International Money Express, Inc. Q4 FY2021 Earnings Call

Greetings. Welcome to International Money Express Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that today's conference is being recorded. At this time, I'll turn the conference over to Mike Gallentine, Vice President of Investor Relations. Mr. Gallentine, you may now begin.

Good morning, everyone and welcome to our quarterly earnings call. I would like to remind you that today's call includes forward-looking statements; including our 2022 guidance and that actual results may differ materially from expectations. For additional information on International Money Express which we refer to as Intermex or the company, please see our SEC filings, including the risk factors described therein. All forward-looking statements on this call are based on assumptions and beliefs as of today. You should not rely on our forward-looking statements as predictions of future events. Please refer to Slide 2 of our presentation for a description of certain forward-looking statements. The company undertakes no obligation to update such information except as required by applicable law. On this conference call, we will discuss certain non-GAAP financial measures. Information required under Reg G under the Securities and Exchange Act with respect to such non-GAAP financial measures is included in the presentation slides, our earnings press release and our annual report on Form 10-K, including reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. These can be obtained in the Investors section of our website at intermexonline.com. Presenting on today's call will be our Chairman, Chief Executive Officer and President, Bob Lisy; and Chief Financial Officer, Andras Bende. Also on the call today is Joseph Aguilar, Chief Operating Officer; Randy Nilsen, Chief Revenue Officer; and Chris Hunt, Chief Information Officer. Let me now turn the call over to Bob.

