

And so far, the year-to-date marketing campaign on that, you feel like you're on target for kind of what you're thinking about for the course of the year?

Yes. We're right on. We're -- like I said earlier, we're pleased with what we've seen first quarter, it's really 2.5 months in, we launched on January 17, but we really like what we're seeing so far.

Our next question comes from Joseph Foresi, Cantor Fitzgerald.

I guess my first question is just, you talked a little bit about the moderation in the first half of the year and the pickup in the second half of the year. I'm wondering maybe you can just dive a little bit deeper into what's causing that fluctuation? And what gives you sort of confidence in the pickup?

Yes. So Joe, this is Tony Lauro. You've got to remember, in the first half of last year, we weren't public, so we didn't have public company expenses like D&O insurance, Investor Relations, external reporting, we weren't doing quarterly audits, things like that. But we were doing them in the second half of the year. So on a year-over-year basis, you see high growth in those expenses in Q1 and Q2, but then they come back down to be very flat in Q3 and Q4. The second large one would be in marketing, where we have front-loaded our marketing activities this year, where last year, we had kind of backloaded them a little bit. So you're seeing high year-over-year growth in our marketing expense this year that also normalizes in the second half of the year. And then the third one was, it really doesn't quite normalize as much, but in aggregate they do, is that we move to an active network so our infrastructure cost are running a little higher to support that technology.

The one thing I would add to that, Joe, is that, to be clear, I mean, we've sort of set a pretty high standard, right? With the first couple of quarters out and delivering a year of over 40% of EBITDA growth. We certainly don't feel like we're in any way embarrassed by 22% EBITDA growth, particularly while we do that while opening a whole new corridor in the world, which we think that's incredible opportunity for us going forward. Our first corridor outside of the Latin American corridor, which took some time, even though it's just in a lot of money but it takes some time because it's English-speaking, different than our Spanish-speaking corridors that we work with today. In addition to continuing to move forward with the GPR card, a whole new product in a whole industry that we've never encountered before, while we continually move along with our processing components and everything else. So we're pretty happy with the growth. I mean, obviously, wanted be higher, and we think we can continue to push for it to be higher growth, but we're really happy with that in the backdrop of all the other things we did in first quarter.

Got it. And I wanted to ask a couple of questions about Africa and Canada. I'm wondering, what drew you to these particular geographies? And the standard -- and the strategy for the geographies, are they any different than sort of your standard strategy for Latin America? I'm wondering why you picked Africa and Canada. And then you've sort of been known as being very customer-friendly in the same areas that would frequently need and want and use a service like this. I'm just wondering why you picked those 2 areas and if the strategy is about the same?

Well, let's kind of separate them first of all, that Canada is a first-world country that's an outbound country, right? So different than adding Africa. In Canada, although it's a different country with different laws and everything else, for us, from a strategic perspective, isn't much different than extending out into more states from a strategic business perspective. Canada is a natural next movement for us in terms of not only Latin America but Canada has a diverse market, and that will -- we'll grow with that into more destination countries, more inbound countries as we grow out of Canada. Africa, this is different, it's an inbound country, it's a country that's a recipient of remittances versus generating them, and the reason we picked Africa is because it's highly concentrated. Some of the neighborhoods are very close the neighborhoods we already work even though they may not be the same neighborhood, we have some expertise in that area, and we're able to bring in some people who had worked very successfully in the African business for other companies. And then I think in addition to that, it's a very concentrated market with good margins, and that's really things that we look at is can we do a great job in that market. It's concentrated in the sense that we don't need to have, remember, we're not guys that receive a lot in ubiquity, that's the Western Union model. Our model is very rifle shot so when you get a market where you can rifle shot with 300, 400, 500 retailers, and serve this whole continent, that's a really great thing for us. The second part about it is the margin tend to be really good. So much better than they are in some other areas of Latin America when we get outside of Mexico and Guatemala. So all of those things combined make it a very attractive offering for us, and we think that -- I mean, I'm really excited about -- I mean, to me, it's reestablished for me how much this business, this industry is staying at brick-and-mortar because I look at the very fast growth in a brick-and-mortar business for us in a whole new corridor and quickly as it has moved. Not that it's a huge number yet, but it's actually going a little quicker than I thought it would. So we're really excited about it.

Okay. And then the last question, just around margins. I mean, you said Africa's got really good margins, maybe higher than -- those are my words not yours in Latin America. I understand...

Some of it is to make sure I clarify, the Latin America other than Mexico and Guatemala. Other than Mexico and Guatemala.

Got it. So I guess, I understand sort of the costs and the comps and front-end loading and active network and stuff like that. But I'm wondering just your thoughts on whatever level you can give them about the long-term margin profile of the business? Or do you think you'll be adding countries kind of on an annual basis, and we should think of it that way?

