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Euronet Worldwide Inc  (NASDAQ:EEFT)
Q1 2019 Earnings Call
April 30, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Euronet Worldwide First Quarter 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. (Operator Instructions)

It is now my pleasure to introduce your host, Mr. Jeff Newman, Executive Vice President and General Counsel for Euronet Worldwide. Thank you. Mr. Newman, you may begin.

Jeffrey B. Newman -- Executive Vice President and General Counsel

Thank you, Nicole. Good morning, and welcome everyone to Euronet's quarterly results conference call. We will present our results for the first quarter of 2019 on this call. We have Mike Brown, our CEO; Rick Weller, our CFO; and Kevin Caponecchi, Executive Vice President and CEO of our epay division on the call.

Before we begin, I need to make to -- call your attention to the forward-looking statements disclaimer, on the first page of the PowerPoint presentation, we'll be making today. 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 that are listed on the first page of our presentation. Euronet does not intend to update these forward-looking statements, and undertakes no duty to any person to provide any such update.

Please note also the reconciliation of certain non-GAAP measures to their GAAP equivalent's included in the supplemental data included as an annex to our PowerPoint presentation.

Now I'll turn the call over to our CFO, Rick Weller.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

Thank you, Jeff, and good morning, and welcome to everyone who is joining us today. I'll begin my comments on slide 5. But before I begin, I'll apologize for my voice. I must have picked up something, and I assure you that I feel much better than I nice sound. But with that, let me get started on page 5 again.

We delivered first quarter revenue of $577, operating income of $56 million, and adjusted EBITDA of $87 million. Our adjusted EPS for the quarter was $0.85, a 16% year-over-year increase and $0.02 ahead of the guidance we provided in February. This strong first quarter EPS result was driven by double-digit operating income contributions from all three segments and with about a penny of tax benefit which was offset by about a penny of share dilution from our convertible bonds as a result of the increase in our share price.

Next slide please. On slide 6, we show our three-year transaction trends by segment. EFT transactions grew 11%, driven by expansion of our ATM and point-of-sale processing networks in Europe and India. Epay transactions grew 31% with growth across Europe and significant contributions from mobile top-up transactions in India. Money transfer transactions grew 10% with growth across most sectors of the money transfer business.

Next slide please. On slide 7 we present our segment financial results on an as-reported basis. On a year-over-year basis, there were significant changes in the exchange rates of the foreign currencies where we operate. For the most part, the major currencies declined between 5% and 10%, with some of the minor currencies changing nearly three times that amount. To normalize the impact of these currency fluctuations, we have presented our results adjusted for currency on the next slide.

I'm now on slide 8. EFT delivered a strong start to the year with constant currency revenue growth of 16%, operating income growth of 54%, and adjusted EBITDA growth of 29%. The double-digit growth rates were the result of a 10% increase in our ATM network and an 11% increase in transactions, primarily from Europe and India. This transaction growth increase includes an increase of our core domestic withdrawal transactions as well as value-added transactions on ATMs and point-of-sale terminals, including dynamic currency conversion, domestic and international surcharge, and foreign currency dispensing. Revenue and gross profit per transaction remained relatively constant year-over-year, while operating margins expanded nicely.

Epay began the year with constant currency revenue growth of 6%, operating income growth of 15%, and adjusted EBITDA growth of 13%. These strong profit growth rates were driven by continued expansion of our digital media products. Gross profit per transaction came in slightly as we continued to see stronger mix of mobile top-up transactions from India. The incremental benefit of the large volume of India transactions together with continued growth from our higher-margin digital media products continued to nicely expand the epay operating margins on a year-over-year basis.

Money transfer delivered constant currency revenue, operating income, and adjusted EBITDA of 11%, 22%, and 18%, respectively. These excellent growth rates were driven by 10% money transfer growth, which included contributions across most areas of the business. Transaction growth together with improved revenue and gross profit per transaction drove expansion of operating margins by more than a 100 basis points.

So in summary, this was an excellent start to 2019 where all segments posted double-digit operating income and adjusted EBITDA growth rate in our seasonally weakest quarter, as well as improved operating margins.

Now let's go to slide 9 and a few comments on the balance sheet. Here on slide 9 you can see that we continued to strengthen our balance sheet. As you may recall, in mid-March we successfully issued $525 million of 0.75% convertible bonds, and with that transaction we repurchased $49 million par value of our existing 1.5% convertible bonds for $94 million. With this in mind, the issuance of these bonds contributed to the increase in both cash and debt. In addition to cash received from the new bonds, cash increased from cash generated from operations, partially offset by the partial repurchase I just mentioned of the company's 1.5% convertible bonds and repayment in full of the balance outstanding on our revolving credit facility.

As you know, we have issued the redemption notice for the remaining $352 million of 1.5% convertible bonds outstanding. We are currently in the 40-day measurement period to determine the final settlement price of those bonds and the redemption is planned to be completed on May 28, 2019. We will settle the remaining $352 million par value in cash so you will see a decrease in both cash and debt on our balance sheet in the second quarter. However, please bear in mind, we will make draws on our revolver throughout the second quarter to supply cash to the ATMs as we move through the seasonal peaks.