Good morning and thank you for joining us today. We are proud to announce the fourth quarter and 2021 year ending results. Let me highlight some of our accomplishments on Slide 3 compared with fourth quarter and full year 2020. We achieved revenue of $127 million, a 28% increase versus last year; net income of $13 million, a 37% increase; adjusted net income was $16 million, an increase of 36%; and adjusted EBITDA for the quarter of $24 million, an increase of 27%. For the year, revenues were $459 million, an increase of 29% over the previous year; net income was $47 million, an increase of 39%; adjusted income was $57 million, an increase of 36%; adjusted EBITDA was $87 million, an increase of 27%. These are very impressive results in their own right but even more impressive given the comparison to our very strong results of 2020 fourth quarter and full year in which revenues increased 19% and 12% respectively, net income increased 80% on the quarter and 72% for the year and adjusted EBITDA grew at 32% and 19%. The two-year growth for 2021 was 45% in revenue, 139% in net income and 51% in adjusted EBITDA. We are truly a stronger, more profitable company than we were when the pandemic began in 2020. This performance validates our high-quality omnichannel customer-focused strategy. The company utilizes cutting-edge high-tech proprietary software through every step of our business to meet customers where they choose to transact, whether digitally or in person. This allows Intermex to deliver a robust and easy-to-use agent interface, provide our services efficiently and support back office IT infrastructure. As a result, Intermex exhibits all of the characteristics of a high-tech growth company. Importantly, as I will discuss in greater detail momentarily, because the service we provide to our customers is essential, our business was built to operate well in both good times and challenging economic environments. We firmly believe this positions Intermex to take advantage of a very long runway ahead. Before I provide additional color on the customer side of the business, I would like to discuss the company's strategy related to our agent partners, who are carefully chosen to ensure that they share our philosophy of providing superior customer service and support. Our service is vital to customers who may be sending funds to assist their families' critical needs in such areas as housing, food, and medical expenses. We accept that responsibility and work diligently to deliver 100% of the time. We fully expect the agents with whom we work to have the same sense of urgency realizing that our service is essential and may be life-changing. Our agents are located in areas that have been strategically selected, including the demographic characteristics of the geographies, to help meet the needs of each and every consumer. The agents who partner with us benefit from using our cutting-edge proprietary software that enables the fastest remittance processing in the industry. We continue to endeavor to upgrade our industry-leading platform at retail. In 2021, we invested in significant IT enhancements. One of these investments is the launch of our new Intermex direct agency software application in December which features both upgrades in hardware and software. Intermex Direct provides the added benefit of streamlining the process for agents by allowing them to log into one system and access multiple applications with added security and enhancements. The system also benefits Intermex to better reporting and the ability to provide continuous improved support. Agents also choose Intermex because of our strong compliance culture that we have built and in which we continue to invest. Those investments span systems and people to ensure that Intermex remains best-in-class and at the forefront of the remittance industry. Our strong compliance culture allows agents to utilize our extensive network of banking relationships and conveniently located local branches to deposit funds. This is an important fact because some of the banks are not willing to bank small businesses that generate large amounts of cash deposits. With Intermex's wide network of banking relationships, we can solve this problem by providing Intermex's own bank accounts for the agent partner to deposit into. Finally, agents benefit from the same top-notch unparalleled customer service as do our customers with an average speed of answering calls within five seconds and often faster. This quick turnaround time frees the agent to focus on customer service resulting in shorter wait times and more satisfied customers. We also provide significant value to our customers on the product side as Intermex firmly believes in providing the customer with choices that best meet how they want to conduct a transaction. We give our consumers the choice of initiating a transaction remotely via our digital app or in person at one of our convenient agent locations or one of our company-operated stores. Consumers can send cash or use a debit card at a convenient retail location or they can use a debit card, credit card or bank account to initiate a transaction online. This philosophy of consumer choice also extends to how remittances are received and paid in country. Our customers' beneficiaries can receive money digitally into their bank accounts, loaded on a mobile wallet, paid out in an ATM, paid out over the counter in a convenient retail location, or home delivered. Importantly, all of these funds are available in minutes. We have further enhanced customer choice with the launch of our new digital application this week. This app offers consumers the option of selecting lower fees or higher exchange rates in real-time. It also includes enhanced functionality that provides consumers with several options to fund their remittances and payout methods. As with our retail-based remittances, funds are available within minutes and backed by our world-class customer care. The new Intermex application also contains an intuitive navigation flow that allows users to fund a remittance with a debit or credit card or ACH for a transfer. Users can select a variety of receiving methods, including cash pickup at thousands of locations, direct deposits into bank accounts, debit cards, mobile wallets, and home delivery in select markets. Intermex also expects to make this application available to our co-branded digital and mobile partners in Latin America and Asia. This omnichannel customer-focused strategy has generated strong and consistent growth for Intermex and has resulted in our taking market share from our competitors. On Slide 4, in the fourth quarter of 2021, our market share increased to 21%, a record high in our core markets of Mexico, Guatemala, El Salvador, and Honduras. Besides the strong growth we have generated in our core markets as shown on Slide 5, emerging markets such as the Dominican Republic, Ecuador, and Nicaragua, among others, continued to experience strong growth during the quarter. Our emerging market business is one of our many bright spots with transactions increasing 32% from the fourth quarter of 2020. Turning to Slide 6. As I previously noted, Intermex is continuing to invest in our digital application and you see the company's continued progress in our digital initiatives with transactions increasing 96% versus the prior year period. Some of our peers define a digital transaction as one where either side of the remittance is cashless. Based on this definition, Intermex currently processes more than 24% of its transactions digitally where they were initiated as cashless transactions on the send side or settled as cashless on the receive side. During the fourth quarter, transactions that were deposited directly into bank accounts increased 44% compared with the prior year period. Transactions processed through the use of a debit card at retail are a small percentage of our overall wires but grew at 98% year-over-year. We expect these transactions will continue to increase as we expand the number of retailers that accept debit cards. Lastly, another key pillar of our growth strategy is our card product where some of our 2021 investment was directed. This category includes Card Direct, Prepaid MasterCard, and Payroll MasterCard. We have been enhancing our systems infrastructure to efficiently and effectively support these products while also adding field sales and support personnel to expand our presence in the market to drive meaningful contributions to future revenue and profitability. We plan on discussing more on this product category at Investor Day we are holding later today which will be available by webcast for those of you who are unable to attend in person. In a second, I will turn the call over to our CFO, Andras Bende, for his remarks on our record financial performance that Intermex delivered for the fourth quarter and for the full year 2021. I will conclude by reiterating how our unique customer-focused strategy, that provides choice matched with high-quality products in the form of reliable fast money remittance supported by quality agents and customer service and utilizing proprietary apps and infrastructure, is sustainable in differentiating ourselves. This strategy has produced peer-leading results and positions Intermex as a high-growth fintech leader with a sustainable long-term growth strategy. We believe 2022 will be another year of strong market share growth coupled with double-digit increases in revenue, net income, and adjusted EBITDA, and we look forward to sharing our continued progress with you. Now, I'll turn the call over to Andras.

