Earnings Call Transcript - EEFT Q4 2022

Scott Clausen, General Counsel

Greetings and welcome to the Euronet Worldwide Fourth Quarter and Full-Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Clausen, General Counsel for Euronet Worldwide. Thank you, Mr. Clausen, you may begin.

Scott Claussen, General Counsel

Thank you. Good morning, everyone, and welcome to Euronet's fourth quarter and full-year 2022 earnings conference call. On this call, we have Mike Brown, our Chairman and CEO; and Rick Weller, our CFO. Before we begin, I need to call your attention to the forward-looking statements disclaimer on the second slide of the PowerPoint presentation that we will 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 these anticipated in the forward-looking statements as a result of a number of factors that are listed on the second slide of our presentation. Except as may be required by law, Euronet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any update. In addition, the PowerPoint presentation includes a reconciliation of the non-GAAP financial measures we'll be using during the call to their most comparable GAAP measures. Now, I'll turn the call over to our CFO, Rick Weller. Rick?

Rick Weller, CFO

Thank you, Scott, and good morning, and welcome to everyone joining us today. I will begin my comments on Slide 5. For the fourth quarter, we delivered revenue of $865 million, operating income of $79 million, adjusted EBITDA of $127 million, and adjusted EPS of $1.39. These results produced strong double-digit constant currency growth rates, driven by strong growth from all three segments, reflecting continued improvement in domestic and international cash withdrawal transactions in the EFT segment, where the demand for travel continues following the lifting of COVID restrictions across the globe. Next slide, please. Slide 6 presents a summary of our year-end balance sheet compared to the prior quarter-end. As you can see, we ended the year with $1.1 billion in unrestricted cash and $1.6 billion in debt. This increase is largely from cash generated from operations, partially offset by working capital changes. The decrease in debt was largely from the reduction in ATM cash, which was returned from the ATMs following the peak travel season. Now, I'm on Slide 7. Here, we present our results on an as-reported basis for the fourth quarter. Similar to the last several quarters, many of the currencies in our most significant markets declined in the 10% to 20% range versus the U.S. dollar, compared to the prior year. I will note that towards the end of the fourth quarter, we began to see the currency strengthen against the U.S. dollar, which has continued into the first quarter. The improving FX rates in the fourth quarter provided a benefit versus our guidance, which was largely offset by some higher-than-expected operating taxes. Again, that's operating taxes, which go up in the operating expenses, not in the income tax expenses. To normalize the impact of these currency fluctuations, we have presented our results on a constant currency basis on the next slide. Slide 8. The strong improvements in EFT revenue, operating income, and adjusted EBITDA were the result of increased domestic and international withdrawal transaction trends from the lifting of COVID travel restrictions across the globe, together with the addition of and good performance from the acquisition of Piraeus Bank's merchant acquiring business in March 2022. On a year-over-year basis, revenue and gross profit per transaction were consistent. epay revenue grew 9%, operating income grew 12%, and adjusted EBITDA grew 11%, driven by the continued expansion of mobile and digital payments and branded payments together with the continued growth of the digital distribution channel. Also included in the fourth quarter results was growth in loyalty reward programs delivered by epay on behalf of new large retailers. epay's revenue and gross profit per transaction were consistent on a year-over-year basis. Money Transfer revenue, adjusted operating income, and adjusted EBITDA grew 9%, 6%, and 5%, respectively. The growth was the result of 13% growth in U.S. outbound transactions, an identical 13% growth in international originated money transfers, of which transfers largely initiated in Europe grew 13% and transfers initiated in the Middle East and Asia grew 14%. In addition to these strong growth rates, XE transactions grew 25%, partially offset by a 17% decline in our intra-U.S. business. When you look at direct-to-consumer digital transactions on their own, they grew 38%. As we have in prior quarters, we continue to monitor the impact of inflation across the business. We have generally seen increases across all segments in salary expenses, both our own and our suppliers. On the revenue side, we have not seen any direct impacts of inflation on our EFT and epay businesses. However, in money transfer, similar to what we saw earlier this year, the average amount sent per transaction declined by about 3% or 4%, resulting in nearly a 1% offset in our revenue per transaction growth rates. Overall, on one hand, we saw constant currency revenue per transaction come in by about 1%, largely attributable to the decrease in average send amount I just mentioned. However, on the other hand, constant currency gross profit per transaction improved in money transfer by approximately 2%, largely due to favorable mix and improvements in overall correspondent payout costs. The drivers behind our full-year results for each of the segments were largely the same as the fourth quarter, so I won't go through the full-year results in detail, but we have presented them on the next few slides. As I reflect on 2022, I am pleased with the resilience of all three of our segments. In EFT, we saw our transactions improve in line with the improvement in travel trends, if not a little better. Our new merchant acquiring business continued to perform quite well. Many of you may recall that epay started the year slow, but the business gained momentum in the second half of the year as we expected and ended the year with double-digit constant currency operating income growth for both the fourth quarter and the full-year 2022. In Money Transfer, we continue to expand both our physical and digital networks. We are also continuing to build momentum in our digital initiatives as we sign more rent agreements and we see large banks and brands realize the value proposition of our Dandelion network. I know that many of you are going to ask what we expect for the full-year 2023. It is not our practice to give full-year guidance, but I do think it is helpful if we provide some direction for the full-year. As many of you know, on January 1 of this year, Croatia transitioned its currency from the kuna to the euro. Certainly, the currency migration will have some impact on our EFT results. However, we believe that there are a number of new rate-related opportunities in the EFT segment that will nearly offset the impact. We fully believe that we can carry the momentum we have built in 2022 forward into the new year. To that end, we expect the first quarter adjusted EPS to be approximately $0.85 per share, which represents a 23% growth over last year, assuming consistent FX rates, interest rates, and other unforeseen matters. We also continue to expect the full-year adjusted EPS to grow in the mid-to-upper mid-teens range over our full-year 2022 adjusted EPS. I think it bears repeating that we have a strong balance sheet, while making the right strategic investments in our business, which we believe will allow us to continue to grow at double-digit rates. It was another great year at Euronet.