The shares which we will use to settle the conversion premium are already included in our diluted share count, so you will not see additional share dilution in the second quarter or further in the year. The new bonds have a conversion price of $188.73. So there's yet nice additional share value appreciation before any additional shares would be added to our share count. And finally, as you may have read in our press release, we adopted ASC 842 in the first quarter of 2019, and as a result, added about $350 million of assets and liabilities to our balance sheet with no impact on the income statement.

As I wrap up, I will say it again. This was a great first quarter for EEFT and I believe that we are well positioned to deliver strong results in 2019.

With that, I'll turn it over to Mike.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Thank you, Rick, and thank you everyone who's joining today. I will begin my comments on slide number 11. So last quarter we shared with you a little more insight into how we have leveraged our global assets to create a Digital Integrated Payments Cloud that allows us to more strategically utilize the range of assets we have accumulated over the years. This payment cloud consolidates all of our assets and allows us to competitively participate in both the traditional and digital payments landscape. Perhaps more importantly, it allows us to be on the leading edge of disruption in the traditional payment space. We are using our technology to actively support parties who are making inroads to disrupt the more traditional players by providing them with state-of-the-art technology and immediate access to our expansive physical network, which would take years to build from scratch

Payments disruptors across several payment categories have already taken advantage of our Digital Integrated Payments Cloud. Some examples include companies ranging from software and media to card processing and account withdrawal to alternative payment and money transfer, and we've added several new integrations into our cloud this quarter.

The first of these integrations you may have seen in our February press release where we announced an ATM network participation agreement with ING Bank in Spain. ING Bank is primarily an Internet bank, another one of those disruptors, with 3.9 million customers but only 29 branches in Spain. By leveraging our Digital Integrated Payments Cloud to connect to our physical ATM network in Spain, ING can now offer its customers more convenient access to their cash with the same screen flow and experience they would find at one of their own ING Bank ATMs.

The second example is Poland. We became the first to offer BLIK deposits through our Automated Deposit Terminals. This is a meaningful addition as we have noticed and watched and told you about that BLIK withdrawals are now on a run rate of more than 8 million transactions per year and growing fiercely.

The third example is Remitly. Following our example with PayPal Xoom a couple of quarters ago, our money transfer team signed another agreement with a leading digital remittance provider called Remitly. The agreement with Remitly will allow this largely digital player to offer their customers physical cash pickup at over 73,000 of Ria's locations across 20 countries. In the money transfer industry, the demand for cash pickup remained strong and Remitly's customers are no exception. Over half the remittances sent through Remitly are collected in cash at a physical location and our technology enables them to meet their customer demands through our expansive network that is so hard to build and develop.

The fourth example is Ripple. We signed an agreement with Ripple that gives a Ripple access to Ria's global physical and digital footprint, while also allowing Ria's customers to connect and transact with Ripple's network which includes more than 200 financial institutions worldwide.

Finally, the fifth example involves Alipay. We have added Alipay alternative payments through our Digital Integrated Payments Cloud to Tiffany & Co., GM Cabs, and various tourism channels in Australia. And in case you didn't notice, the examples I just recited include connections through our Digital Integrated Payments Cloud for all three of our segments this is not just for the EFT segment, rather it runs across all aspects of Euronet's segments, products, and assets. These agreements are just a few of the ways we are leveraging our assets to further enable digital payments around the globe.

Next slide please, slide 12. You may remember that behind the Digital Integrated Payments Cloud is a solution that we call Renaissance or actually REN we call it. The slide -- this slide details the key features of REN. Because we developed REN to run our own business, it has a focus on industry standards and an attention to detail that you don't get from third-party to just develop software. With an agnostic design that runs on commodity hardware, an API that focuses on industry standards, and near 100% availability, REN enables our Digital Integrated Payments Cloud to quickly and cost-effectively deliver industry-leading solutions to enable disruption in the payment space.

As you may recall from our discussion in February, we have signed an agreement with the Central Bank of Mozambique to implement REN as a new national payment solution connecting to the country's 21 banks. We are well into the planning and project management of this agreement and look forward to updating you on our delivery success. But beyond Mozambique, we have received numerous inbound calls after making that announcement. It is exciting to see the positive market response to our technological advancement and the difference our technology can make.

Now let's move on slide number 15, and we will talk about EFT. Slide 15, over the last several months, I've met more new investors' faces covering Euronet than I have come across in a while. So I thought it's worth reiterating the significant addressable market opportunities we have across all of our segments. We have included the addressable market slides from our fourth quarter call in the appendix for your reference, as it is the size of these market opportunities that enables us to tell you about what we're doing on the next couple of slides.

As we continue to expand our EFT business across Europe, we continue to identify markets with significant opportunity. During the quarter, we launched an independent ATM network in Norway making this the 27th country where Euronet ATMs are available. We also added new outsourcing agreements for SKOK banks, further expanding the relationship with SKOK in Poland that we told you about last year.

As our European network continues to grow at a rapid pace, we are also very pleased with our accelerating growth outside of Europe. During the quarter, we signed an ATM driving agreement with the Catholic Syrian Bank in India. We also signed a new ATM driving and debit card management agreement with Faysal Bank in Pakistan. Next slide please.

Slide 16, continuing with growth outside of Europe, we signed an agreement with HDFC Bank in India, one of the largest card issuers and merchant acquires in the country, for providing acquiring and processing services to the bank. Euronet will be responsible for providing terminal driving, card processing for both domestic and international cards and DCC services for high-value merchants in the hospitality and luxury shopping segments.