Thanks, Bob, and good morning to everyone. Moving to Slide 7, let's walk through the fourth quarter results in a bit more detail. As Bob highlighted, it was another quarter and year of stellar execution along with growth in all areas of the business with plenty of milestones achieved across our key measures. These impressive results reflected our focus on providing high-quality customer service matched with our omnichannel distribution strategy. We're successfully meeting our customers where they live or work and we're providing them with product and service choices that best suit their needs backed by world-class service. It's important to remember that we do not compete on price for our customers. Quality, dependability, and choice are more important than being the least expensive. As Bob referenced, we are providing our customers with a critical lifeline service for their families. In 2021, we talked a great deal about the investments we're making in systems, people, and products. As Bob noted, the rollout of Intermex Direct has made agents even more productive. At the same time, we've added field sales and support personnel primarily west of the Mississippi. Both of these initiatives have resulted in continued agent growth and productivity. In the fourth quarter, digital transactions initiated increased 96% over the prior year period, which is especially gratifying considering we achieved those results with our legacy digital app and with limited marketing dollars. This growth comes on top of already strong growth in 2020. With the deployment and rollout of our new world-class app, we'll be increasing our efforts to generate continued high growth from our digital app service. In addition to our very strong digital growth in the fourth quarter of 2021, we realized 12% agent growth compared with the prior year quarter with a specific focus on agent growth west of the Mississippi as I mentioned earlier. These agents helped drive 20% growth in customers for the quarter, who generated a 24% increase in transactions to $11 million while sending 40% more principal totaling $5 billion for the quarter. Included in those strong transaction numbers is the growth in the number of digital transactions that I just mentioned and the 32% growth in our emerging market countries continues our trend of growth in this market at an accelerated pace. On Slide 8, all these positive growth drivers generated a 28% growth in revenues compared with the 2020 fourth quarter finishing at $127 million. Importantly, we believe these strong growth drivers provide a significant runway in 2022 and beyond. We'll also be discussing our plans and strategy in more detail at our Investor Day later today. Through a continued focus on effective expense management and economically positive investments in people, products, and support, GAAP net income for the quarter was just over $13 million, up 37% versus the prior year period. Our strong top line was the key driver with lower depreciation, amortization and interest expense also contributing to a solid bottom line result. These improvements were partially offset by the expected increases in salaries from higher sales headcount as well as investments related to new product initiatives such as the card products that Bob mentioned that we are rolling out in 2022, investments in digital including our new digital app and enhancements in modernization of our technology such as Intermex Direct. On Slide 9, excluding certain other expenses, adjusted net income increased almost 36% to just under $16 million. Our strong growth in revenues, partially offset by the increase in operating expenses I previously mentioned, resulted in a 27% growth in adjusted EBITDA to just under $24 million for the fourth quarter of 2021. Adjusted EBITDA margin for the quarter was steady at almost 19%, consistent with the prior year level although at that time, we benefited from very stringent cost management related to a great deal of uncertainty as a result of the COVID-19 pandemic. Turning to Slide 10. For the full year, Intermex's results were influenced by similar drivers as in the fourth quarter. The company generated a 29% growth in revenues to $459 million. This was driven by an 18% growth in customers that sent 25% more remittances during the 2021 year compared with the prior year. While 2021 was a year of incremental investment in people, products, and technology, we continued to balance strong top line growth with significant growth in profitability due in large part to the very efficient operating model that we've created. For the year, the increase in revenues translated to a 39% growth in net income to $47 million. And on Slide 11, on an adjusted basis we delivered 36% growth in adjusted net income to $57 million and 27% growth in adjusted EBITDA to $87 million, all very impressive growth numbers and just the latest in a long history of double-digit percentage growth. Importantly, while Intermex has been investing to drive future growth, adjusted EBITDA margins have stayed very consistent in the high teens. Moving to our balance sheet and cash on Slide 12. We wanted to give some insight into how much cash the business generates. Because our settlement assets move so quickly, the day of the week of the financial close can really muddy the water if you try to interpret operating cash flows. So we normalize it through an internal measure we call free cash generated. I'd equate it to how much of the salary ends up in the savings account in the end. If you can see on the left, Intermex generated $47.6 million net free cash in 2021, 26% higher than 2020. This means the company converted 55% of its adjusted EBITDA to net free cash generated for the year. We need to underscore again that our working capital is very cyclical. However, Intermex ended the year with $132 million in cash and an undrawn revolver capacity of $150 million. Looking at our capital allocation. As we've demonstrated, our preferred first use of cash is to reinvest in the business to accelerate our growth in what we do today already. We also continue to look at inorganic growth opportunities that have a positive risk-adjusted rate of return. Finally, in terms of the uses of cash in the fourth quarter of 2021, Intermex repurchased approximately 271,000 shares of our common stock for a total of $4.4 million. For all of 2021, the company repurchased approximately 342,000 shares for $5.6 million. Management continues to believe that repurchasing our stock is a very attractive use of cash at these valuations. Moving on to Slide 13. Given the strength of our fourth quarter and full year results, our execution trajectory and incredibly valuable and growing payments ecosystem; our full year 2022 guidance for revenues, net income, adjusted net income and adjusted EBITDA are as follows. We expect revenue in the range of $537 million to $546 million, net income in the range of $58 million to $59.5 million, adjusted net income in the range of $66 million to $67.5 million and adjusted EBITDA in the range of $100 million to $102 million. We continue to balance revenue growth and profitability while also continuing to invest in technology, talent, and marketing to drive future growth. For 2022, with the launch of our new and improved remittance app, we expect to see strong digital growth along with growth in our card products. Management also expects to increase market share by further growing our productive agent base in the retail channel which means more customers and more transactions for Intermex. As our guidance shows, we believe Intermex has a strong and sustainable growth opportunity ahead of it and we are in a great position to take advantage of that opportunity by continuing to be an innovator and leader in the fintech space with a unique and differentiated service delivered by omnichannel. With that, let me turn the call back to the operator for questions.

