Greetings and welcome to the Euronet Worldwide Second Quarter 2015 Earnings Conference Call. At this time all participants are listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a remainder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jeff Newman, Executive Vice President and General Counselor for Euronet Worldwide. Mr. Newman, you may begin.

Thank you, Andrew. Good morning and welcome, everyone, to Euronet’s quarterly results conference call. We’ll present our results for the second quarter 2015 on this call. We have Mike Brown, our Chief Executive Officer; Rick Weller, our Chief Financial Officer; and Kevin Caponecchi, CEO of our epay division 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 our website. Now, I’ll turn the call over to our CFO, Rick Weller.

Thanks Jeff. Good morning and I too welcome everyone to the call. I will begin my comments on slide five. As you can see, we continued our momentum and delivered exceptional second quarter results with double-digit constant currency growth across all P&L metrics. We produced revenues of $425 million operating income of $47 million and adjusted EBITDA of $67 million. Our cash EPS was $0.78 per share, a 34% increase from the $0.58 a share in the second quarter 2014. This $0.78 includes $0.03 to $0.04 of favorability from the stronger than expected earnings in lower tax rate jurisdictions, resulting in lower tax expense and about three quarters of a penny of favorability from foreign currency rates, since we gave guidance in late April. And while the $0.78 is an impressive operational achievement, it also includes about $0.15 per share of headwind from foreign currencies versus the same quarter last year, which if added back to this year’s number, would have resulted in a 60% year-over-year constant currency increase in cash earnings per share. These exceptional results were made possible by contributions from all three segments. Next slide please. Slide six provides our three-year transaction trends by segment. EFT transactions grew 3% with growth in Europe, partially offset by declines in China. With our focus on expanding our ATM and POS networks to higher value locations versus higher volume locations, we will continue to see revenue and margin expansion outpace transaction growth rate. epay transactions increased 13% year-over-year driven by growth in India, Australia, Germany and the Middle East, which was partially offset by declines in Brazil, the UK and Poland. Transaction growth outpaced revenue growth, primarily as a result of increased transactions in India and the Middle East, which earn a much lower revenue per transaction than transactions in…

Thank you, Rick and welcome, everybody. I’ll begin my comments on slide number 10. As I kind of look at this second quarter, I’ve got a few bullets here I’d like to share with you. The first thing that you cannot miss is that our constant currency and operating income and cash EPS growth were 67% and 60% respectively. These are simply outstanding results. I know we use that word outstanding a lot but that’s despite currency headwind. We exceeded our guidance by $0.08 which was more that 10%; we had strong performance from all three segments. And this continues to demonstrate our commitment to delivering more products on more devices in more locations and more markets. Also this quarter we are going to talk a little bit about our eye to the future with two acquisitions that support the growth strategy of the money transfer business. The first was our Malaysian based money transfer provider IME which we purchased which gives us immediate access to the large and fast growing Asia Pacific money transfer market, where we’ve previously had little to no presence. We also acquired XE, the world’s most trusted online foreign currency website. This expands our internet presence by orders of magnitude and the potential user base. It also expands our digital money transfers strategy of attracting new customers to our digital sites. Both acquisitions will drive future growth. So, let’s move on to slide 12, and we’ll talk about each of these segments starting with our legacy segment which is EFT. On a constant currency revenue and profit basis, the EFT segment grew 22% -- 23% year-over-year. This growth is fundamentally fueled by more ATMs and more value added transactions. Now jump to slide number 13 and we will talk a little bit more about some…

[Operator Instructions] And I’m showing our first question or comment comes from the line of Peter Heckmann with Avondale. Sir, your line is now open.

With XE.com, interesting acquisition and really seems to be a pretty valuable media property. You talked in the press release about converting some of the existing payment volumes off of the incumbent provider which I think Currency Cloud on to HiFX. Will you need to develop incremental technology or get additional licenses to convert all that volume? And if so, what would be the time line for converting that volume on to your platform?

First of all Pete, it wasn’t in Currency Cloud but second, the nice thing is we have license. And so what we have to do basically is give the current provider 12 months notice which we’re about to do and then we’ll be able to take over that volume with our current license12 months thereafter. And no technology -- the two founders who run that company are excellent technologists, they’re strategic, they’ve built up a hell of a company, they’ve got a really strong group of people. We’re really happy to have them on board with us as we kind of convert their website and their contributions into more of a payment generation hub than just an information hub.