We also signed a MasterCard and Visa contactless issuer agreement with the United Bank of Egypt. We expanded our digital presence by launching a digital wallet and customer authentication for Raiffeisen Bank in Europe, and we added 41 new POS acquiring and duty-free 391 merchants in Italy and the UK.

Finally, we finished the quarter with 42,034 ATMs, a 10% year-over-year increase. During the quarter we added a net of 874 high-value ATMs, and we reactivated 837 ATMs in advance of the travel season. These strong deployment rates in the first quarter give us a head start on the 3,500 to 4,000 new ATM deployment goal we told you that was possible for 2019.

Before I wrap up EFT, I'd like to give you a preliminary view of the Visa DCC performance on our ATMs. We activated Visa DCC for all non-European cards on our European ATM on April 13th consistent with Visa's announced timeline. While it is still early, the initial results have been largely consistent with our expectations. With continued growth in Europe, accelerating expansion outside of Europe, strong ATM deployments and additional -- and the addition of Visa DCC to our ATM, EFT is off to a tremendous start for 2019.

So now let's move on to slide 19 and we'll talk about epay. Slide 19. For years we've been telling you about epay's strategy to diversify from a mobile -- from mobile top-up by adding more content to more locations and more geography. As you might have seen in our earnings release, during the quarter the epay team adopted the term digital media to describe all the content not related to mobile top-up. This change aligns our terminology with the reinvention of epay business that has occurred over the last several years as it relates to the product mix shift toward digital content, which accounted for more than 70% of our gross profit in the first quarter.

With that background, let me highlight a few new agreements for the quarter. In Germany we took over full gift card mall offered by REWE stores, the second largest grocery store chain in the country. This was a competitive win, and we were able to add digital media, including Adidas, IKEA, About You, Douglas and others. We also expanded our relationship with Amazon by adding Amazon and Amazon Cash to Lekkerland in Germany. In Italy we added Nintendo, Microsoft, and antivirus bundles in Euronics, a large electronics retailer. And finally, as further evidence of the significance of our Digital Integrated Payments Cloud, during the quarter we launched an agreement with SIBS, the national payment switch in Portugal, to provide Sony products to the more than 12,000 ATMs connected to their switch.

Slide number 20 please. Here you can see that we signed several new agreements across multiple countries that will continue epay's growth in the coming quarters. We signed an agreement to distribute Microsoft Xbox and Office 365 in Singapore. In the UAE we signed an agreement to distribute Google Play, and in Australia we signed agreements to distribute Kaspersky and Symantec software.

Our epay business continues to reinvent itself by adding new digital media and enabling digital payment technologies for our partners. With double-digit constant dollar operating income growth and several new agreements, this was a great first quarter for epay.

Now let's move on to slide number 23, and we'll talk about money transfer. Our money transfer network now reaches 377,000 locations across 155 countries and 8% year-over-year increase in location. During the quarter, we launched 15 new correspondents in 13 countries, and in addition to that, we signed agreements with 14 new correspondents in 13 more countries, including an agreement with Inpay, which gives us access to the Bulgarian post office network. We have expanded our partnership with Walmart now to include domestic payout of Ria transactions in Walmart stores across the United States. As you know, since 2014, Walmart and Ria have been offering customers a low-cost, convenient money transfer alternative through the Walmart-to-Walmart money transfer service powered by Ria. With this new agreement, Ria customers can now send money through any Ria agent worldwide, including agents in the US, and pick up the cash at any Walmart store nationwide. This agreement provides Ria with an expanded payout network in the US, while also driving more customers into Walmart stores. That's a win-win if you ask me.

We also partnered with Turbus, the primary transportation service company in Chile, to offer send and payout services at more than 400 locations across the country. Turbus has been providing money transfers for nearly two decades, so they understand the business well and their locations are well adopted by money transfer customers in the market. This was another competitive win and offers Ria customers even more convenience and service availability in Chile.

And to touch on our continued digital expansion, while we have seen a delay in the transfers out of the UK as influenced by the indecisive Brexit matter, we are pleased with strong acceptance of new transfers following the rebranding of our digital payments business from HiFX high effects to the single XE brand. With very significant and growing addressable market, the money transfer team continues to deliver strong results in both the physical and digital landscapes.

Now let's move on to slide number 24, and we'll wrap up this quarter. My hope is that this update gives you insight into our very healthy core business, which allows us to continue to grow at stunning double-digit rates, while also enabling us to plant the seeds for future growth. To summarize the quarter, we delivered adjusted cash EPS of $0.85, a 16% year-over-year increase in our weakest quarter of the year.

EFT delivered exceptional results while also adding 874 new ATMs in advance of the busier travel season, and it had constant currency op income growth of 54%. Epay's double-digit earnings growth resulted from continued expansion of our digital media products (inaudible), constant currency op income growth of 15% over prior year, and finally money transfer continues to deliver strong earnings growth from expansion in both the physical and digital channels. Here we had constant currency op income growth of 22%. We successfully issued $525 million worth of a 0.75% interest convertible bond to essentially refinance our 1.5% convertible bond, and we had generation of free cash flow, which continues to strengthen our balance sheet. And finally we expect second quarter adjusted EPS to be approximately $1.69, assuming consistent foreign exchange rate.

And with that we'd be happy to take questions. Operator, will you please assist?

