International Money Express, Inc. Q1 FY2025 earnings call

• Retail: Despite challenging market conditions, total principal amount sent was up 4% year-over-year. The company protected margins, made smart targeted investments, optimized at the ZIP code level, improved transaction processing time from 20 seconds to 9 seconds, and achieved a 99.995% uptime. • Digital: Digital transactions grew just under 70% year-over-year in Q1. The company invested more in digital marketing than any past quarter, customer acquisition costs were better than projected, and customer retention was strong. Wires as a service pipeline continued to expand. • Cost: Salaries and benefits were up only 1% from a year ago. Incurred $0.3 million restructuring charges. Selling, general and administrative expenses were up due to increased digital marketing spend, but cost and efficiency disciplines were maintained.

Total revenue for the quarter was $144.3 million. The retail business saw total principal amount sent up 4% year-over-year, though transactions sent decreased. Digital transactions grew just under 70% year-over-year in Q1. Wire transfer and money order fees net accounted for $120.2 million, down year-over-year. Foreign exchange income contributed $20.2 million. Service charges from agents and banks were $93.8 million, down from the previous year.

• Revised full-year guidance: No quarterly guidance provided. Full year revenue expected to be $634.9 million to $654.2 million, diluted EPS $1.53 to $1.65, adjusted diluted EPS $1.86 to $2.02, and adjusted EBITDA $103.6 million to $106.8 million. • Expect digital business to continue scaling, and retail to recover as market conditions improve, with lapping of easier numbers in the second half of the year.

• Market dynamics: Economic, political, and immigration backdrops present challenges to the business model. Consumer behavior shift with larger principal amounts sent less often impacts results. • Competitive landscape: Uncertainty around pricing rationality in the industry and potential competitive actions from other players.

Q: About near-term trends in retail versus digital and March-April trends.

A: Digital grew approximately 80% in April. Retail is still struggling but the underlying market is strong. Expect retail to recover and digital to continue high growth.

Q: On the trajectory of full-year revenue growth and margin improvement.

A: Digital business scaling drives revenue, retail to recover as market improves, and lapping of easier numbers in the second half of the year.

Q: On retention in retail and digital.

A: Retail acquisition occurs through retailers. Digital retention is slightly better despite increased marketing investment.

Q: On incremental investment in digital.

A: Full systems go for digital, as it is profitable and wires as a service is a positive for the digital business.

Q: On the impact of principal amount and transaction dynamic.

A: The mix of transactions is different, volume is present but the mix affected results, with approximately $2-3 million more EBITDA if amounts were normalized.

Q: On pricing rationality in the industry.

A: Some private equity-owned providers pull back, Intermex is competitive price-wise, and uses price as an attacking mechanism where needed.