Shares of MoneyGram International (MGI) fell nearly 15% on Nov. 1 after the money transfer company's third-quarter results fell short of Wall Street's expectations.
MoneyGram's revenue decreased 7% year over year to $324.6 million, as declines in the company's U.S. business more than offset growth in its international operations. Wall Street had expected revenue of $334.5 million.
MoneyGram International's shares fell sharply on Friday following the release of its Q3 results. Image source: Getty Images.
MoneyGram now produces 60% of its money transfer revenue outside the U.S. That business saw transactions rise 7% compared to the year-ago quarter.
"While the US market, which continues to be our primary challenge, showed signs of improvement on a sequential basis, we are very pleased that our non-US business achieved year-over-year growth for the quarter," Chairman and CEO Alex Holmes said in a press release.
Still, MoneyGram remained unprofitable. The company delivered a non-GAAP (adjusted) net loss of $2.2 million, or $0.03 per share. Analysts had expected MoneyGram to report an adjusted net profit of $0.03 per share.
Ripple partnership
MoneyGram struck a deal with cryptocurrency giant Ripple in June. The cash-rich company invested $30 million in MoneyGram in exchange for an equity stake. Ripple also obtained the option to invest another $20 million to increase its ownership position in MoneyGram in the future.
As part of the agreement, MoneyGram gained access to Ripple's blockchain technology for cross-border payments.
"Our third-quarter results reflect the continued transformation of our business as we increasingly focus on customer experience improvements, cross-border digital growth, and industry-leading innovation through our strategic partnership with Ripple," Holmes said.
Notably, CFO Larry Angelilli said during a conference call with analysts that MoneyGram has begun using Ripple's controversial XRP digital token in foreign exchange settlement.
The Ripple blockchain enables MoneyGram to achieve what we are calling real-time settlement. Currently, MoneyGram is using Ripple to facilitate what are almost instant foreign exchange trades. In Mexican peso, for example, we purchase the cryptocurrency XRP on a U.S. exchange, transfer it to an exchange in Mexico, and sell the XRP on the exchange in Mexico for pesos all within about 60 seconds.
This is one of the first instances of a money transfer company using XRP for its operations, and it will be interesting to see whether Ripple's cryptocurrency can help to improve MoneyGram's profitability in the quarters ahead.