Mike Brown, CEO

Thank you, Rick, and thank you, everybody, for joining us today. I'll begin my comments on Slide 15. Well, I guess, as I look back, all I can say is, what a year. We delivered very strong consolidated constant currency double-digit growth rates in the midst of ongoing economic and global uncertainties. We have continued to prove that our business is resilient, and as Rick mentioned during the pandemic, we were not afraid to invest in places we believe that would continue our long-term growth trajectory. In EFT, our most profitable transactions continue to improve. In epay, there continues to be a growing demand for mobile and branded digital payment content, and consumers and businesses still need to send money across borders. The fourth quarter unfolded largely in line with what we expected when we spoke in October. Despite not seeing a full travel recovery, we are encouraged by the continued signs that, at least as it relates to travel, the end of the pandemic seems to be upon us in the U.S., and travel conditions are improving further east. The Euro Control outlook remains consistent; passenger traffic in 2023 is expected to reach 92% or 93% of 2019 levels. While we'd like to see this data at least in line with that 100% of 2019, this would still be roughly a 25% improvement from 2022. We are also seeing positive signs from travel booking sites, which indicates a very strong demand for travel this coming summer and year, due to the backlog of people wanting to take trips that were canceled during the pandemic or delayed due to the capacity restraints that really vexed us and global travel last year. On their recent earnings call, the Delta Airlines CEO was bullish on the travel industry recovery and expects double-digit top-line growth in the coming years. This optimism in travel, together with some pricing opportunities, entry into new markets, continued growth in our POS acquiring business and sales of our Ren platform, supports our expectation that we will deliver strong growth rates in 2023. With this macro overview, let's get down to each specific segment, beginning with the EFT, starting on Slide Number 16. Slide 16. We have successfully grown our ATM deposit network in Poland this quarter, signing agreements with 23 new merchants who will have access to our broad deposit network. For some perspective on the success of this network, we received more than $6 billion worth of Polish Zloty in ATM deposits in 2022. We are continuing to expand that growth in Romania with an ATM network participation agreement with Unicredit Bank. These deposit ATMs allow customers and retailers to deposit money with nearly instant credit to their accounts, allowing them to avoid carrying large sums of money to the bank or having to wait until banking hours. As I reflect on the $6 billion in ATM deposits that we processed, it seems like a good time to address one of the most common questions I receive. Of course, that is, is cash dying? I am certainly not going to deny that digital transactions are popular and convenient, but what we have seen and what the $6 billion in ATM deposits show us is that there continues to be a large volume of cash used in circulation. Further, what we have seen is that in times of economic and other uncertainties, people tend to revert back to cash. So, I'd tell you that, no, we do not believe that cash is going away. Accordingly, our core business has proven to be very profitable, so we have continued to use these profits generated from our cash-based withdrawal and deposit transactions to invest in next-generation technology and digital transactions, which we believe will continue to diversify our global business. Moreover, the value of our cash business creates significant value for our shareholders. Getting back to the highlights in Spain, we signed a network participation agreement with Banco Caminos; this is the 15th agreement that we have signed to allow banks to provide their customers with convenient access to our market-leading ATM network in Spain. Also in Spain, we leveraged the content relationships in our epay segment to cross-sell Spotify, Xbox, Nintendo, and Paysafe card sales on Euronet ATMs. The combination of these two business segments is a great example of our goal to allow customers to participate in the global economy in a way that is most convenient for them. We signed two exciting agreements in the Philippines during the quarter. We signed our cardless cash withdraw on deposit agreement with PayMaya, the second-largest digital wallet in the country. This wallet has platforms and services that cut across consumers, merchants, communities, and government and provides more than 41 million Filipinos with access to financial services through its consumer platform. We also