Questions and Answers:

Operator

Thank you. (Operator Instructions) And our first question comes from Peter Heckman from D.A. Davidson. Your line is now open.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Good morning, everyone. Wanted to see if you could give us some additional color on the seasonality of DCC, specifically with Visa allowing this expansion of DCC services worldwide, how should we think about that $0.60 to $0.65 benefit you had talked about? How should we think about its spread across the second, third, and fourth quarters?

Rick L. Weller -- Executive Vice President and Chief Financial Officer

Yeah. Pete, if you look at our overall DCC, and I'll just use some really kind of ballpark kind of grenade numbers here, but let's say roughly 10% and this would be -- this would be before we have the overlay of the incremental Visa into the -- into the picture. So we had about 10% in the first quarter, call it, 20-ish in the second quarter, 45-ish in the third quarter, and then the balance out in the fourth quarter. So the -- so the second and the fourth are, let's call it, largely about the same, although there's a few percentage points difference there, but that kind of gives you a general picture of what it looks like.

So if you kind of leave the 10% out of that math, because the first quarter it wasn't activated and then you sum those other three up, you can kind of see in there that I would tell you that we probably get roughly a quarter of it in the third and the fourth, and half of it in the third.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Got it, got it. That's helpful. That's helpful. And then in terms of just ATM cash and noting your comment on drawing out on the revolver, your ATM -- the cash dedicated to your ATMs, would that be significantly more than let's say $700 million, $750 million at the end of the quarter?

Rick L. Weller -- Executive Vice President and Chief Financial Officer

No. At the end of the quarter it was probably closer to about $500 million. And I think as we go into the end of the second quarter, it'll increase rather substantially, probably double that number as we approach the peak season.

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Got it. Okay. That's what I was looking for. End of second quarter. All right, I'll get back in the queue. Thank you.

Operator

And our next question comes from Rayna Kumar from Evercore ISI. Your line is now...

Rayna Kumar -- Evercore Group LLC -- Analyst

Good morning, Mike, and Rick.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Good morning, Rayna.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

Good morning.

Rayna Kumar -- Evercore Group LLC -- Analyst

Can you talk about the potential for ATMs start charging across Europe? Are you seeing any countries moving in that direction?

Michael J. Brown -- Chairman, Chief Executive Officer and President

As we said before, you really don't know about this until it kind of hits. But we do know that the realities are still there. The reality is that the disruptor banks, these Internet banks continue to access ATMs of the big bricks-and-mortar banks at a significant discount than what it really costs that bank to provide that transaction. So you find the big banks who are already at a competitive disadvantage to the disruptors and has been subsidizing these more nimble Internet banks.

So what that does is it just causes -- it's causing change and another thing is we've watched this happen now kind of country by country. Every time another domino falls, everybody else kind of watches. So we don't know of any that are imminent, but we know everybody has been talking about it for years.

Rayna Kumar -- Evercore Group LLC -- Analyst

That's very helpful. And just one follow-up. Now that Visa is allowing global DCC, are seeing opportunities to add ATMs in areas which once may not have been profitable for you? Is there a potential to exceed your 3,500 ATM target for the year?

Michael J. Brown -- Chairman, Chief Executive Officer and President

Well, our 3,500 to 4,000 target is based upon how many site selectors we have, not how many good sites there are necessarily. But you're right, I mean if we had a site before that was an A-class site say, and we were unable to give a DCC offer to certain cards out there because before these regulation changes, then that A-site then kind of becomes an A+ site, maybe a B site becomes a B+ site. So what we're finding is that it's kind of like the -- it just offers us more opportunities certainly to go deeper in penetrating our current market, which is mostly Europe, but the -- but the big opportunity, of course, like we mentioned before isn't now because there's quite a few more Visa cards than MasterCard debit cards in the world, it allows us to go outside of Europe. And that's what's really exciting.

Rayna Kumar -- Evercore Group LLC -- Analyst

Great. Thank you.

Operator

And our next question comes from Andrew Smith from Citi. Your line is now open.

Andrew Schmidt -- Citigroup Global Markent, Inc. -- Analyst

Hey, Mike and Rick, thank you for taking my questions.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

Morning, Andrew.

Andrew Schmidt -- Citigroup Global Markent, Inc. -- Analyst

First question on money transfer. Clearly still some good growth here, but looks like we saw a little bit of a deceleration in the quarter, and I think you mentioned some delays in the transfers out of the UK. I was if you could just walk through just maybe geographically in terms of what you're seeing from a growth perspective. And I guess from here should we expect revenue growth and transaction growth to pick up? Just curious in terms of sequential movement in the quarter.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Well, the big -- the big challenge that we had was on the HiFX part of our business or now called the XE part of our business, was really Brexit. I mean we do two-thirds of that businesses' business out of the UK, and people in the UK were all sitting back and waiting to see what would happen with Brexit and their currency value. So that did whack it, but the nice thing is the rest of the business just grew like crazy. And the net of this was the results that we just showed you. So we saw strong growth in the US and very strong growth in Europe for the traditional money transfer business. So we're encouraged because -- we're encouraged because at the end of the day these Brexit transfers or the transfers that are initiated out of Britain will have to be made, so.