And then I don’t think you referenced it in the press release and maybe not, maybe you can provide some additional color of how converting and limiting that incumbent processor might -- at the accretion in kind of the second year of the deal?

We haven’t and we will let you know little later.

And our next question or comment comes from the line of Rayna Kumar with Evercore. Your line is now open.

You spoke about some strong money transfer wins in the quarter but going forward, how fast can you grow money transfer top line, given tougher year-over-year comps? And where do you see the largest opportunities to win business over the next two years?

Our comps have been accelerating over the last two, three years. And this year it’s kind of hard to double your op income down here every single quarter, quarter-on-quarter. But the point is we’ve got a lot of momentum under it; we’ve made investments in our future. Just our core business, this is as ex any kind of acquisition, ex Walmart-2Walmart continues to grow very well. Our basic legacy Ria business grows very well and then you add all these things on top of it and you get growth acceleration. So I grant you that it will be hard to kind of double our op income every quarter, as I move forward forever and ever I mean. But we’ve got a lot of important things in the pipe to continue to do that. And you can just look at it. I mean this is the question that you -- not you but people have been asking for the last several quarters, how do we keep wining more and more business. It’s because we have a better value proposition than our competitors. We have some excellent professionals that run and work at Ria and the combination is what you see is kind of what you get.

Just one follow-up, do you expect to win a cross-border money transfer contract with Walmart.

Walmart has not granted those to anybody. If they decide to do something like that, I hope that we’re in a good position to do so. So, we’ll just have to see what happens.

Our next question or comment comes from the line of Chris Shutler with William Blair. Your line is now open.

Maybe let’s just start with money transfer Mike. I know you said that the trends have been pretty consistently strong in just the core business. Maybe can you quantify that, so ex Walmart, any acquisitions, are you still kind of in that low double-digit range for growth?

Yes, I think that’s about right. We’ve been hitting in that kind of 12% to 14% range for quite a while now.

And then on the Walmart-2-Walmart business, how is that kind of trending on a same-store basis and is your expectation that growth rate or when is your expectation that growth rate is going to begin to plateau?

Well, there is your question of the day. First of all, same-store -- it’s the same number of stores today as they were on May 1st of last year because number of Walmarts in the U.S. really haven’t grown in quantity. So, all the growth that you’ve seen in that business has all been same-store sales growth. We have lapped our starting point. We continue to see stronger and stronger months almost every single month. I think that what you’ve got here is a little bit of the eke on one on one price elasticity curve, we offer a better value proposition for the Walmart customers than they can get anywhere else in the country that has driven larger quantities than maybe even were there before but we don’t know the exact numbers before. So, it continues to grow and people ask us how big it can get, I don’t know, it just keeps growing. And it’s exciting to know that more and more people are finding out about this service. So, a significant amount of our customers are first time users and so that tells me more and more new people are coming into the business.

And then, how confident are you that -- I don’t in the next let’s say 12 months that you could maybe win another big box or two in that space or is it still just too early to tell?

I think it’s too early to tell but I think that finally we’re making impacts on the big boxes. I mean these big boxes have done things the same old way for 10 years. The same buyers, it’s the same way without much stock. And now that we’re starting to shake things up, I think people are starting to give us a fair shot at discussions. Whether that turns into an agreement in the next 12 months, I can’t tell you for sure, but I sure love if it could.

And then maybe one more if I could sneak it in, in the EFT segment, I guess that you take roughly 1100 ATMs less 450. Of that remainder, what was the rough split Europe versus India?

Most of it Europe, there is like some like 667 or something like that was the net of the two, growth. So, we did 499 in the first quarter, 667 in the second quarter. So, we’re certainly on our way to our goal of 2,000 for this year.

I’m guessing most of those machines have good possibilities for DCC rollout?

Actually all of our do it just right out of the gate. And so, yes.

Our next question or comment comes from the line of Mike Grondahl with Piper Jaffray. Your line is now open.

Thanks guys and congratulations on the quarter. Maybe a special thanks to Juan.