Our first question is from the line of David Scharf with JMP Securities. Please proceed with your question.

Hi, good morning and thanks for taking my questions. And congrats on another tremendous year, Bob. You know what, I'll let others kind of pile on with all the digital questions. I had a couple more mundane ones. Bob, we've seen the average remittance size trend upward really for the last couple of years throughout the pandemic. I don't know if wage pressure and inflation are contributing to that. But as we think about the very strong revenue guidance you just rolled out for '22, are you anticipating remittance sizes to continue to trend upward? Is that embedded in your guidance?

This is Andras. I think we can't expect year-over-year growth to be as significant as it was last year. Therefore, we have adjusted our expectations and are modeling minimal growth for 2022. If growth does continue to rise, it will be beneficial for us.

Got it. Okay. And then as the follow-up question. I know last quarter you talked about kind of building a sales effort for this Card Direct initiative basically to get payroll cards to employers and I believe you may have added somebody from a prepaid issuer in the past to build that commercial sales effort. Is that effort actually begun? Is there any kind of update you can provide there?

Sure. David, this is Randy. Yes, to answer your question, we've got a team now of eight salespeople out selling to employers and doing a good job. I think we ended the year with right around 35 employers working with us.

Got it. And is there an employee count you're able to share that maybe those 35 employers in aggregate represent?