Andrew Schmidt -- Citigroup Global Markent, Inc. -- Analyst

Got it. That's helpful. And then in terms of just ATM -- independent ATM deployments, now more so over the longer term versus this year, obviously the Visa DCC rule change allows you to sort of expand the addressable market in terms of the number of ATMs you can put in globally. But should we think about an acceleration in the number of -- in terms of just ATM count growth, or is it more about just being able to more sustainably maintain that 10% growth in ATMs annually? I guess more about sustainability or acceleration in ATM counts ...

Michael J. Brown -- Chairman, Chief Executive Officer and President

No, no, well, the deal is we've got hundreds of site selectors in Europe, and the rest of the world still doesn't have our site selectors. We've got some in India, but in other markets in the world we've got to build them up from scratch. So you will see an acceleration for sure because we got to build those teams in these new countries that we enter, and so we should see an acceleration.

And a little addendum to the last question. One thing that we have seen that's slowing down our money transfer revenue growth a little bit in the US is we see flattening on the -- on the domestic money transfer business.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

Well, that was -- that was really because we, as you know, some time ago we had add agreed to a rate decrease with Walmart and that expanded the opportunity for growth in that kind of -- we kind of ran the course of that through the end of the first quarter or so of last year. So on kind of a comparable basis, you have a little bit of a lesser comparison, if you will. But what was -- what is exciting is, as Mike mentioned, we just signed a deal with Walmart to be able to open up US domestic business. And as you know, we've not had a US domestic network. And so we've been at a real competitive disadvantage of being able to attack the US market. And so this gives us another attack angle here. So while we've seen that kind of flattening out on just the Walmart to Walmart, we now see some incremental opportunity expose itself to us with this -- with this new Walmart opportunity.

Andrew Schmidt -- Citigroup Global Markent, Inc. -- Analyst

Understood. That's really helpful. Thank you, guys.

Operator

Thank you. And our next question comes from Jim Schneider from Goldman Sachs. Your line is now open.

James Schneider -- Goldman Sachs & Co. LLC. -- Analyst

Good morning. Thanks for taking my question. I was wondering if you could maybe talk about epay for a second and to what extent the results for the quarter came in line with your expectations from a revenue growth standpoint. And as you go forward, anything we should be thinking about in terms of pricing impacts or the roll on or off of different customers and programs?

Michael J. Brown -- Chairman, Chief Executive Officer and President

Kevin, do you want to take that?

Kevin J. Caponecchi -- Executive Vice President and Chief Executive Officer, epay, Software and EFT Asia Pacific Division

Yes, sure Jim. So, this is Kevin. Thinking about epay on a go-forward basis -- let me start again. Your question about the current quarter. The current quarter was in line with what we expected from epay. Just like the rest of the business, the first quarter is a challenging quarter for all of us. So we were quite pleased that the resilience of the performance of our digital media and this whole mix shift that we've had.

Thinking about epay on a go-forward basis, there is nothing that would cause us to pause at this point in time. So we're anticipating that epay will continue to perform as it has the last two quarters. Third quarter can sometimes be a little challenging because of vacation. So what first quarter is to the EFT division, third quarter is to epay, driven by the holiday season across Europe and the US. But then again we go -- we use the third quarter to really ramp up for our strongest quarter, which is obviously the holiday season in the fourth quarter.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

And Jim, you asked about pricing pressure or any kind of repricing of the agreements and things like that. There is nothing that we see on the horizon, as Kevin said, we continue to add the digital media product into the platform. As we've shared with people in the past, we make more money per transaction in that business. And as Mike mentioned, we added several additional new names, I mean some software guys. These are very nice profitable products for us and really support the retailers' activities out there in the market in terms of directionally what they want to be able to do to sell both hardware and software.

So we don't see anything on the front that's putting pressure on that. The only thing I would say that might optically look like pressure on price, although it isn't is all the volume that we added from the non-mobile Indian transactions. But as I said in my comments, they all contributed nicely to the expansion on the bottom line. So it just depends on which element you do your math. They clearly are lower margin transactions, lower value per transaction, but they essentially were all (ph) free transactions that came in that dropped right to the bottom line.

Kevin J. Caponecchi -- Executive Vice President and Chief Executive Officer, epay, Software and EFT Asia Pacific Division

We have a, we have a big emphasis on expanding our epay division across Asia. And as Rick said, the margin percents remain good, but the average transaction value is significantly smaller. But each transaction is contributing to the bottom line.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

And maybe just another PS on the India transactions because let's not be -- let's not be too negative on the volume growth of these small and lower value transactions. They're a result of again our activities on this Digital Integrated Payments Cloud. We're connected with guys like Paytm and people like that that are alternative disruptive players out there, and they're taking our content and they're putting it into their wallet. They're getting more value for their customer. And so the more of those folks that we integrate with, we use our efficient API sockets to integrate with, we get these guys up and running, they get access to a very wide platform of product here that's very helpful to their customers. And clearly you can see in our results. It's very helpful to our bottom line.

So technology in all three of our segments is really contributing to those incremental -- those incremental numbers and our volume, we can bring that on because of our technology, we can bring it on quickly. So I don't want to undersell the value of these high-volume low-margin transactions, but when you just do the math of dividing a transaction number into a revenue number, your first impression might be lower price. It's not. It's just really mix, and you can see it hit the bottom line.

James Schneider -- Goldman Sachs & Co. LLC. -- Analyst

Understood.

