Euronet Worldwide Inc (EEFT) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Euronet Worldwide fourth quarter full year 2013 earnings conference call.

(Operator Instructions)

As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Jeff Newman, Executive Vice President and General Counsel for Euronet Worldwide. You may begin.

Thank you, Nicole. Good morning, and welcome, everyone, to Euronet's quarterly results conference call.

We will present our results for the fourth quarter and full year 2013 on this call. We have Mike Brown, our CEO, Rick Weller, our CFO, and Kevin Caponecchi, the President of Euronet on the call.

Before we begin, I need to make a disclaimer concerning forward-looking statements. Statements made on this call that concern Euronet's or its managements 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 conditions in financial markets and general economic conditions, technological developments affecting the market for the Company's products and services, foreign exchange fluctuations, the Company's ability to renew existing contracts at profitable rates, changes in ATM or other transaction fees, and changes in laws and regulations affecting the Company's business, including immigration laws.

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 will turn the call over to Rick. Rick?

Thanks, Jeff. Good morning, and welcome to everyone that has had a chance to join us today.

We finished year strong, delivering fourth quarter revenue of $375 million, $16 million operating income, and $53 million in adjusted EBITDA. As you may have read in our press release, operating income includes an $18.4 million impairment charge related to a portion of our epay business. This is a US GAAP non-recurring non-cash adjustment, and to better understand our fundamental business, we will center our discussions around the adjusted operating income, which excludes the impairment charge.

To that end, adjusted operating income was $34.5 million for the fourth quarter. Our cash earnings per share was $0.63. This is a 43% increase over the fourth quarter 2012.

This increase was primarily the result of our continued focus on adding new products to our portfolio, and expanding the presence of our existing products and services. This $0.63 was also impacted by about a $0.01 of headwind from foreign exchange rates since we provided guidance in October, and tax benefits stemming from the realization of certain deferred tax assets in various taxing jurisdictions. Excluding the tax benefit, cash EPS growth would have been in line with guidance. Overall, this was another strong quarter for our business.

On slide 6, we show the three year trend of transactions in each segment. The EFT transactions grew 4%. This growth was driven by increases in virtually all our markets, and partially offset by declines from the IDBI contract termination in India we discussed earlier in the year.

Excluding the impact of the IDBI agreement, the transactions would have grown 11%. epay transactions declined 4% from decreases in the UK, Australia and the Middle East. These volume declines were partially offset by growth in Germany, India, and North America. Finally, total transactions for Ria grew 7%, including a 13% growth in money transfers.

Offsetting the money transfer growth of 13% was a year-over-year decline in non-money transfer transactions by 9%, as a result of discontinuing certain low value transactions. The 13% growth in money transfers came from both the US and outside the US. Transfers sent from the US increased 11%, including 10% growth to Mexico, and 12% growth to non-Mexico locations. Transfers sent from outside the US increased 14%, including strong growth from key send markets like Spain, Italy, and the UK. We are pleased to finish the year with our 11th consecutive double-digit money transfer growth. Next slide please.

On slide 7, we present our quarterly financial results for each segment as reported. We saw some mixed impacts from foreign currency exchanges over last year's fourth quarter. To give you an idea of the changes, the Euro increased 5%, the Polish zloty increased 3%, the Australian dollar declined 11%, and the Indian rupee declined 13% over the prior year. So I will go to the next slide, where we present our results adjusted to remove the impact of these foreign currency fluctuations. Next slide please.

On slide 8, EFT revenue grew 20%, operating income grew 7%, and adjusted EBITDA grew 8%. This growth was primarily the result of network expansion including more higher profit ATMs, stronger demand for value-added services, and increased cards under management. In the quarter, operating income was partially offset by ramp-up costs related to the deployment of additional brown label ATM's in India.

The additional investment in brown label ATMs, followed the positive results we are seeing from our previous deployments. If not for the additional brown label ATM's in India, the EFT segment's operating income would have grown at rates commensurate with revenue growth.

Epay revenue was flat. Adjusted operating income increased 25%, and adjusted EBITDA increased 17%. While revenue was flat, gross profit increased 5% driven by favorable product shifts from non -- to non-mobile, principally in Germany and Italy. Revenue growth was offset by declines in Australia and the Middle East.