I don't think we've really been sharing that because it's still a pretty competitive business and the way we're going about it, there's a lot of folks coming into the industry and we're trying to keep that pretty close. But I think what we can tell you is that these are a lot of businesses that are right at the core of our consumers so it's not only the card that we put in their hands that we make money off of but we're also empowering that consumer to then be more digitalized. They can either use their card then as you heard in our expanding acceptance of credit card or debit card rather at retail and then of course online. So it's going in the hands of people not just indiscriminately to try to go out for employers but employers that would be employing consumers that would be our joint consumers with remittances as well in the most part. And that's really the value, right? That's really the value because people talk about digital but if you don't empower that consumer, you're not going to get them to be able to do an online digital until they have some kind of plastic in their hands.

All right. Perfect. Thank you.

Our next question is from the line of Mark Palmer with BTIG. Please proceed with your question.

Yes. Good morning. I'll echo that the performance was very impressive, the guidance calling for more of the same. With regard to the '22 guidance, you noted in your prepared remarks that the addition of production agents was the key to additional market share gains. Can you talk a little bit about the competitive dynamic in the space and what's going on with other remittance firms such that you're able to sustain these market share gains over time which you have been doing for quarters and years now?

Well, I'll start and then Randy, our Chief Revenue Officer, will jump in since he has more detailed insights. There's a significant misconception in the marketplace about retail. We prefer not to emphasize it too much, but our Investor Day will show you how substantial the retail market has become over the past decade. We've noticed that some of the largest public companies are adjusting their strategies to align with market perceptions rather than actual conditions, leading them to essentially abandon retail. I won’t name names, but it’s evident. Additionally, we're competing with smaller players, which Randy will discuss, and highlighting our advantages. We've always focused on providing added value rather than being a low-cost provider. Typically, our prices are on the higher end, yet our business has maintained very minimal margin declines over the years, while we have gained considerable market share and attracted customers from competitors without resorting to discounting. This is crucial. Some believe there aren't significant opportunities in retail, but that's not accurate, as it's still growing rapidly. We are among the few actively and effectively pursuing these opportunities day by day, retailer by retailer, and zip code by zip code. I’ll let Randy add a bit more.

Yes. So Mark, what Bob said is exactly spot-on. I think it boils down to disciplined execution. Each one of our sales representatives has a quarterly sales plan that includes adding agents in unserved zip codes, further penetrating underserved zip codes, and focusing on agents where there's more market share and we're just not getting the amount of business out of that retailer than we think we should be. So it really boils down to execution and the fact that we've got such great products and such great services and support these retailers better than our competitors just continues to provide us opportunity to take market share.

One more question, please continue.

I was just going to add, as we talk about a lot, this rifle shot approach where we understand our market share down to the zip code level and going to recruit and really scan and make sure that we get the very best retailer in the very best location really makes a big difference. Our retailer performance is so high compared to our competitors because we're bringing in the very best retailers because of the approach we take. So it really makes a huge difference versus competitors that are indiscriminately adding lots of retailers that become really a distraction versus quality retailers.

You have $132.5 million in cash, you have $150 million available under your revolver. I know in the past we've talked about M&A opportunities and the opportunities that are out there have been expensive. Given the pullback in the market and what's going on there, are you seeing any of those opportunities becoming more available? Is there any softening with regard to prices such that there could be an opportunity to use some of that cash and revolver availability in M&A?

Yes. We're more optimistic and further along related to M&A than we have been in the past. There's nothing to report specifically at this time. But I think there's a very good chance that you'll see M&A activity from us this year but can't really say for certain. But absolutely, we're seeing things that we think will add to our business both at retail and also potentially things that might add to our business in vertical adjacent sort of businesses or may add to our business in different ways related to card and things like that. So we think there are going to be opportunities out there more as the year unfolds but we're deeper than we've been. So Andras might want to add to that.

