EURONET WORLDWIDE, INC. Q3 FY2026 earnings call

Strategic Resilience and Digital Acceleration:

• Digital accelerators (RIA Digital, Dandelion, Merchant Services, Payment Processing, CoreCard) grew 33% year-to-date, outpacing original investor day expectations.
• Digital accelerators now constitute approximately 26% of payment channel revenue, up from 21% in 2025, signaling a structural shift toward higher-growth, scalable digital streams.
• Management emphasizes that despite current pressures, the strategic framework remains unchanged, focusing on expanding digital capabilities and leveraging the global network.

Product Launches and Strategic Partnerships:

• Diebold Nixdorf Collaboration: Announced intent to partner with Diebold to combine Euronet’s ATM operations and REN processing platform with Diebold’s cash recycling technology and field service, aiming to help banks reduce costs and improve efficiency.
• OLAN Platform: Launched a unified merchant payment platform integrating payments, software, and value-added services (tax-free, FX, ePay). Rollout has begun in Greece.
• Stablecoin Solution: Introduced a white-label stablecoin-funded card solution via Fireblocks partnership, bridging fiat and digital assets for financial institutions.

Operational Expansion:

• Merchant Acquiring: Strengthened position in Greece with Google Pay acceptance; expanded soft-pos in Spain via GetNet/Santander partnership; added 2,750 net new merchants in Greece.
• India: Signed agreement with MasterCard to process RuPay and UPI transactions, accessing domestic rails.
• Latin America: Secured BIN sponsorship agreements in Costa Rica and Colombia to expand ATM/infrastructure footprint.
• Cross-Border Network: Added TapTapSend and Safaricom M-Pesa as Dandelion partners, validating the hybrid physical/digital remittance strategy.

Financial Discipline:

• Maintained investment-grade rating discipline with $1 billion unrestricted cash and $2.2 billion total debt.
• Continued capital return through share repurchases ($50 million in Q3).

Risks and Challenges:

• Persistent pressure from U.S. immigration enforcement actions impacting outbound remittances.
• Weakening global currencies against the dollar affecting reported results.
• Steam discontinuing physical gift cards poses a near-term headwind for ePay Q4, though anticipated offset from GTA VI launch.

Payments Infrastructure: Revenue grew 9% year-over-year, driven by merchant acquiring and Core Card contributions. Adjusted operating income was flat (excluding a $1.7M timing adjustment and $4.7M amortization charge), while adjusted EBITDA grew 4%. This segment represents the traditional ATM and merchant services business.

ePay: Revenue and operating income both grew 5%, with adjusted EBITDA increasing 6%. Growth was supported by digital content demand, merchant acquiring expansion, and B2B promotional campaigns.

Cross-Border Payments: Revenue declined 4%, with significant headwinds from U.S. immigration policy and macroeconomic uncertainty. Operating income dropped 35% and adjusted EBITDA fell 32%, reflecting revenue flow-through and $6M in incremental advertising spend to boost digital transaction growth.

• Full-Year 2026 Revenue: Revised downward to approximately $4.375 billion.
• Full-Year 2026 Adjusted EBITDA: Revised downward to approximately $725 million.
• Full-Year 2026 Adjusted EPS: Expected to grow approximately 10% year-over-year.
• Q4 Outlook: Management anticipates subtle sequential improvement in cross-border volumes compared to Q3, consistent with trends seen from Q2 to Q3. No expectation of further deterioration in geopolitical or economic conditions.

• U.S. Immigration Policy: Strict enforcement and ICE raids are significantly reducing discretionary travel and outbound remittances from the U.S., which historically accounted for a large portion of cross-border revenue.
• Macroeconomic Uncertainty: Global economic weakness, particularly in Europe, is dampening consumer spending and discretionary travel.
• Currency Fluctuations: Weakening major currencies against the U.S. dollar negatively impacts reported financial results.
• Regulatory/Tax Changes: Implementation of remittance taxes and potential future regulatory changes in key markets.
• Competitive Pressure: Intense competition in digital remittances requiring increased marketing spend ($6M in Q3) to maintain growth.
• Product Transition Risks: Loss of Steam physical gift card sales creates a temporary gap in ePay revenue, dependent on successful ramp-up of other gaming titles like GTA VI.

Q: What drives the Diebold partnership economics?

A: Mike Brown explained that Euronet performs little ATM outsourcing in the U.S. but possesses deep expertise in complex networks. The partnership leverages Diebold’s strong U.S. bank customer base to enter a market Euronet has barely tapped. Rick Weller added it is a natural fit combining Euronet’s processing with Diebold’s hardware to help banks improve efficiency and profitability.

Q: How does the revised 2026 outlook reflect stabilization vs. deterioration?

A: Rick Weller stated the forecast assumes continued subtle improvement in Q4 over Q3, with no evidence of greater degradation in the geopolitical environment. He described the market as "delicate" but positive, noting that third-quarter constant currency revenue decline improved slightly from Q2. Management expects stability rather than aggressive recovery.

Q: What is the status of CoreCard revenue replacement post-acquisition?

A: Mike Brown noted that half of CoreCard’s legacy revenues were expected to leave upon full integration due to contract terminations (e.g., Apple to JPMorgan Chase). However, Euronet is aggressively replacing this volume, having closed 6-8 new deals already, exceeding initial 18-month timelines. Sales interest is strong across U.S., overseas, and LATAM markets.

Q: Which corridors face the most severe challenges in cross-border payments?

A: Mike Brown identified U.S. outbound remittances as the primary challenge due to immigration enforcement causing fear among workers. While Mexico showed signs of abating pressure, the broader issue is U.S.-based sentiment. European softness exists but is less severe than U.S. impacts.

Q: Is digital transaction growth incremental or migration from existing users?

A: Rick Weller clarified that approximately three-fourths of digital customers are new to the franchise, indicating significant market share gains rather than just migration. While some existing retail customers are moving online, the bulk of the 33-34% digital growth comes from attracting new users to the platform.