Operating income and adjusted EBITDA grew at a faster rate than revenue, as the result of one-time expenses incurred in the fourth quarter 2012, lower intangible amortization expense, and as observed earlier, a shift towards higher margin non-mobile transactions, which are seasonally highest in the fourth quarter.

Money transfer revenue grew 12%. Operating income grew 14%, and adjusted EBITDA grew 7%. These increases are the result of a 22% network expansion, which drove 13% year-over-year money transfer growth. Gross margin per transaction declined slightly in the fourth quarter from a shift in the mix of transaction destinations, and to a lesser extent from competitive pressures.

Costs related to the launch of our digital product, also offset operating income and EBITDA growth. Had we chosen to not invest in the digital channel, Op income for the money transfer segment would have grown at more than twice the revenue growth rate.

Let's move to slide 9 to review some balance sheet highlights. Slide 9 shows our balance sheet for the end of the year, and changes since the third quarter. The decrease in cash is a result of revolver paydowns, and timing of settlements within our epay and money transfer businesses, partially offset by positive cash flows generated from operations. The zero times net debt to adjusted EBITDA multiple is the result of roughly $200 million in total debt, versus $200 million in cash on hand at the end of the quarter.

Now let's move to slide 11 and I will cover a few of the full year results. On slide 11, you can see that the full year 2013 revenue was $1.4 billion, operating income $118 million, and adjusted EBITDA $194 million. These full year results include the $18 million impairment I discussed in the quarterly results, as well as a $19 million gain we recognized in the third quarter related to contingent consideration on an acquisition. We will focus on the $117 million adjusted operating income, as we discussed the segment results.

Full year cash EPS was $2.04. This very strong double-digit growth, up and down the page, from revenue down the cash earnings can only be described as a great year for Euronet. Next slide please.

On slide 12, you can see full year transaction trends for all three segments. For each segment, the transaction trend was virtually the same as we discussed in the fourth quarter. EFT transactions grew 2%, or 10% excluding the impact of the IDBI agreement. Epay transactions were essentially flat, and money transfer transactions increased 15%.

Let's move to slide 14, where we will discuss full year results on a constant dollar basis. On slide 14, we provide a full year view, adjusted to remove the impacts of foreign currency, and non-cash non-recurring impairment charge, and the contingent consideration gain. For the full year, EFT revenue grew 25%. Adjusted operating income grew 36%, and adjusted EBITDA grew 29%. EFT results benefited from expansion of our ATM network, increased demand in value-added products, strong performance from brown label ATMs in India, and additional cards under management.

Epay results were largely consistent with what I covered in the quarterly results. Earnings growth was primarily from non-mobile content expansion, and sales of value-added products in Germany and the US, and the November 2012 acquisition of epay -- of Easy Pay partially offset by declines in Australia, the Middle East, and costs to launch iTunes in Turkey and Russia. Finally, full year money transfer growth was from the network expansion I discussed, which drove the transaction growth across all markets. Next slide, please.

On slide 15, you can see our December 31 balance sheet compared to last year. You will notice that we reduced our debt by nearly $100 million, and increased cash by almost $10 million, further demonstrating the strength of our cash earnings produced in our fundamental business.

The $100 million reduction in debt is essentially equal to the $107 million in cash earnings we generated for the year. Overall, this was a great year for our business, one which saw double-digit earnings growth and record cash earnings per share.

With that, I conclude my comments, and turn it over to Mike.

Thanks, Rick, and welcome, everyone.

This certainly was a great year for Euronet. As the results show, we saw great earnings expansion generated from our three core businesses. There wasn't one key win that drove the results. We just continued to work hard, and focus on adding new locations and products to our existing portfolio. Our teams did an exceptional job, and their efforts are reflected in our results.

Let's move on to slide number 19, and we will discuss the EFT segment first. Okay, EFT. I think the stunning EFT results speak for themselves. The 36% constant currency adjusted Op income growth for 2013 over 2012, followed the 47% constant currency Op income growth we achieved in 2012 over 2011.

These strong earnings reflect our success in organically developing new products and technologies. We are able to leverage these new products and technology over our regional processing centers in a quick and cost efficient manner, giving us sustainable competitive advantage in the market. We believe these competitive strengths will continue to result in meaningful growth for this EFT segment.

Slide number 20, please, begins our highlights for the EFT segment. We signed an agreement with MasterCard to deploy contactless POS terminals across Greece. Through this agreement, we will roll out these terminals to a number of merchants throughout the country. We have deployed terminals to four large merchants in Athens, and will continue to deploy more terminals throughout the first quarter.

In Q4, we were able to expand or renew several agreements with valuable customers. In Romania, we extended our network participation agreement with Intensa San Paolo Bank, so Intensa customers can continue to use ATMs in our network free of charge.

We also extended our ecommerce acquiring agreement with MCB Bank, which is Muslim Commercial Bank in Pakistan. We renewed several outsourcing agreements, including our agreement with Budapest Bank, a subsidiary of GE Money in Hungary, and Banca Carpatica in Romania. We also renewed our agreement with IDBI Bank for participation in our Cashnet network. Just as a reminder, Cashnet is the only other nationwide switch in addition to the government-sponsored network in India.

Now let's move on to slide 21. Here we highlight the additions to our value-added services portfolio and ATM installations. In Austria, we signed a frame work agreement with Payment Systems Austria, an organization owned by all the Austrian banks which represents nearly all the ATM's in the country.

We have seen strong growth in our card management business. In case you aren't familiar with this portion of our business, we provide card-issuing services such as set up, production, security and personalization, as well as card management for our entire card portfolio of our customer banks.

In the quarter, we launched MasterCard debit cards for Sberbank in Bosnia and Society Generale in Montenegro. We also launched co-branded cards with Piraeus Bank in Greece, and Hipotekarna Bank in Montenegro. These co-branded cards are bank-branded, but also carry a second brand name where customers can use their card to earn points with both the bank and the brand, which can then be redeemed for discounts or bonuses on certain products.

In the quarter, we ran two ATM promotions in Poland. First we launched a promotion for ORLEN, Poland's largest petrols chain which we signed last quarter. Through to this campaign, we dispensed millions of promotional offers, with each cash withdraw entitling customers to a fuel discount at ORLEN stores. Additionally, we ran a coupon campaign with Play Mobile, the largest mobile phone operator in Poland. Customers received a Play Mobile coupon with their cash withdraw, which they could then redeem for a gift on Play Mobile's website.

Finally in the Czech Republic, we launched a prepaid card with Expensa. These services provided by Euronet make up a major part of Expensa's prepaid card offering. We were awarded an innovation award from MasterCard in the Czech Republic for this unique solution. In the fourth quarter, we also added 516 ATMs with the largest increases in India, Poland and Pakistan. In summary, the EFT segment had an outstanding year, driven by organic product and technology growth which resulted exceptional earnings in Europe and Asia.

Now let's move on to slide number 25, and we will talk a bit about epay. On slide 25, you can see a few highlights from our core mobile business. In Australia, we signed mobile top-up agreements with Corenetts IGA Grocers, and with First Data to provide mobile top-up and other products on approximately 2,500 First Data ATMs.

Over the last several quarters, we have told you about our success in launching mobile operators solutions. These solutions provide mobile operators with enhanced visibility into their distribution network, more timely consistent reporting, and the ability to better execute their commissioning programs for their retailers.

These products have been very successful in the US, and are beginning to gain traction outside the US where we continue to see tremendous opportunity. In the quarter, we signed an agreement with Vivo in Brazil, to provide Vivo with products under our mobile operator solutions platform.

On to slide 26, please. This shows some of our non-mobile agreements that we launched through the quarter. Non-mobile continues to become a greater part of our business, reaching 39% of our total gross margin in Q4, and 33% for the year.

Keep in mind that a few years ago, this number was a fraction of that amount, so these products have tripled over this period. We expect non-mobile growth to continue, so we remain focused on digitization and electronic distribution of content. You may have seen our press release in the fourth quarter, announcing our partnership with PayPal to provide iTunes digital codes.

This agreement allows PayPal customers in the US and the UK and in Germany to purchase iTunes digital codes using funds in their prepaid, I mean in their PayPal account, online or on their mobile App. Once the digital code is purchased, it is instantly available for self-use or can be e-mailed as a gift. This product launched with great success across these three countries. We will continue to expand this distribution channel throughout the coming year.

We also continued to grow distribution through our online banking channel. We launched PlayStation, Microsoft XBOX and Spotify digital code on La Caixa's online banking application in Spain. La Caixa has a strong digital presence, and partnering with epay allows them to offer new products to their customers through their online and ATM channels.

This is an exciting opportunity with La Caixa, and we look forward to extending this partnership. This agreement is similar to the partnership with PostFinance in Switzerland we announced during the first quarter last year, which even today continues to be quite successful. During 2013, we are able to launch electronic distribution of our content through mobile wallet and online banking apps with a great deal of success, and see these as exciting opportunities beyond our already successful retail channel.

We also signed some nice deals in the retail channel. One of the more significant ones was our agreement with Dixon's to add Steam content to stores. Steam is the leading online gaming platform, and is a nice complement to our already strong gaming portfolio. We saw a nice reaction to this launch in the fourth quarter, which confirms our interest in the gaming segment. This was a solid year for epay where you can see from the above examples, we were able to geographically expand our content, develop new channels for distribution, and increase the presence of our existing content within our already strong retail network.

Now let's move on to slide 27. We can talk about money transfer. Before I get to the quarterly results, I would like to give you an update on our investment in digital products.

As Rick observed, we continue to make these investments to take advantage of the growing online opportunity, which is a complement to our typical business. This customer base for this channel is different than our traditional business of brick-and-mortar agents, so we see this as an addition and not a threat to our strong growing retail business. We view this as a great market opportunity where we can offer high quality money transfer service at a reasonable price, to a brand new set of customers leveraging our assets that we have throughout this segment.

Moving on to slide 30, please. This shows Ria's network expansion for our quarter. The network now reaches 135 countries, and includes 216,000 locations, a 22% increase over the same quarter last year. Ria continues to focus on adding network locations, while maintaining high quality and reliability. In the fourth quarter, we successfully expanded relationships with our correspondents in key corridors. During our third quarter earnings call, we told you about our growing pay out network in Indonesia through the addition of Bank Negara in the third quarter, and also Bank Rakyat earlier in 2013.

In the fourth quarter, we continued to grow those pay out locations through the addition of Alphamart, of Bank Negara. The combination of these three agreements has added more than 19,000 new cash pick up locations in Indonesia alone, significantly improving our service to this corridor. We also expanded our relationship with Postal Savings Bank in China to add an additional 1,800 locations, bringing our total locations to 3,200.

China is the world's second largest recipient of migrant remittances, receiving approximately $60 billion in 2012. This expanded relationship with Postal Savings Bank extends our pay out service to all provinces in China, and represents a significant opportunity to grow our market share to this important remittance corridor.

In addition, we added 500 new locations of Elektra in Mexico. This is an extension of the agreement we announced with Elektra a year ago. We also signed an agreement to add 400 new locations with Bansefi in Mexico. This growth further strengthens our position in that, our largest corridor. Finally, we signed agreement with 10 new correspondents in seven countries, highlighted by more than 700 new locations in Bangladesh and 900 new locations in Bulgaria.

Move on to slide 31, please. Here we highlighted Ria's transaction growth for the quarter. Money transactions -- money transfer transactions grew 13% this quarter, representing the 11th consecutive quarter we have delivered double-digit money transfer growth. US-initiated transfer continued to deliver double-digit growth, recording an 11% increase year-over-year including a 10% increase in transfers to Mexico, and a 12% increase in transfers sent to non-Mexican corridors.

We continue to see positive trends in our market share in key US corridors, including Mexico, El Salvador and the Dominican Republic. Additionally, our sends from the US to emerging markets in Africa and Asia, continue to grow at double-digit rates.

Non-US initiated transfers continue to perform well, with the growth of 14% year-over-year. This growth is driven by increased transfers sent from key European markets, including France, Spain, the UK, and the UK, with Spain continuing its momentum, delivering its third consecutive quarter with double-digit growth.

Non-money transfer transactions continue to perform well. The 9% decline year-over-year reflects the discontinuing -- discontinuation of a high volume, low margin product in Spain from early 2013.

Excluding that product, non-money transfers grew 22% over the same period last year, driven by a significant increase in check cashing transactions in Canada and the US, which grew 45% and 36%, respectively. We also continue to see strong growth in the sales of our prepaid Top Up products in the US and Italy. 2013 was a great year for Ria, with double-digit growth across all reported metrics. Let's move on to slide 32, and we will wrap up the quarter.

Okay, on slide number 32, you can see that our Q4 2013 adjusted cash EPS was $0.63, bringing us to $2.04 for the full year, representing a 30% growth year-over-year in our adjusted cash EPS. The record cash EPS was primarily the result of double-digit consolidated Op income growth from all three segments, for both the fourth quarter and for the full year.

EFT growth came from ATM expansion, sales of value-added products and additional cards under management. Epay growth was driven by non-mobile expansion, and money transfer benefited from continued network expansion and transaction growth across all send markets.

Now generating over $100 million annually in cash earnings, we continue to strengthen our balance sheet. Finally, we expect our adjusted cash EPS for the first quarter 2014 to be approximately $0.45, largely reflecting the seasonally low first quarter, together with a little FX headwind, all assuming the foreign exchange rates remain constant to today.

Before I close, I think it is worth repeating, that this was a great year for Euronet. As we get ready to celebrate our 20th year in business this summer, I would like to thank all of our employees for their hard work and contributions to this success.

With that, we are happy to answer questions. Operator, will you please assist?

(Operator Instructions)

Our first question comes from the line of Peter Heckmann of Avondale. Your line is now open.

Hello, good morning. Could you provide a little bit more color on prepaid? I missed some of your comments there. You saw a little bit of fall off in both locations and transactions, and I am not sure if I understand all the puts and takes. Could you review? (multiple speakers)

Yes. Well, Pete, I think that as we looked at the fourth quarter, as I mentioned there, the revenues were essentially flat, but gross margin was up 5% year over year. And so, it was some fairly simple dynamics behind that.

We saw a little decline in our mobile business, but more than offset that in our non-mobile business. As Mike reviewed, we had some continued launches of product with things like the PayPal, the Google products, the software type of products have all played pretty well. So, I don't think that it is too much more complicated, or too many more moving parts than that, as we finish the year.

Does that help a bit, Pete?

Okay. So, transactions year over year were down 4%, and so, you had prepaid content growing, offset by mobile prepaid; correct? And then --?

No, it was prepaid mobile was going down a bit, offset by continued growth in the non-mobile.

Oh, but it wasn't offset, if transactions were down 4%?

Well, the gross margin was. Because, as you know, we make more money per transaction on those; so, good, rich value transactions.

Okay, that's fair. And then, you had a 13% decrease in locations, and I see somewhere in here it says -- because of the elimination of US sites. If you covered that in the call, I missed it. Could you review?

Yes, we had also talked about that in the third quarter there. We worked with one of the mobile operators in the United States to kind of rationalize, if you will, some less-than-productive sites out there. So, it resulted in some depression on -- or some reduction in those sites, but not much in terms of business to us.

They are basically culling very unproductive sites, which, to us, were very few transactions, so --

Got it. Got it. Okay.

And then, and again, I apologize if I missed it, could you just talk about the ATM backlog, and how that is characterized between your expectations for proprietary unit installation for the year? But as well, what you have in backlog for outsourcing, both brown label and otherwise?

Well, Pete, we don't put, per se, brown label in our backlog numbers here. Our backlog would look like we have got several hundred in the backlog, that is under assigned kind of commitments now. We would expect that our -- if you just kind of take a look at our overall ATM growth numbers -- is that we should be able to see with what is in our backlog, with continued deployments and outsourcing signings, that we should be able to grow commensurate or better than what we did this year. And this year, we improved our ATMs, our growth -- we grew our ATM's 14% year over year, if you take out those IDBI ATMs that went out of the picture earlier in the year.

Okay. Okay, and then any thoughts on the proprietary side? I know that is not a backlog number, but are you seeing attractive economics, given your financial flexibility where you would be deploying your own ATMs --?

Well, absolutely, Pete. I mean, that was where basically most of the 14% came last year. So, that is what we want to continue to do this year.

Okay, thanks. I will get --

I mean, most banks -- the reality is: Banks don't have strong balance sheets still. They are not deploying many new ATMs on their own. We try to get more outsourcing agreements, and we nail them now and again. But one thing that is totally in our control is taking advantage of some of the proprietary lessons that we have learned of expanding our own ATMs, both with the brown label in India and across Europe, taking advantage of the PSD license that we have. And we are in, I think, 12 or 13 different countries right now in the EU.

Okay, thanks. I will get back in the queue.

Thank you. Our next question comes from the line of Mike Grondahl of Piper Jaffray. Your line is now open.

Yes. Thanks for taking my questions. Could you talk a little bit how the Google Play rollout went in Germany from late Summer, and what are plans going forward there?

Yes, this is Kevin. So, we rolled out Google Play in Germany in the fourth quarter to strong results, kind of in line with what we expected, given the high predominance of Android devices versus iOS devices. And we are working with Google on a number of additional rollouts throughout the year this year.

Okay, and the bank in Spain, La Caixa --?

La Caixa? Yes.

La Caixa -- is that fully rolled out, and how does something like that ramp? And are there other banks in a backlog or that you think will go that route?

Yes. So, the way to think about the banks is: The bank represents a full channel. And within that channel, there is kind of three subchannels: online banking, mobile banking, and the ATM. We are in the early stages of rollout with La Caixa starting with the online channel, and we will expand with them to their other subchannels.

And to answer your question about other banks, the banking channel is a strategic channel for us for ePay, and we believe there is lots of opportunities to expand with banks throughout the world.

And with the success, Mike, that we had with PostFinance in Switzerland, it just gives us a great kind of poster child to go to talk to other banks. Because these are exactly the kind of customers that these banks want. They want yuppie kind of -- young kids making money with nice phones who do mobile banking on them. I mean, that is just their target market, rather than kind of old or retired folks who might be coming to their bank right now.

So, it is a strategic play for the banks, in terms of their acquisition strategy with customers, and then, it is an important channel for us for further expanding our distribution.

Okay. And maybe just lastly: Mike, what are one or two things you are most excited about for 2014?

Well, last year was a year where we just hit singles and doubles all year, and we didn't do anything magic. There wasn't any one big deal. There wasn't an acquisition that changed our dynamics or anything.

What I am excited about is doing just what I did in 2013, and try to do it in 2014 and then some. So, just expanding more ATM locations, particularly ones that are under our own control; adding more products in ePay across more geographies like we are doing; more channels; taking advantage of the banking channel -- that is very exciting. Money transfer continues to do very well for us.

And so, we are just going to do just what we did last year, and we are going to just try to do a repeat performance. I mean, it is a lot of work between now and December to accomplish that, but that is absolutely kind of block and tackling. That is our modus operandi for this year.

Yes, and I would just add, Mike, that with our guidance of the $0.45, in comparison to the year-over-year numbers, that represents a 20% increase in cash EPS year over year. So, looks like we would be off to a good start to have that a repeat performance. But as Mike said, it is a lot of hard work between now and the end of the year.

But we look back, and we got the payoff. We grew our bottom line by a [friggin'] 30% last year. I mean, that is phenomenal. We just got to keep that momentum going.

Okay. Thank you, guys.

Thank you. Our next question comes from the line of Chris Shutler of William Blair. Your line is now open.

Hello, Chris.

Hello, guys, good morning. Let's start in EFT. So, all the metrics, I mean, particularly the adjusted EBITDA and adjusted op margins this quarter, they declined, frankly, a little bit more than I expected from Q3. And I understand Q3 is now a lot stronger, particularly with DCC, and there may have been some [extra, especially] from India in Q4. But can you maybe just give a little bit more color and walk through the dynamics from Q3 into Q4, and what changed? And how we should think about fees now because they seem a little bit more pronounced now, going forward?

If you remember our last call -- go rewind that one -- we said that Q3 will be, for the foreseeable future, our strongest quarter for EFT. And it is because -- it is not just a DCC game. It is a traveler's game. When we usually make money off domestic interchange in a given country, that number ranges from $0.28 to $0.60 depending on which country in Europe that we are in. Okay?

But the nice thing is, in the Summer quarter, all of Europe is on the move. Okay? And it isn't just us making money off foreign currency transactions. The fact is, Germans go to Greece. When they go to Greece, it is no longer -- and everybody is like traveling all over the place, so you have all this criss-crossing going on.

And so, when you do even a euro-to-euro transaction like that, where there is no foreign exchange at all, you get paid, not the domestic interchange but the international interchange, which is kind of like around a -- it could be $1, it could be EUR1, something like that.

And so, just as you look at it, with the fact that we have so many of our own deployed ATMs now, as opposed to in the old days, it was primarily through outsourcing where we got paid a fixed fee every month, depending on how many ATMs the bank had. Now, because we are expanding our own ATM channel so dramatically, we will just see more and more, basically, margin fall to our bottom line, due to the travelers in Europe and et cetera.

So, we will see that for a long time. Our goal, again, it just worked so well, that we are going to just throw out more ATMs as fast as we can, in as many countries as we can. So, more locations -- and also better locations where -- we are now in so many countries, and we are figuring out the tricks to each country. What makes a good location? How do you nail them and so forth? So we are doing that. So, you will see this year, in 2014, and EFT is going to fall off Q3 this year.

Okay. And, Mike, you mentioned having a lot more owned ATMs today. Can you give us the number -- how many that you actually own versus outsource?

We own about six -- well, depending on how you count it, we own 6,000 that we run and operate out of the 18,000. But outside of that, even that 18,000, we have got another 2,500 or so in India. So, I guess, you could say we have 18,000 at risk -- I am sorry, we have 8,000 at risk, or 8,500 at-risk ATMs, which, you know, just two years ago we had less than half that number.

Okay, great. And then, the only other question would be: pure commerce. So, maybe (inaudible) that 2014, but maybe you can just give us the latest [thoughts there] and ask about the timing of the [incremental] operating profit from pure commerce rolling (inaudible)?

Well, we are excited about this year. This year we brought several large customers live towards the very end of last year. So, we will start to see the 12-month kind of impact of that this year. Plus we are signing more deals all the time.

So, yes, we aren't going to guide you to exactly how much that is going to give us, because we will have to kind of see, but at least we are live now. And one of the great -- a great example is DFS is a -- the country where we have with DFS, is the four big US international airports, which is San Francisco, LA, Honolulu, and JFK. So, we will see all of those start to accrue benefit this year.

But in 2013, all it was, was blocking and tackling, bringing these suckers live, signing a whole bunch of new agreements. But we didn't -- we saw all the expense related to training and everything, and getting all these things up to speed, but we didn't see much of the revenue. So, we will see that here this year.

And I might also add, too, when you look at Q -- if you look at India, India is a totally different game than Europe. When we put ATMs in Europe, because they have so many cars and everybody kind of gets what -- where they are, we see a pretty fast ramp up in Europe on our ATMs to get to the point where we need to. Where, in India, it is kind of a six-month thing.

So, when you are loading a bunch of new ATMs in India in a quarter, expect that to be an absolute expense drag because it still costs you $1,000 a month to run the suckers, even though it hasn't yet ramped up, because it is all local transactions in India. So, that is why, if we get all excited about how many ATMs we put in, in some quarter in India, expect that to be a drag on our earnings for probably the next two to three quarters.

But the nice thing is we have enough empirical evidence with 2,500 of these suckers now, that we know they pay. (multiple speakers) Yes, we have just got to wait that six, seven, eight months, before they start paying, and then they start printing money for us.

Okay, great. And then, just one more, Mike, on money transfer. Just wanted to get your thoughts in terms of where you (inaudible) in 2014 in terms of operating income versus the last couple [eight] years? I know transaction growth had been [starting] a little bit in line with the industry? And also just curious, one of your competitors saw a little bit of a rebound in transaction growth in January, and just curious if you have seen the same thing? Thanks.

Part of you were cutting out there, Chris. I mean, about half of what you said was kind of cutting out. Could you repeat it again? I don't know, for some reason there is a bad line here.

Of course. Sure. I apologize. Just curious in 2014 on money transfer operating income growth, and then have you seen a rebound in the transactions in January?

January. Have you seen a rebound in transactions in January?

Yes, actually, January is good. Actually one of the big rebounds that we saw over last year was Europe, and particularly Spain, which is our largest market there. Spain was really under a lot of pressure, but it grew quite strong last year.

And it is also a mix game, too. Let's not forget that we do something around 43%, 44% of our transactions come out of Europe -- or outside the US, but they generate around 53%, 54% of our gross margin. So, what that tells you mathematically is that we make, on average, more profit on a European transaction than on a US transaction.

So, when you see recoveries in Spain, and we mentioned here Spain, UK, France, et cetera, you know that we are doing quite well this year. Those are, on average, on a margin -- weighted margin basis, that those transactions carry more weight than one from the US.

Okay, thank you.

Thank you.

(Operator Instructions)

I am showing no further questions at this time. I would like to hand the call back over to Mike for any closing remarks.

That is all I have for today. I thank everybody for your time, and we will look forward to talking to you after Q1 is done. Thank you very much, everybody.

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