Yes. Mark, I would also just add in terms of that cash position. Because our working capital moves around so much, that number is probably on the higher side. We drew more on the revolver this quarter, more volume on the revolver than we ever had as a business. So depending on the day of the week, we're not as cash heavy as it may appear.

But we do have about how much in cash, just so...?

The max we draw on the revolver is $40 million and we've got a $150 million revolver so you can do the math.

About $110 million, right? Unless my math is off today.

I just didn't want you to think it went from $132 million to $50 million, right? So, that's right.

Our next question is from the line of Alex Markgraff with KeyBanc Capital Markets. Please proceed with your question.

Yes, thanks for taking the question. Nice to see the customer growth acceleration in the fourth quarter. Just kind of curious as we look at the guide for '22 at 18% midpoint, I wanted to get your thoughts on how you're thinking about customer growth levels in '22 versus kind of what we saw in '21 and that's the 29% top-line growth?

Yes, I think the customer growth in 2021 was very high and can sometimes be viewed as disproportionate to the number of new retailers we added. We have been a bit more cautious. We've consistently exceeded our EBITDA targets for the year and have raised those expectations multiple times this past year. Therefore, we're not anticipating the same level of new customers. Typically, we acquire new customers by entering new areas where we haven't been or where we are underrepresented, and by partnering with new retailers that attract customers we haven't reached before. We don't expect a significant decline in that activity. In fact, we've increased our field team, especially in the Western region, to drive that growth. However, it’s important to note that the customer count might be slightly conservative due to the high numbers we are comparing against. As we approach the fourth quarter of 2022, we will be comparing against a 27% EBITDA growth from the fourth quarter of 2021, which will present a challenge. We do expect to have another strong year, but it will build on the strong growth from 2021.

Got it. That's very helpful. Just to clarify, was your comment about agent growth referring to a convergence of those growth rates compared to what we experienced in '21, where we had low double-digit agent growth alongside 20% customer growth? I wanted to understand your point about the disparity in '21.

Yes. This is Randy. I'll take that. So yes, they go hand-in-hand. So as Bob mentioned, as we add locations where we're underrepresented or unrepresented, then that first year almost all of the consumers are new to our franchise. And we see a second bump in customer acquisition that second year because as the retailer becomes more confident with our systems, likes our services better, they start to transition their customers that have been using competitive services over to us. So we really get two plus years of customer acquisition when we add a retail location; so they go hand in hand.

Yes, good morning, everyone, and congratulations on another strong quarter. I have a two-part question. You mentioned the 12% growth in agents, which I understand well. Can you provide some insight into the current backlog for new agents in relation to historical trends? Is it above, in line, or below what you've seen in the past? Additionally, it would be great if Randy could give us an update on the overall sales force and how it has trended over the last six months, along with your outlook on that.

Yes, I don't think we refer to it as a backlog. The opportunities we see are mainly in certain markets, particularly in the Western states. We consistently mention California, Texas, and other areas in the West where we have fewer retailers and therefore more opportunities, as well as fewer competitive barriers. That's the primary area of focus for us. However, there are still some opportunities in the Eastern states as well. We don't perceive a backlog in the traditional sense, where retailers are trying to reach us for agent positions that we cannot accommodate; that's not our situation. We actively choose agents rather than just reacting to their inquiries. We target specific retail markets based on demographic analysis of our current wire distribution and pursue the top retailers. It's about us generating those opportunities. I’ll hand it over to Randy now. We're investing significantly in the Western states, and we have a larger sales team operating there today, but Randy will provide more details on that.

We increased our retail sales team by about 20% in Q4, bringing them on board to ensure they could fully contribute by 2022, and that's what has occurred. The team is now making contributions, and as we entered 2022, we are operating at full capacity. We have identified over 1,000 zip codes in both the East and West, with a focus on the West, where we are underrepresented. We believe this team will significantly contribute to our success this year.

I don't think so. The markets have remained very strong, and there are still plenty of opportunities. The market has improved, with some middle-tier independent companies that were discounting more securing private equity deals over the last year or two, causing a slight rebound. Pricing pressure may be lessening, and we've never fully engaged in discounting. We typically provide added value, making us slightly more expensive to consumers than discounters, but we can still compete effectively because of the quality of our service. We believe there are still opportunities for growth, and we are increasing our market share in all the countries we serve, with Guatemala in the high 20s but poised for growth, especially in Texas, California, and other Western states like Arizona, Nevada, Utah, and Colorado. The number of foreign-born individuals in these areas significantly exceeds those in the East, where we already have a strong presence. While we have a solid business in the West, there's more potential for growth compared to the East. We see a favorable runway ahead. If we look at the fourth-quarter growth numbers, many were skeptical when we went public in 2018. Now, our EBITDA is nearly 2.5 times what it was at that time, and our revenue is also around 2.5 times higher. We anticipate continued growth. We are always conservative with our targets, and while our guidance may seem aggressive, we tend not to overstate our position. Growth builds on itself, but we acknowledge the larger denominator. We believe there is a tremendous opportunity for growth, and I don't want to downplay the importance of digital. We will discuss our digital initiatives in our investor meeting later today, but there is a significant amount of neglected potential in retail, which is not declining but growing rapidly. We will share figures later that illustrate how retail is expanding faster than GDP or remittances to Latin America over recent years. We see that an omnichannel approach, allowing consumers multiple ways to send and receive money, is the best way to conduct business.

Thank you. Our final question today comes from the line of Timothy Chiodo with Credit Suisse. Please proceed with your question.

Thank you. Good morning, everyone. Thanks for taking the questions. I wanted to touch on the growth algorithm implied in the 18% growth at the midpoint. It sounds like the components should be in our new agent location additions which have been strong. Also the maturing, as Randy mentioned, of the recently added locations so they resulted in more transactions per location. You also mentioned during the call here that there is a slight increase in transaction size that's embedded in the guidance but not nearly as strong as last year which is maybe appropriately conservative. And I guess some of the other factors would be either pricing or mix or new products and digital. Maybe you could just touch on that overall growth algorithm, if there's any pieces there that I might be missing or any that you would highlight in particular?

In terms of the numbers that will drive EBITDA and revenue today, much of that is expected to come from retail. We're particularly enthusiastic about our online business, which has been growing over 100% year-over-year recently. Additionally, we are excited about the payroll card and the upcoming launch of our new GPR card. All these aspects will contribute to our growth. However, in the early stages, our main focus this year is on investing more in retail, especially in the West, where we are increasing our presence. As we have mentioned before, we see a payback period of about seven or eight months after we establish a retailer. This results in a highly lucrative return on investment, particularly in California, Texas, and other areas in the West. The retailers we established in 2021 will also be significant contributors, even if their impact shows up in 2022 same-store sales. This is because the second year is when retail locations typically see substantial growth, which continues into the third year. Therefore, revenue and EBITDA growth for 2022 will primarily come from both existing stores and new retailers we are adding.

Timothy, it's Randy. Let me just add one more component. I think maybe this is where you were headed as well. On the pay side of the business with the partners that we work with in Mexico, Guatemala, et cetera, as our volumes increase year-over-year, it gives us the opportunity to negotiate better fees with each of those partners. So this year as we see our money transfer business increase with those pay partners, we'll see the fees that we pay them come down slightly which of course that savings drops right to the bottom line. So that's another component.

Excellent. Thank you.

Okay. Thanks.

Thank you. We have reached the end of the question-and-answer session and I'll turn the call over to Bob Lisy for closing remarks.

Thank you everyone for joining us today. We hope to see some of you at our Investor Conference later on, either in person or via video. We are optimistic about our business and look forward to continuing to achieve great results. This year has been wonderful for us. When you examine our growth from 2019 to 2021 amid the challenges posed by COVID, the numbers are impressive, especially compared to larger public companies in our sector that have faced declines during the same timeframe. We believe we can maintain this momentum as conditions improve this year. We look forward to sharing great results and hope to speak with you all again soon. Thank you for your time and attention today.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.