Yes. I know Juan has done a really good job and his team. He has got just butt kicking team.

Yes, he sure does. Mike, if you had to pick just one or two areas that outperformed your expectations, what were they in the quarter?

That is probably the toughest question I have had today because the reality is they all have. I mean it’s just across the board and every segment, it’s just -- the only thing that I wouldn’t to say compared to may be six months ago, our transactions in Greece were below our expectations, but not where they were may be three or four months ago because we knew all consternation that was going on that country. But with that exception, I mean everybody -- every country, it was just an amazing quarter of everybody doing a very good job.

Is there any way you can qualify your Ria Online investment and do you feel that’s paying off?

Yes, this is no different than maybe I think may be somebody asked this may be last quarter. So we are spending about $6 million to $7 million of investment in Ria. Our quantities are growing very quickly. And I can’t wait to leverage this new asset of XE to help that accelerate much, much faster.

And then last quarter, you talked about you EFT software going on 17,000 ATMs in France at BCPE, 35,000 ATMs at Elan Financial Services and then a big chunk in India. Have those been rolled out yet?

No, they have not yet. They are in the process. And these are what we call pass-through transactions where the bank will actually operate as own ATM and for some of these value added products and this might be selling top-up at the ATM, selling an iTunes at the ATMs, doing a DCC transaction at ATM et cetera, et cetera with this pass-through transaction. And one of those are requirements or one of those queries hit his ATM, he passes that transaction to U.S. and we handle all of the detail of that forum and just pass it back at the end. So, it’s not really software that runs on his ATMs but it’s kind of like an exit. It’s a web call when those customers require those kinds of service.

Will those be live soon or by year-end, or what’s sort of the thought?

We are hoping by the last -- by year-end, we should get most, all of them live.

Okay.

What here are banks and banks IT departments tend to be challenged with a lot banks right now, so just getting them to get it all done, take some time.

It’s still to come, okay. And then just two more quick, the gift card in the U.S. at Staples, Sears and Kmart, are those exclusive deals for you? And that’s new to me that you are doing gift cards in the U.S.; primarily you have been overseas before. Can you just kind of talk about those wins?

Kevin, would you answer that?

Yes, sure. So, we have gift card malls. Some of the other competitors focus on large retail. We focused on convenient and petrol stations max. We’ve had a gift card mall. If you go to a pilot truck stop for example, there will be a spinner rack with our content. And we’ve been in pilot at five plus years. And so now, we are starting to gain significant brands like the ones mentioned. And so we will take their gift cards and put it into our gift card mall in the select channels that we focused on in the U.S. which are related to convenience and petrol chains.

And then just lastly, Mike. The $0.94, did you qualify how much -- what you are including in that from the recent acquisitions?

Well, I mean we said that IME -- we said that first of all, IME, we have said that that would be about $0.08 or so in a year, right, so in its first year. So, in the first full quarter of it will get around $0.02. With respect to XE, we said that that’s basically going to be neutral in its first year, so it’s really almost $0.02 of the $0.94.

Got you. Not much. Okay, hey thanks a lot.

And then also Rick, just to help him, what would be an estimate of the currency headwinds baked into that?

Let’s see…

I think I caught him off. Sorry.

But I’ll give you. It’s probably in the ballpark of $0.10 to $0.12 a share.

10 to 12, okay.

That’s assuming currencies stayed just where they are right now compared to prior year.

The Euro in last year in the third quarter was 1.29; we are still at about the 1.10 level, so call that 18ish kind of 17%, 18% difference. I’d have to look up and down the page on the other currencies. But knowing that many of the other currencies kind of fall in line with the euro there that would probably turn out to be reasonably close estimate.

Our next question or comment comes from the line of Alex Veytsman with Monness Crespi. Your line is now open.

My first question is on the money transfer transaction growth, transactions grew from 13.9 million in first quarter I believe to 15.5 million in the second quarter. Can you give us more granularity as to which markets were the strongest? And specifically what was the transaction growth for Walmart-2-Walmart?