; Yes. So it's Tony again. So I'll just reiterate what we've said in quarters past, which is, we're going to see pressure as our mix shifts away from Mexico, which is the most profitable market. We're going to see pressure on our gross margin, but we're going to see continued expansion of operating leverage over time in order to hold our EBITDA margins stable. So we expect our EBITDA margins to stay stable over the medium term, which is the next few years while investing in new markets and new products. So we can absorb those and maintain the EBIT margins that we have. And although I wanted to say that our net income margins will continue to expand with our renegotiation of our -- migrating to a new debt facility as well as the runoff of the amortization of our intangible assets and slightly moving to more favorable tax rate. So we're seeing stable EBITDA margins and expanding net income margins over the foreseeable future.

Our next question comes from Jason Deleeuw, Piper Jaffray.

So I just want to understand the industry growth that's assumed in the guidance this year versus the industry growth last year. If you could just update us on what you're assuming for overall industry growth this year?

Yes. So we gave a range because we knew there were a range of potential, not only our own personal performance, but industry growth outlook. I would say, what we've seen so far is in line with our expectations and if we see growth rates increase across the industry, we'll start moving towards the higher end of our range. If we see them slow down, we'll move towards the lower end of our range. But right now, we haven't seen anything that makes us concerned about the range that we provided.

And can you just remind me, what was the range? Or unless I missed that?

The range of EBITDA?

Oh, no. I was saying for industry growth.

Yes. We didn't provide a range of industry growth in our published guidance. But like I've said, what we've seen so far is in line with what we're expecting.

Okay. And then on the EBITDA cadence, thanks for the quarterly cadence color there, but there are also a lot of -- I mean difficult -- different comparisons year-over-year on the revenue growth. How should we think about the revenue growth cadence over the coming quarters?

So revenue growth, again, some of that's going to depend on how the market growth plays out quarter-over-quarter, but we are going to have a tough grow over in the second quarter because if you recall, second quarter of 2018, we saw a big spike in volume and average send amount, driven by the Mexico election and volatility of the peso.

Got it. And then just a last question. As you expand into the new growth markets, just trying to get a sense to how competitors are responding. And are the competitors still generally, the smaller local players in the areas? And any noticeable -- just how they respond? And then, I guess, how you would respond to how they're responding to you?

Yes. I'll give you a little background on that. This is Bob. And then Randy Nilsen will add to that. So when we go into these markets, you say expanding the market, there's not any of them that are really putting a flag in the ground for the first time. So we're already known the markets. In a place like California, where we're still having huge amount of upside growth, we're actually seeing a lot of people that are coming after our agents possibly, right? As we're going after agents. So there's a lot of competition going on. We see that the primary driving forces in terms of competition would be private companies that are smaller competitors. We do see some competition at retail as we've spoken about many times, not Western Union with its Western Union yellow and black product, but with Vigo, at times, we'll see them be quite aggressive in their retail. Not a lot of focus on some of the value-add for the differentiation of the product but a lot of focus on pricing. We'll see -- we have the kind of aggressive pricing at times retail. But the primary force of driving towards discounting is done primarily from the small niche providers, and that's just something that we've been able to kind of consistent basis, talk to people in the industry, they believe that there's been price compression going on for years and years, and we've been able to sustain and some years, actually increase our margins at the gross margin line, per transaction during that sort of compression time of pricing and do that as we grew our transaction growth year-over-year 2x, 3x, sometimes 4x the rate of the industry. And so we continue to kind of hang our hat or leverage on the things that we're great, we think we're really good at, and it made us really good, which is very careful, very concentrated and targeted recruitment of quality agents. So we don't waste a lot of time and energy being ubiquitous and this Western Union is not the only guys with ubiquity, the small guys like to put up a lot of agents really quickly. Also by being really value-added with the quality of the product and many things we've talked about over the many quarters already that we've spoken to many of you guys related to banking relations, it's quality and technology, our check direct product, or call center, our tech support, whatever it might be, always looking to be the best in the industry as any of those components, and we continue to do that. Now, no product in anywhere, I think, is completely price inelastic, so we recognize that we sometimes in some of the more competitive product -- competitive space, rather, have to be at a more aggressive price but in our sort of apples-to-apples states we're able to sustain price and we're maybe a little more aggressive in places like California, Texas and the others. I don't know if that answered. Randy, do you have anything to add to that?

No. I think you got it. Yes.

We have reached the end of the question-and-answer session, and I will now turn the call back over to management for closing remarks.

Well, thank you, all, for your time and attention on our first quarter conference call. We look forward to talking to you all soon. Thanks, again.

This concludes today's conference, you may disconnect your lines at this time. Thank you for your participation.