Michael J. Brown -- Chairman, Chief Executive Officer and President

And one last thing. I don't know if you've caught it, but our epay team is winning competitive bids left and right. We're stealing business from the other two players in the marketplace, and we're stealing business because we have the superior Digital Integrated Payments Cloud that allows us to do these connections and do these kind of unique products and combinations that nobody else can do. So we're just -- as far as us, as far as what we see, it's kind of Katy bar the door. We're blasting. I mean epay's doing really, really well worldwide.

James Schneider -- Goldman Sachs & Co. LLC. -- Analyst

Good to hear. Thanks for clarification. And then maybe just a quick follow-up. On the Visa DCC impact, I'm sorry if I might have missed it in the earlier comments, but can you maybe just talk about how you expect that to layer in as we -- with the start from April into Q3, is there any kind of non-linearity aside from the seasonality of transactions that we should be thinking about as we model that impact?

Michael J. Brown -- Chairman, Chief Executive Officer and President

The only non-linearity is that we've projected out over the next three months or so Visa DCC -- we've lit up all our ATMs in Europe with Visa DCC, OK, because remember that was already allowed by Visa if the cards were enabled -- I mean if the cards were issued in Europe. When we get outside of Europe, we do -- where we do about 10% to 15% of our DCC revenues, these have to be recertified or additionally certified with Visa with these banks because they had never done them before and it wasn't allowed. So we've kind of got that layered in to ramp up over the next three months.

Kevin J. Caponecchi -- Executive Vice President and Chief Executive Officer, epay, Software and EFT Asia Pacific Division

And this is (inaudible) on the banks.

Michael J. Brown -- Chairman, Chief Executive Officer and President

And yeah, As Kevin just reminded me, the banks have to kind of get their act together too with us, but it's all free money for them, so they do have an incentive to be quick about it.

James Schneider -- Goldman Sachs & Co. LLC. -- Analyst

Thank you.

Operator

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

Christopher Shutler -- William Blair & Company, LLC -- Analyst

Hey, guys. Good morning.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Good morning, Chris.

Christopher Shutler -- William Blair & Company, LLC -- Analyst

Just wanted to get -- on the Walmart agreements, Mike, just what drove the timing of the new agreement and was it more you guys going to them or vice versa, just a little more detail? Thanks.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Well, Walmart is a big organization, and even though I'd like to think that I was the only thing they think about every morning when they wake up, that's not the case. And so we've been talking about this for over a year, and -- but we finally got them. I mean it takes implementation and organization to get it done, but we've got to done it. It makes a lot of sense for them because what it is, is we added 4,500 locations for payout in the US for any transactions that have been sourced anywhere else in the world across the Ria network, both domestic and international. And these people pick up their money out of Walmart stores. So obviously that's beneficial to Walmart because people are walking out with a fistful of cash and they have a tenancy to walk through the turnstiles and spend a little of it there.

Christopher Shutler -- William Blair & Company, LLC -- Analyst

Okay, got it. And then the epay business, could you give us the percentage of gross profit coming from the digital media?

Michael J. Brown -- Chairman, Chief Executive Officer and President

Yes, 70%. 7-0. Yeah.

Christopher Shutler -- William Blair & Company, LLC -- Analyst

Okay, great. And then lastly on the -- you mentioned the Bank of Mozambique and that win from last quarter. But can you just remind us, give us the elevator pitch on the services that you're providing there? (multiple speakers) getting more inbounds, maybe a little more color there on the inbounds.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Okay. So this all has to do with the technology that we have here. This REN technology is absolutely the most innovative technology for transaction switching and settlement in the world. And they recognized this. They basically were going to chuck their old system and they wanted to get something modern that they could -- that the bank could compete with all these digital players and wallets, and so forth. And our REN technology allowed them to do so.

So we are going to connect up all 21 banks. We're going to run all the ATMs in the marketplace, all the POS terminals in the marketplace. We also have a series of additional product we'd like to sell to them, things like the equivalent of BLIK transaction like we do in Poland right now where we're doing 8 million of those a year, or you don't even use the card to come up to an ATM and make a transaction. You do it all through your mobile phone. And so there's a -- there's a lot of opportunity there.

And that was just -- we sold a couple of small REN deals in a small Caribbean country, but this is the first big one. And now we're getting inbound calls, but it's not just because of the announcement of Mozambique. We've been going around pitching this, and people have said without exception that this is the coolest thing they've seen, and they need this. Banks need this because they're sitting on 25 to 30-year-old technology that doesn't allow them to be competitive with all these wallets and these Internet banks. So we can give them all that functionality with this technology.

Kevin J. Caponecchi -- Executive Vice President and Chief Executive Officer, epay, Software and EFT Asia Pacific Division

And the low cost.

Michael J. Brown -- Chairman, Chief Executive Officer and President

At a very low cost, total cost of ownership is a fraction of what it costs to run these old systems of theirs.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

And then the wild card upside to us is we're connected to 11 banks in the country, and we've got a heck of a lot more stuff to offer them. So we'll see what additional benefit that brings, but having the connectivity, just like we mentioned earlier, in terms of the distribution of content through the REN platform like this, our payments cloud, we can easily make all of our epay product available to these folks if that's what they want to offer their customers. So great opportunity to be connected, not only just at a national level, but with all the banks in the country.

Christopher Shutler -- William Blair & Company, LLC -- Analyst

Sorry. Thank you.

Operator

And our next question comes from Andrew Jeffrey from SunTrust. Your line is now open.

Andrew Jeffrey -- SunTrust Robinson Humphrey Inc. -- Analyst

Hey, good morning, guys. Mike, you've enumerated some pretty interesting opportunities as you integrate sort of next-gen payment technology. You mentioned the integrations with Ripple and with Alipay in money transfer for cross border. How do you think about those sort of longer-term driving growth? I mean is this you sort of planting seeds? Is this something in the next couple years you think that can reach critical mass as a growth driver for Euronet?

Michael J. Brown -- Chairman, Chief Executive Officer and President

Absolutely. I think we may be -- I mean this might be like one of those top secret next -- I wouldn't call it a next division, but this could be very substantial to this company, because it gets us in then there and it allows us to sell our other products, too. So whether this is money transfer, maybe this is as paper compliance, maybe this is access to our ATMs, access all the content that Kevin has on epay, this enables us to disrupt this industry further. And there are a lot of people who want to be the disruptor. And the banks on the flipside are interested in it because they don't want to be disrupted, and they're getting disrupted. You can see it every day.

Kevin J. Caponecchi -- Executive Vice President and Chief Executive Officer, epay, Software and EFT Asia Pacific Division

We don't (inaudible) ideas. We just help enable those ideas.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Yeah, that's the cool thing.

Andrew Jeffrey -- SunTrust Robinson Humphrey Inc. -- Analyst

Okay. So ...

Michael J. Brown -- Chairman, Chief Executive Officer and President

Yeah, you'll see more and more announcements like this over the coming years. That I can promise you. I mean the number of inbound calls and us visiting other people, the excitement we have with this new technology, it's killer. And the neat thing -- but now we're dealing with people who have these 30-year-old systems, and you know they're all hung together with bailing wire and bubble gum. So everybody's a little cautious, but every time we do another integration, they see how easy this is and we can start by making it kind of a middleware between the new realities and the modern systems to their old technology, and then we can start knocking out their old technology piece by piece.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

Andrew, if you put yourself in the mindset of a sales person, what better thing do you have to go talk and open up doors again with a new revolutionary, state-of-the-art kind of product that helps them satisfy their customers and make more money. I mean that is exactly what sales people like to try to do. And so it will have, as Mike said, many future dividends that it pays by reinvigorating the discussions with literally all of our customers and clients that we have across all three segments, whether it's money transfer, epay or the EFT segment.

Andrew Jeffrey -- SunTrust Robinson Humphrey Inc. -- Analyst

Okay. That's exciting stuff. Thank you. Then just a follow-up with regard to expansion of EFT outside of Europe. Would you make, Rick, the same kind of comments you made about epay? These are lower rev per transaction kind of machines. I'm thinking about India in particular. But because you have such a high fixed cost base, they generate strong incremental margin, I guess, is part of the question. Another part of the question is, are you kind of subsidizing some of that expansion with high-margin incremental Visa DCC dollars?

Michael J. Brown -- Chairman, Chief Executive Officer and President

Yes. I don't know, maybe I just cut in for Rick. But you've got to understand. First of all, we're talking about India, and the average top up in India is like $4, OK. So that's on mobile top-ups that we do through the wallet that we use our DIPC to enable, OK. So when you have a $4 face value and you get paid 1% or 2% to do that, there is just not much money in it in cents per transaction. So our -- but then again we do -- we sell a piece of software, we enable a piece of software in Europe that costs $200, we make 2% on that, we make $4. So you're comparing $0.04 to $4.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

The other thing I would add in that you're kind of talking about EFT I think if I got your question correct, Andrew, about going beyond Europe, and that -- well, would that be lesser margin business and things like that. And a bit unlike the outsourcing business where we have seen that typically our income or our margins, the farther east you go are a little lighter than what we see in Europe. When we're talking about our own ATMs and we're putting the boxes out there, we're actually dealing directly with the customer.

And so what we're going to -- our success is no different than what we have any in Europe. It's finding the right sites with the right foot traffic, and because now we've got to both cards, if you will, both major cards on the EFT front, then -- and for DCC, that is very helpful. And then in many of these countries, you even see direct access fees charged on all the other cards that come up to the box. And so, yeah, when we deploy an ATM in those environments, we don't expect that to be at a major discount to what we see in Europe. But we typically will see lighter margins per ATM on an outsourcing deal the farther east you go. So hopefully that helps Andrew.

Andrew Jeffrey -- SunTrust Robinson Humphrey Inc. -- Analyst

Okay. Yeah, it does. thank you.

Operator

Thank you. And our next question comes from Jason Deleeuw from Piper Jaffray. Your line is now open.

Jason Deleeuw -- Piper Jaffray & Co. -- Analyst

Good morning. Thanks for taking the questions. Just on the margins, the trend continues to be pretty strong. And is this simply reaping the benefits of the past investments and I'm just trying to get a sense of the incremental margins for Euronet across the three businesses. Have those increased now that you've made these cloud and platform investments?

Michael J. Brown -- Chairman, Chief Executive Officer and President

Yeah, it's a combination of that Andrew, plus the fact that we've got our cost covered, you know. And so, I mean, Jason. Excuse me . And that's been. I think that next new transaction us is probably kind of free and so that just helps your margins, you take a look at our margins were money transfer when we, when we bought the business 11 years ago we had like 6% margins. We have well over double those margins now because our volume is up from back we when we Allied ourselves up with real 11 years ago we were doing $200 million in volume and now we do over $1 billion in volume. So as you bring in more and more transactions on the very competitive platform. You know, it just, it just kind of fall straight to the bottomline grade.

Jason Deleeuw -- Piper Jaffray & Co. -- Analyst

Great. And then just a little bit on Ripple. I know it's a new deal but what's the thinking there and with blockchain money transfer just like to kind of get your thoughts on that partnership.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Well, you could go ahead.

Rick L. Weller -- Executive Vice President and Chief Financial Officer

No, you know what it does, it's kind of a good thing for both us and them. They've got connections to lots of banks out there, and we -- as you know, we've got connections to even more banks, OK, through our money transfer payout services there. So whether we're talking about another correspondent that's a traditional bank or it's someone like Ripple, they provide a means to get into a bank to deliver a payment. And in their case, it's a little bit more to a to an account, account to account transfer. So it would accommodate some of those customers interest in that regard. So we see it as being another addition to our 370 some thousand payout locations.

As we've said before, when you think of money transfer, money transfer product is really equivalent to payout, not origination. You have to be able to pay -- have someone pick up the money, and so we continue to take a look at folks like Ripple or others that are in the market that want to join with us to be able to get some mutual benefit out of it, and it then contributes to that comment Mike made earlier on the margins. You bring in these type of transactions. It's an efficient cost infrastructure. We leverage our business. Those monies drop to the bottom line.

So there isn't anything what I would -- I would put in the category of let's say, gee-whizzy. If there is a gee-whizzy, it's because our payment cloud makes the connection with those types of people very easy and the exchange of transactions. And then also kind of in there it says, oh look, it demonstrates for you too, oh look, we know how to do blockchain too. So there's nothing like let's call it rocket science about a blockchain in fact. So it adds to our overall network.

Michael J. Brown -- Chairman, Chief Executive Officer and President

And we talk about why do people like this DIPC, why do people like Ren? It's because of the ease of connections and our ability to connect. We connected up Ripple in three weeks using older technology. I mean they told us, our own people told us it'd be three, four months of time to certify a connection. And we did this sucker in three weeks. So that just gives you an idea, we can offer that same kind of utility to anybody else out there.

Jason Deleeuw -- Piper Jaffray & Co. -- Analyst

That's great. Thank you very much.

Operator

Thank you. And our next question comes from Mike Grondahl from Northland Capital. Your line is now open.

Mike Grondahl -- Northland Securities, Inc -- Analyst

Thanks, guys ...

Michael J. Brown -- Chairman, Chief Executive Officer and President

And operator, I think we've got to make this the last question because it's already top of the hour and I'm respectful of everybody's time. So Mike, go ahead.

Mike Grondahl -- Northland Securities, Inc -- Analyst

Yeah. The HDFC deal in India, Is that a larger deal for you? How would you kind of characterize that one?

Kevin J. Caponecchi -- Executive Vice President and Chief Executive Officer, epay, Software and EFT Asia Pacific Division

Yes. Mike, this is Kevin. So it's a very strategic deal for us because on the HDFC side of things, we've always been involved in their ATM business. And so this allows us to expand beyond ATMs to card processing and POS driving, et cetera. The other reason we're excited about it is there's a growing DCC opportunity in India if you can get to the right merchants. And we have partnered with HDFC to specifically target high-value merchants, luxury merchants that typically are the ones that would attract tourists when they're -- when they're visiting. So I would say, Mike, it's very strategic, and we're hoping that it'll be significant in terms of contribution. But it's kind of a new activity for them and a new activity for us.

Mike Grondahl -- Northland Securities, Inc -- Analyst

Great. I'll leave it at that. Thanks, guys,

Kevin J. Caponecchi -- Executive Vice President and Chief Executive Officer, epay, Software and EFT Asia Pacific Division

Very good.

Operator

Thank you. And this does conclude our question-and-answer session. I would now like to turn the call back to Mr. Mike Brown, CEO, for any further remarks.

Michael J. Brown -- Chairman, Chief Executive Officer and President

Just my last remark is, thank you, everybody, for joining us. I look forward to talking to you in about 90 days, and we're going into the summer months, so we are definitely excited about that. Take care and we'll talk to you'll later.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.

Duration: 59 minutes

Call participants:

Jeffrey B. Newman -- Executive Vice President and General Counsel

Rick L. Weller -- Executive Vice President and Chief Financial Officer

Michael J. Brown -- Chairman, Chief Executive Officer and President

Peter Heckmann -- D.A. Davidson & Co. -- Analyst

Rayna Kumar -- Evercore Group LLC -- Analyst

Andrew Schmidt -- Citigroup Global Markent, Inc. -- Analyst

James Schneider -- Goldman Sachs & Co. LLC. -- Analyst

Kevin J. Caponecchi -- Executive Vice President and Chief Executive Officer, epay, Software and EFT Asia Pacific Division

Christopher Shutler -- William Blair & Company, LLC -- Analyst

Andrew Jeffrey -- SunTrust Robinson Humphrey Inc. -- Analyst

Jason Deleeuw -- Piper Jaffray & Co. -- Analyst

Mike Grondahl -- Northland Securities, Inc -- Analyst

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