You’re just talking about our sequential growth from first quarter -- from first to two. That’s just seasonal; it wasn’t any kind of unusual difference across our markets. A lot of that’s driven by Mother’s Day. Mother’s Day is the highest transaction volume day of the year. So that’s pretty consistent with what you’d see in prior year kind of trends.

Also don’t forget, first quarter for money transfer for the typical remittance market, when you’re in the northern latitude, you have less construction jobs for immigrants, certainly less agricultural jobs. So, there is just less transactions always in the first quarter than it will be in the second quarter.

And what about Walmart-2-Walmart, can you give us some idea as to what was the transaction growth of that particular transaction…

No, we don’t give any information on that but they were up nicely.

All right.

As we mentioned in the last call, April turned out to be our largest month to-date and we continue to surpass April month-on-month since then.

It’s better than December, right?

Yes, April was better than December and May was better than April and da da da.

And then just some housekeeping for IME, so you mentioned $0.02 coming for third quarter and then $0.06 for the fourth quarter.

No, we said $0.08 in its first 12 months of operation.

Okay, got it.

So that’s how we got to $0.02 in the quarter and that’s just kind of rough guess but probably won’t be too far on.

Okay. So, it’s $0.02, you should not -- kind of $0.08 in the second half.

Right. Because we give that same kind of guidance every time we mention any kind of acquisition because you never know what point in the year you do them and so we try to give kind of the next 12 months outlook.

And then as far as the top-line impact how much of the revenue impact are you expecting in each of the quarters for second half of ‘15?

We haven’t put out numbers on that there but IME is not a big revenue kind of number, even if you just take that $0.02 per share and kind of explode it back upwards. And then you come with that. And in our release we put what the annual revenue number was of IME. So, I think for your estimate, essentially a fourth of that number would be a reasonable guess.

The next question or comment comes from the line of Tim Willi with Wells Fargo. Your line is now open.

Two questions, one on money transfer, one on epay. First on money transfer, Mike with IME, obviously there is a lot of excitement about sort of bolstering your presence and entering into a lot of markets where you weren’t or had small presence. Could you maybe just even -- I know you don’t give longer term guidance but if you just think about your own internal expectation for what this business would look like or whatever would be 24 months, 36 months in terms of your plans to grow and build off the network they have and their market expertise. You’ve obviously shown you can do that by how you’ve built Ria since you acquired it. So I’m just curious how you think about this property specifically, its geography, and the population it can address and help you accelerate into more so than if you didn’t have it?

So, if I was to quote Juan Bianchi who runs Ria, if you would remember back when we purchased Ria in 2007, we were doing about 14% or 15% of our revenue and our profit in Europe at the time and remaining 85% in the United States. And over that this last eight years, that 14% has grown about 50% of our business and continue. Our entire -- this is our legacy business and it continues to grow at these nice double-digit numbers. So by buying IME instead of -- and then I might also mention that even we bought Ria in 2007, they started European operations about three years before that or so, two or three years before that. So, it took about a decade to go from zero to half our business. With IME, we might be able to achieve similar kinds of things in quite a shortened timeframe, maybe it only takes half that. So, it would be great if our Asian business accounted for a third of our business. And it isn’t going to take 10 years to get there with the head start that we have with IME. So that’s kind of a qualitative thing. We don’t have exact numbers on it. But with where IME is right now, we’ve certainly got an accelerated head start on the Asia Pac business.

And then my follow-up just on epay, two things, one was housekeeping. You’ve typically quoted sort of the gross profit contribution of non-telephony. I don’t recall hearing that today, if you have that handy, Rick?

Yes, this was about mid 40s percent.

And then, I’m just sort of curious; it doesn’t get asked, myself included. But just competitively, what does the market -- what does it look like and evolves to around non-telephony? Obviously people like Blackhawk or over in Europe and parts of Europe I think Incomm’s got some stuff over there. I mean as you look at the landscape realistically; how many players do you feel like there is a widening chasm between those that really get it and those that won’t make it in the non-telephony marketplace, just how you feel about where you are competitively there?

There is really only three players of significance in non-telephony, but you mentioned Blackhawk, they’re public and there is another company Incomm and those two companies are -- traditionally have been around the same size, maybe there is some divergence. Where we’re strong is in the markets that we started with telephony, mobile telephony and that’s continental European markets and a bit of England as well. And so the is I think it’s hard to unseat them from their long-term relationships with retailers, probably similar for them to unseat us. But we’re very excited about where Europe is going.