signed a network participation agreement with the Bank of the Philippine Islands, BPI, to allow BPI cardholders to perform cash withdrawals and balance inquiries free of charge on the Euronet ATM network there in the Philippines, which now has approximately 900 ATMs in the country. Next slide, please. Slide Number 17 provides you with an update on our ATM portfolio. During the quarter, we reduced our owned ATMs by approximately 450 machines. This is the result of a couple of measures. First, we removed about 350 ATMs in Croatia that were in places that would likely not be profitable, given the country's conversion to the euro. Second, a more robust post-COVID travel season last year gave us another data point to analyze our ATM estate with higher transaction volumes, and we redoubled our ATM profitability management efforts. As a result of this process, we removed about 250 ATMs, which we will relocate, and which we expect will ultimately provide us with a stronger and even more profitable ATM network as we move into this year and next. The culling of the network was offset by the addition of about 158 new ATMs in new and existing markets. We also reduced our outsourced ATMs by 200 due to the expiration of an outsourcing agreement in Poland. Finally, we deactivated about 3,900 ATMs for the winter season, consistent with our historical practices. As we think about our ATM deployment plan for 2023, we expect to deploy between 3,500 and 4,000 machines in new and existing markets. Moreover, as we see the return of travel and provide a more robust travel recovery, our optimism for ATM deployment may very well increase. To sum up the year in EFT completely, I'd say it was a great year. We were able to answer the most lingering question from the pandemic: Will consumers still want cash when they travel? We now know that the answer is certainly a resounding yes. As our transaction growth paralleled the travel recovery reported by Eurocontrol. With Asia Pacific now accelerating its opening, certain pricing opportunities across our markets, and entry into new markets alongside our digital initiatives, we anticipate that EFT will continue to produce strong growth rates in 2023. Now, let's go to Slide Number 18, and we'll talk about epay for a minute. I am particularly pleased that epay closed the year with revenue growth slightly above the expectations that we provided over the last several quarters, with more than 40% constant currency growth above 2019 levels. This is a strong testament to the demand for our mobile and digital branded payments content, together with the expansion of our digital distribution channel. This quarter, we continued to expand our content by launching McAfee renewals and at Currys stores in the U.K. and Ireland. In Spain, we launched digital subscriptions for Disney+; we also expanded sales of Uber cards in Germany and Spain. We continue to expand our relationship with Microsoft to provide Microsoft 365 renewals in Germany, Brazil, UAE, and the U.S. We really like these renewals and the agreements that we've signed as they leverage our industry-leading tech stack and give us a recurring revenue stream. Finally, we launched a digital branded payments agreement in legal stores in the U.K. Our epay team continues to find innovative ways to give customers payment options in the way that they want them, whether that's in a physical store, online, at an ATM, or through a digital wallet. We believe that our content and technology solutions are industry-leading and will continue to give us new opportunities for expansion around the world. Now, let's move on to Slide Number 19, and we'll talk about Money Transfer. Our network now reaches 522,000 physical locations, 3.6 billion bank accounts, and 428 million wallet accounts across 188 countries and territories. During the quarter, we launched 16 new correspondent agreements across 14 countries. One of the more significant of these launches was with a Hong Kong-based OTT pay, which processes bulk small-value cross-border business-to-consumer payments on behalf of companies that need to pay gig workers, influencers, and other independent contractors. We also signed 19 new correspondent agreements across 19 countries. We added four new mobile wallets across Cameroon, Mali, Sierra Leone, and Colombia, and we added corporate payments in both Egypt and Morocco. During the quarter, we acquired Sikhona, a global partner in South Africa, significantly strengthening our presence in the send and receive market with a license, a strong cash acceptance and promoter network, as well as a successful money transfer app. We are already seeing a large number of new in-bound and out-bound opportunities in that country and will consolidate our presence, reinforcing our position in South Africa and the broader region. Finally, we continue to expand our digital assets, launching our moneytransfer.com app in Singapore. This gives us another send market in our digital channel, where we are seeing direct-to-consumer digital transactions growing 38% year-over-year. Now, we'll talk about Slide Number 20 and our Dandelion successes. Well, we're extremely pleased to announce that we have signed an agreement with HSBC, the world's eighth-largest bank, to utilize our Dandelion platform. As a major bank with strength in Asia Pacific and the Rest of the World, the HSBC Group has a key role to play in today's global economy. We are very proud and very excited about this new relationship, and now we are laser-focused on going live with our first market this month. The agreement with HSBC is a good example of the favorable market response to Dandelion's differentiated value proposition, which includes real-time payments, alternative payment channels, and complete payment solutions all available through a single API integration. Dandelion's sales pipeline grew significantly in Q4, with strong interest from banks, payment companies, MSBs, and fintechs across the globe. We will continue to work hard on this pipeline and hope to deliver more exciting announcements in the coming quarters. Now, let's move on to Slide Number 21, and we'll talk about rent. On Slide Number 21, you can see that we continue to expand our Ren pipeline of agreements. During the quarter, we launched Visa prepaid card issuance and switching with TNG Digital, the largest e-wallet issuer in Malaysia with approximately 22 million customers. Using our Ren technology, Euronet will convert funds in the T&G e-wallet to a Visa-branded open loop program. We successfully ran the pilot program in December and did an official launch in January. A few slides back, we told you about our ATM network participation agreement with BPI. In addition to this agreement, BPI has recognized the value of our Ren offering, and we launched person-to-merchant payments through InstaPay. InstaPay is a real-time payment service to allow customers and businesses to transfer funds instantly between accounts from a number of different banks in the Philippines. During this quarter, we expanded this functionality to allow person-to-merchant payments, providing a comprehensive real-time payments experience to BPI's customers. You may remember, last year, we told you about an exciting partnership we had with Grab in Singapore where Euronet's Ren platform was selected as Grab’s strategic partner to provide end-to-end open-loop issuer processing and switching services. We have now expanded that same relationship with Grab to Malaysia. We also signed an agreement with Grupo Confianza in Honduras to become the SaaS card issuing solution and Mastercard BIN sponsor for their credit union clients. This agreement is strategic in that it gives us entry into Honduras with our Ren cloud-native platform and creates a bridge to attend to smaller clients who are better served with an aggregator. As you can see, the investments we have made in our digital technology solutions are continuing to pay off with a strong pipeline of new rent agreements. We expect this Ren pipeline to contribute approximately $140 million in revenue over the next six years. Now, let's go to Slide Number 22, and we'll wrap up the quarter. As I stand back and reflect on 2022, it largely marks getting back to where we were. Okay. I apologize for a little bit of a technology break there, but I will continue now. As I stand back and reflect, 2022 largely marked getting back to where we were pre-COVID. Had it not been for changes in currency, our full-year adjusted EPS would have been roughly at 2019 levels. I think it is worth repeating a comment that we made at the end of the third quarter. History can often be a good predictor for the future. Through Euronet's history, we have been through every economic cycle, one-off events like cash demonetization in India, and now what appears to be the two biggest global economic setbacks in the last 80 years, the 2008 financial crisis and the COVID pandemic, and we have always come out stronger on the other side. This has been made possible by our hard-working employees, of course, but also our balanced product and geographic portfolio, the disciplined management of our balance sheet and investments for future growth, together with the fact that our product portfolio consists of products that people want, use, and need. With improving travel trends, more content, bigger networks, and more geographies, we believe our business is poised to continue to deliver double-digit growth rates in 2023 and beyond. With that, we'll be happy to take your questions. Operator, will you please assist.

Operator, Operator

Our first question comes from Rayna Kumar from UBS.

Rayna Kumar, Analyst

Good morning, Mike and Rick. Thanks for taking my questions. It's good to see that you're reiterating your mid-to-upper teens EPS growth guidance for 2023. I just want to make sure that's off of the new $6.51 EPS base for 2022. Also, if you can walk us through your expectations by segment for the year and for Q1, that would be really helpful?

Mike Brown, CEO

Well, first of all, yes, it's off the full number for last year. When we say kind of mid-teens, we're thinking in that range of maybe 14%, 15%, or 16%, maybe even up to 17% kind of growth rate over last year's total number. With respect to each of the segments, we don't really break it down by segment, but as I've mentioned and Rick did in our comments, we're pretty excited about all three segments. The one segment that will have the easiest growth might be the EFT segment because we believe that we're going to get a lot more travelers to our ATMs this coming summer.

Rick Weller, CFO

Rayna, what I would add, and consistent with what Mike said, we typically don't give all that kind of detail in each of the segments. But I know in the past, we have talked at different times about what we kind of expect in longer-term growth rates for our segments. What we've consistently said, and we continue to believe, is that our epay business will have a revenue growth trajectory that would be in the upper single digits and the lower double digits on revenue, that operating income would be more on the lower double-digit side. In our money transfer business, we believe that our revenue will be in the kind of lower double-digit range, but a little bit more aggressive than what we might be on the epay side. So, think of that as being, kind of, possible that we could be into the low teens on that side of the revenue piece, say 12% or a 13% kind of number. We then expect to see that our operating margins grow a little faster than that. In the EFT segment, with the return of travel as we see the number Mike said earlier, if we just take the Eurocontrol number that would be nearly a 25% number, and we finished up the year and are expecting a travel recovery in the 70% range. If we use the Eurocontrol estimate of 92% or 93%, that results in a substantial revenue growth.

Mike Brown, CEO

I'd also like to caution that the first quarter for the last ten years has been our seasonally weakest quarter versus a perfect storm of all three segments typically being weaker in the first quarter. Also, we’re excited about our acquiring business that we purchased from Piraeus Bank; it performed quite well last year. So, we're looking forward to that one going forward.

Rayna Kumar, Analyst

That's really helpful detail. Just on the point on travel, what are you seeing in terms of increased capacity at Heathrow Airport versus your expectations?

Mike Brown, CEO

We don't know exactly what it's going to do. All we know is that the travel caps were removed during the Christmas rush. I would tell you also, let's not forget the Christmas rush isn't nearly the summer rush. So, we're cautiously optimistic that they're getting their act together there. We'll have to see what happens, but everybody recognizes what a mess it was last year, and so, they’re going to do their best to get it fixed.

Rick Weller, CFO

I think that's reflected in some news about them having a change in their leadership. They really want their travel industry to work well. As Mike said, we didn't see any real hiccups going through the fourth quarter, albeit it's obviously much lighter than the third quarter, but those are favorable signs as we look to next year.

Rayna Kumar, Analyst

Got it.

Rick Weller, CFO

Operator, we’ll move to the next caller. Sorry, Rayna, I have to get everybody else a shot.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from the line of Andrew Schmidt from Citi.

Andrew Schmidt, Analyst

Hi Mike, hi Rick. Good morning. Thanks for taking my question. To dig into the reiterated mid-to-upper teens EPS outlook, just kind of a technical question. Are you flowing through the benefit of the FX rates, the favorability there? If you are, just wondering if there are offsets that remain that seem like if you flow those through, you should be a little bit higher or at the very minimum at the upper end of that range? Any thoughts would be helpful. Thanks.

Rick Weller, CFO

Yes, we did; essentially, we've assumed that the FX rates are the same as what they are today and that they'll remain unchanged for the rest of the year. It just kind of depends on where you want to pinpoint your math on that. As Mike said, if you were more toward the upper teens, it would be a little bit stronger, but yes, it has been appropriately reflected in that number.

Mike Brown, CEO

We've also seen a bit of an offset as we're planning on a couple more Fed rate increases and more rate increases in Europe as well.

Andrew Schmidt, Analyst

Got it. Okay. That makes a lot of sense. I appreciate that. Then just quickly on money transfer. If you could elaborate a little bit on what you're seeing, it doesn't seem, Rick, based on your commentary, that the growth rate has materially altered. So, are you seeing something different as we enter 2023? Or was the fourth quarter a little bit of a point-in-time? Are you seeing the impacts of inflation persist with the remittance customers? Any color there would be helpful. Thanks.

Rick Weller, CFO

Well, we essentially incorporated the impacts from inflation when we first saw what we thought would be some inflationary impacts on our growth rate. Therefore, if you look at the strength we're seeing across the U.S. outbound, Europe, Middle East, it came back a little stronger. We are seeing some of the impacts of COVID starting to lift more consistently around the world, and our digital product has continued to improve. We don't expect that we'll see a gusher of additional revenue from Dandelion this year. We're continuing to build and grow that pipeline. But I think all that continues to build our confidence that we're going to be in that 12% to 13% kind of range. As Mike said, we would expect to see the first quarter be a little bit slower as it typically is the lightest quarter of all three segments.

Andrew Schmidt, Analyst

Got it. Thank you very much, guys. Appreciate the commentary.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from the line of Darrin Peller from Wolfe Research.

Darrin Peller, Analyst

Hey guys. Thanks for taking my question. Look, it's obviously good to see the progress on EFT. I guess, Mike, when we think about the business in EFT and what the behaviors that we're seeing are today, would you expect that if we got back to that 92% or 93% of 2019 levels by the end of 2023, that your profitability levels of EFT should be the same or more than they were assuming it was 92% in 2019? In other words, like-for-like, has anything changed to push that profitability up in that segment beyond just the travel activity?

Mike Brown, CEO

I think if we only get 92% or 93% of the tourists we did in 2019, we're not going to reach 2019's total revenue. However, we do have some opportunities, a lot of which comes down to mix. As we expand into new markets in North Africa, in Asia, our experience shows those ATMs tend to be more profitable per unit than our European ones, even though our European ones perform quite well. If we can gain travel recovery in Asia, that would be great. We have encountered some supply chain issues in getting ATMs to expand into North Africa. As that improves, that will help us as well. We had extensive ATM rollout planned last year in and around the countries that now surround Ukraine, but then the war happened. Those markets are all cross-currency markets, and they are good contributors. We’ll have to wait and see what happens, but I think if we get to 92%, we’ll be satisfied, and it also provides room for growth in the following year.

Darrin Peller, Analyst

That does make sense. When we think about China reopening, can you remind us what kind of contribution base travelers from China made to your business before the pandemic, whether in any of the regions? I'm just curious if you have any insight on that?

Mike Brown, CEO

The biggest market where we see Chinese tourists is in Asian markets like the Philippines and Malaysia. Their return would be beneficial. Before the pandemic, they accounted for about 5% of European travel, which they would contribute greatly if allowed to do so fully.

Rick Weller, CFO

Importantly, the China UnionPay card generally doesn't accommodate DCC. In markets where we have a surcharge opportunity, it can still benefit us, but we've never had significant contributions from Chinese travelers. We're working on agreements to potentially enable that, but as of now, it's not implemented.

Darrin Peller, Analyst

Understood. Thanks, Rick.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from the line of Cris Kennedy from William Blair.

Cris Kennedy, Analyst

Good morning. Thanks for taking my question. Can you talk about the timing of Ren revenue hitting your income statement and how that's tracking relative to your initial expectations?

Mike Brown, CEO

It's tracking pretty much on the expectations I outlined in prior quarters. In the first year we were selling Ren, which was two years ago, we did about $8 million in revenue at around an 80% margin. Last year, we achieved nearly double that. This year, we're targeting $25 million to $30 million if we can install everything as planned. We’re excited about Ren, and it continues to grow. The $140 million pipeline represents contracted minimum revenues from the contracts we’re installing. This doesn’t include new contracts we might sign this year. Once we onboard clients onto our platform, their transaction volume usually exceeds expectations, increasing revenues for us.

Cris Kennedy, Analyst

Great to hear. Thanks for taking the question.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from the line of Pete Heckmann from D.A. Davidson.

Pete Heckmann, Analyst

Hey, good morning. Most of my questions have been answered. I just wanted to follow up on the digital money transfer. Can you talk about how that's been growing at a very nice clip for several years now? Can you discuss how this has changed the mix of money transfer and what the implications are for both revenue growth and margins if we continue to see digital growing at three to four times the rest of the business?

Mike Brown, CEO

The rapid growth of digital is a positive change in the mix. If we grow a low teen rate overall, but digital is expanding at close to 39%, that alters the dynamics. Digital is gaining momentum and we’re opening in more countries. Digital money transfers are profitable for us; about 90% of all digital money transfer companies currently lose money. Our ability to leverage our existing brick-and-mortar business allows us to maintain decent profitability for digital transactions. Thus, we expect our mix to shift more toward digital in the future.

Pete Heckmann, Analyst

In terms of just the Dandelion growth you had indicated would likely ramp up in 2024, could you expand on that?

Mike Brown, CEO

We don’t anticipate significant Dandelion revenues this year. Once banks are integrated, they must market to their customers, which builds momentum over time. This year, we would expect to see substantial Dandelion revenues only if we onboard another quick ramp fintech like Zoom or Remitly. Banks typically take longer as they aren’t used to offering our diverse payout options compared to traditional Swift services. However, these banks are starting to recognize the value proposition of our services which is encouraging.

Pete Heckmann, Analyst

Thanks, Mike. I appreciate it.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from the line of Mike Grondahl from Northland Capital Markets.

Mike Grondahl, Analyst

Hey guys, thanks. Can you roughly size up Croatia and that hit going to the euro? You mentioned some offsets, could you describe the rate-related offsets?

Mike Brown, CEO

We have not disclosed the exact impact for competitive reasons, but the offsets are really in two categories: opportunities to improve interchange rates and the ability to impose surcharges or access fees. Additionally, we proactively streamlined our ATMs that wouldn’t be profitable if DCC isn’t applicable.

Rick Weller, CFO

As we closed out the year, we saw we were in the 75% range; certain countries performed better than others, with overall positive trends. We've consistently seen our transactions align with Eurocontrol data, and if people are on the plane, they will come to the ATM. So, we feel confident about our projections.

Mike Grondahl, Analyst

Got it. Any data points to support your confidence about the 92% to 93% travel recovery?

Rick Weller, CFO

We have seen our transactions correlate strongly with Eurocontrol data. Looking closely at our late year closeouts, we experienced about 75% recovery overall. Several countries did better than that. Our expectations for the next year remain optimistic.

Mike Brown, CEO

It's also quite important to analyze the passenger demographics on where travelers originate from. Our largest group is from Britain, which leads us into stronger contributions from our geographical locations.

Mike Grondahl, Analyst

Okay. Thank you very much.

Mike Brown, CEO

Operator, I think that must be the last call. We're at the top of the hour. Thank you for listening in, and I'm happy to talk to you all in about 90 days.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.