And the brands Mike, there is two sides to it; there relationship with the brand, the connectivity that you have with the brand partners i.e. iTunes Google Play et cetera and then there is a relationship of the connection you have with the retailer. And so that’s hard for competitors to unseat.

Yes, so it’s really a three-horse race more or less, not anybody…

It really has been so for the last five years.

And do you view it is rational competition, have you seen the other players…

I think is rational, yes; it’s competitive but it’s rational.

Yes. So that’s kind of competition. Good. That’s all I have. Thanks very much guys.

And our next question or comment comes from the line of Matt O’Neill with Autonomous Research. Your line is now open. Matt O’Neill: I had a couple of quick follow-ups. Looking at the Asian location and a network location for money transfer and if you back out I think you’d mentioned in the release at the time with IME about 17,000 that would put you back at around 255 or maybe plus 9,000 locations. So, I was just curious what regions are those kind of more organic location growth coming from?

Yes. A lot in India and Asia. And we’re real happy to get India on the map here. We were mostly going to intermediaries. The problem with intermediaries is on a profit side of course there is an extra amount of seat but more importantly, it all comes down to good quality service. So when you have a direct relationship with say a bank and somebody loses their transfer or something isn’t working, instead of having to call up an intermediary to find out where did that money go, we can look at our own system and find out where that money went. So we can answer things immediately. So that’s why we closed down some of the locations that we had with the intermediary and then added the ones with our direct connects. Matt O’Neill: And then I have another question and clarification. I believe right now Ria Online is U.S. outbound only. And I was just curious as you continue to implement HiFX, if there is sort of a natural progression to having more send regions, adding UK et cetera for online?

Yes, there certainly is and we’ll announce those as we bring them online. Matt O’Neill: And then one final question. You guys quantified full year in the slide deck for IME. I was wondering if you could maybe make a similar comment around XE. And I know it’s not necessarily accretive this year and may be it would be more interesting if you would discuss the current volume or transactions coming now?

Well, we don’t really want to giveaway those exact numbers right now. But because we’ve got this issue with this third-party supplier that we’d like to become and that requires the 12-month notice, really you’re not going to see much change over the next 12 months from now. But then we can see us picking up a lot of volume from where this competitor was in today. So that’s why for the next 12 calendar months, you’re not going to see that’s where we say kind of no accretion, no dilution. And then I would say by -- say this time next year, we’ll have a better idea of kind of what’s happened. And as we supplant the current provider with ourselves, we can give you a little bit better estimate. Matt O’Neill:

And our final question of the day comes from Peter Heckmann with Avondale. Your line is now open.

Great. I thought I’d sneak in with a couple quick follow-ups. On the online side and echo Tim’s question for online money transfer with the acquisition of Xoom or pending acquisition Xoom or pending acquisition of Xoom by PayPal and some of the other funded startups. Are you continuing to see the digital side of the business be rational from a pricing perspective? And are there other motivations for some of these players just in terms of gaining share that you may be seeing some of your rationality in the pricing scheme?

So far, it has been rational. And in fact to tell you truth, in my opinion, it’s been a little bit overpriced. I think there is probably a little bit of price competition that we might be able to inject. So, we’ll just kind of see what happens with that. But so far, we feel really comfortable with that market and its profit potential for ourselves.

Okay. And then just as a follow-up, the PayPal, Xoom pending partnership, they’ve been talking more about international mobile recharge. And I know Euronet does that; we haven’t heard as much about it. Is there something there that other competitors are targeting in terms of functionality or marketing and do you see…

I didn’t know that they were same at exactly. We are really experts at that; we’ve been doing that for a lot of years now. The tricky part about that is every destination country has three to six or seven even kind of different mobile operators between MVNOs and regular mobile operators. And so to get all this content and then to settle that all in multiple currencies is a challenge. So, I can’t imagine it’s going to change their numbers much, but I’ll give it an interesting watch.

Great quarter, again. Thanks for all the input.

Thank you. And thank you everybody for taking time with us and we’ll look forward to talking to you next quarter.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect.