Earnings Call Transcript - IMXI Q1 2023

Operator, Operator

Good morning, and welcome to International Money Express Incorporated First Quarter 2023 Earnings Conference Call. During the presentation, all participants will be in listen-only mode. As a reminder, today’s conference is being recorded. I would now like to turn the conference over to Mike Gallentine, VP of Investor Relations. Please go ahead.

Mike Gallentine, VP of Investor Relations

Good morning, and welcome to our quarterly earnings call. I would like to remind everyone that today's call includes forward-looking statements, including our second quarter and full year 2023 guidance, and 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 discuss certain non-GAAP financial measures. Information required by Regulation G under the Securities and Exchange Act for such non-GAAP financial measures is included in the presentation slide, 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 is our Chairman, Chief Executive Officer and President, Bob Lisy; and Chief Financial Officer, Andras Bende. Also on the call today are Chris Hunt, Chief Operating Officer; Joseph Aguilar, President, Latin America; Randy Nilsen, Chief Revenue Officer; and Marcelo Theodoro, Chief Digital Officer. Let me now turn the call over to Bob.

Bob Lisy, CEO

Good morning, everyone, and thank you for joining us. As always, we appreciate your interest in Intermex. We had another strong quarter building upon the company's sustained track record of healthy growth. On Slide 3, Intermex grew revenue and EBITDA in double digits once again. Additionally, the key fundamentals that drive our superior operating performance quarter after quarter are trending in the right direction. Our CFO, Andras Bende, will review the numbers in greater detail during his portion of our prepared remarks. Without question, our core business is strong, and we are on track to meet our full year expectations. As a public company’s fastest-growing omnichannel remittance company, Intermex is positioned to excel well into the foreseeable future. As you know, the business we have built in the U.S. provides a differentiated value proposition to the Latin American corridor that is unparalleled in the industry. Because of our unique value-added model, an increasing number of consumers from the Latin American community turn to Intermex to send money home. Powered by our state-of-the-art proprietary technology, we deliver value-added service to our consumers and thousands of highly productive retail agents who partner with us nationwide. Our customer-focused omnichannel business is powered by superior technology that is difficult to replicate. The rock-solid foundation the company has been built upon drives our sustained growth and creates uncommon value for our shareholders. With all the elements of the La Nacional acquisition now closed, the integration of La Nacional's U.S. business is well underway, and we're well into the process of assessing the significant opportunity that exists for our business in Europe. While we acquired La Nacional primarily for its geographical complement and superior brand to the Dominican Republic, La Nacional's European i-transfer business presents an attractive growth opportunity for Intermex. The i-transfer division is currently profitable, and we see an opportunity to grow revenues and income many times over. For our digital business in the U.S., we are demonstrating strong growth; the digital opportunity is likely larger and a near-term target for us in Europe. The i-transfer business represents a significant digital opportunity with minimal risk of channel conflict. The consumer base of senders is more likely to be banked in Europe. This will present the perfect landscape for us to thoughtfully execute our omnichannel strategy. Across Europe, we can selectively focus on retail and/or digital when and where it makes the most sense, an advantage that few retail providers and no digital players have today. Currently, i-transfer operates in Spain, Italy, and one company-owned location in Germany, representing a tremendous outbound remittance opportunity. We think that i-transfer’s current presence aligns with Intermex's strategy and capital and creates a powerful combination. We're excited about the growth ahead. As we have stated previously, there are a number of components of the La Nacional investment that will become much more efficient over time, driving higher margins. Simultaneously to seizing the opportunity in Europe, which is underway, we have made great progress ramping up the full-scale integration and rightsizing of La Nacional's U.S.-based business. The upside potential for La Nacional in the U.S. is more about rightsizing the retail network and maximizing efficiencies and margins. Growth opportunities will exist, but they will be driven by careful, profitable growth. We are also instituting our disciplined operating rigor and efficiency to the U.S. operations. By that, I mean our focus will be enhancing margins by capturing synergies and eliminating waste wherever possible. While La Nacional's U.S. footprint actively has been reduced by approximately 500 unprofitable retail agents under our management, with some additional reductions planned. Shortly after closing, we also rightsized the sales organization to match the reduced service area footprint. Our formalized restructuring plan is in place, and we will be at a run rate of 9% to 11% EBITDA margin by late 2023 or early 2024. La Nacional is proving to be a great asset for Intermex, and we're just getting started. On Slide 4, including La Nacional, prompts us to rethink how we discuss market share in the U.S. and Latin America. Adding La Nacional's substantial presence in the Dominican Republic changes the equation. Instead of tracking our share versus the market at the four largest countries in Latin America, it now makes sense for us to expand that to the top five countries, of which the Dominican Republic is part. These countries account for 82% of the money sent from the U.S. to Latin America and the Caribbean. We estimate our 2022 market share in these five key Latin American receiving countries was just over 20% when adding La Nacional. This further solidifies our position as one of the leading remittance providers in that market. Additionally, if you look at Slide five, showing the top eight countries, which represent 92% of the money transferred from the U.S. to the region, you see that Intermex has steadily grown its market share to almost 20% for 2022. Our priority continues to be expanding our footprint in the most important ZIP codes for our spending consumers with a differentiated value proposition for both our consumers and our agent partners. The majority of transaction growth is produced by same-store locations, with the balance coming from new agents. When we recruit a new agent retailer, it provides incremental transactions in year one, but that same retailer will grow by larger percentages in years two and three. Our continued pipeline of quality new agents is critical to new store performance but even more important to same-store growth over time. Based on Intermex's superior service for both the consumer and the agent retailer, our share of the remittances within the store will grow as we become the preferred provider over time. To accelerate our 2023 growth, we have added more than a dozen regional sales executives, whose job is strategically to add high-performance new retail locations, especially in the West, where the unfilled market opportunity is greatest for us. The potential for growth in the region is significant, and we are confident that our investment will prove to have an excellent return in terms of building our business in the Western states. In summary, it has been another strong quarter for Intermex. Our best-in-class retail core business continues to perform at a high level. The addition of La Nacional's U.S. business and the i-transfer business in Europe has provided significant growth opportunity. We're excited about the top and bottom line potential contributions of these two business units as they are rightsized and infused with the Intermex approach to the market. With that, I'll turn the call over to Andras, who will drill down into the numbers and offer perspective on our first quarter operating performance.

Andras Bende, CFO

Thanks, Bob. Intermex had another strong quarter, thanks to our competitive advantage in the marketplace and the highly efficient management of our growing lines of business. The intelligent, thoughtful investments we make in people, innovative new products, scalable technologies, and new markets continue to drive the company's double-digit growth. We're executing a differentiated omnichannel business strategy for expanding our ecosystem of productive and profitable retail agents with a laser focus on efficiency, engaging in only the right partnerships in the right geographies. We're also rapidly growing our best-in-class digital offering and emphasizing profitability as opposed to growth at any cost. On Slide six, the strength of our underlying business, along with the addition of La Nacional, has driven up the number of unique active customers by 37% during the first quarter to 3.6 million. These customers generated a record 12.9 million remittance transactions, 29% more than a year ago. On Slide 7, within the overall transaction growth, there was a 68% increase in digitally originated transactions as strong customer acceptance of our mobile app continues. 30% of our transactions were either sent or received digitally, up almost 5% from a year ago. These numbers reflect double-digit growth in our core business and the contribution of La Nacional's U.S.-based business. The international entities of the La Nacional transaction didn't close until April 5, following a final approval from the Bank of Spain, which we received on March 22. The international entities did not impact the first quarter but will be consolidated for the majority of Q2, in line with our expectations and previous guidance. Adding to Bob's comments, we think adding La Nacional to our portfolio is an excellent use of capital, and we're excited about what we've achieved to date and what lies ahead for us. We're confident in our ability to capitalize on material opportunities the business presents to us in both the U.S. and Europe. Now that the business is entirely under our management, we're excited about enhancing profitability in the U.S. and providing capital and strategy to fuel growth for i-transfer in Europe. On Slide eight, total principal transfer grew 22% to $5.3 billion, driven by the strength of our core business, coupled with the addition of La Nacional. The average remittance amount was down 5% for the quarter year-over-year at $415 per transaction. The decline is primarily due to a lower average transaction amount to the Dominican Republic, which now represents a larger share of our business since the acquisition of La Nacional. Our core remittance trend continues to be down only slightly, about 0.8%. For comparison purposes, the core Intermex average spend was $433 during the quarter compared with $301 per La Nacional. As Bob mentioned earlier, with La Nacional now fully consolidated, it now makes sense to look at the five largest markets in Latin America and the Caribbean where we set and our market share is up 150 basis points from the first quarter of last year to over 21%. On Slide nine, looking at the top line, agents and customer growth contributed to the 27% year-over-year increase in revenue, reaching $145.4 million during the three-month period. As for the contribution to revenue from our digital business, we continue to thoughtfully pace spending around our app and online offerings to match or stay ahead of consumer acceptance. We're successfully growing the digital business efficiently and profitably, with the revenue contribution of our digitally originated transactions up 79% year-on-year in the first quarter. We keep a tight pulse on consumer behavior, which positions us to intelligently invest in digital, always ensuring the unit economics are there to support it. It was a very good quarter, and growth in the business was strong. It's worth mentioning, however, that net income growth, while in line with our expectations, reflects areas of seasonality in Q1 in the La Nacional business, higher interest and depreciation expenses, and a higher effective tax rate in growth in the Czech Republic. Net income was up just under 1% at $11.8 million. GAAP EPS growth was better at about 3%, driven by our opportunistic stock buyback activity. Looking at Slide 10, adjusted EBITDA increased more than 16% to $24.1 million, benefiting from strong revenue growth, partially offset by that same seasonality exhibited by La Nacional and an exceptionally strong February 2022, which made for a challenging comparison in the quarter. Adjusted net income was up 6% during the first quarter to $14.2 million, impacted by the same underlying drivers of GAAP net income, but excludes items like share-based compensation, transaction-related expenses, amortization of certain intangibles, and the tax impact related to those items. Turning to the balance sheet on Slide 11, Intermex continues to be an efficient operator and a strong generator of cash. The company ended the quarter with a cash balance of $85.5 million. It's worth mentioning that Friday is the operational low point weekly for cash balance for the business. Net free cash generated is our internal measure, which excludes working capital cyclicality, and it remained strong during the quarter at almost $14 million, an increase of more than 37% from the first quarter of last year. From a buyback perspective, we continue to be active in the market during the three-month period, purchasing 316,000 shares for just under $7.6 million at an average price of $23.95 per share. Additionally, we previously disclosed it in our fourth quarter call, but it's worth mentioning again that the Board recently authorized an additional $100 million for share repurchases. The opportunistic buyback program is another excellent use of capital, and we anticipate remaining active. The company has repurchased over 3.1 million shares for about $66.9 million. This includes the original $40 million authorization in 2021 and amounts we purchased directly from a significant shareholder in the third quarter of last year. Also worth mentioning is the recent April upsize of the revolving line within our credit facility, which now has a capacity of $220 million, up from $150 million. This additional capacity gives us more flexibility to grow organically and through M&A while also creating additional room for opportunistic buyback. On Slide number 12, we're holding firm on our guidance for the full year based on our positive first quarter results. We'll go through it once again today. For the year, we expect the flow revenue to be in the $67 million to $88.5 million range, an increase of 22% to 26%. Net income of $66.5 million to $69 million, an increase of 16% to 20%, and adjusted EBITDA of $120 million to $124.5 million range, an increase of 14% to 18%. For the second quarter, we expect the following: revenue to be in the $168.6 million to $174.1 million range, an increase of 23% to 27%. Net income of $16.8 million to $17.1 million, an increase of 5% to 7%, and adjusted EBITDA of $30.7 million to $31.4 million range, an increase of 11% to 14%. This guidance considers the full impact of La Nacional, the U.S. business that closed in the fourth quarter, and the international business we just disclosed at the start of Q2. We also want to highlight that starting with our Q2 earnings release, we'll start to communicate guidance in the following three metrics: revenue, EPS, and adjusted EBITDA. In summary, we continue to execute, and we feel well positioned to deliver another strong year for our shareholders.

Operator, Operator

I will now proceed with our first question on the line from Mayank Tandon with Needham. Please go ahead with your question.

Mayank Tandon, Analyst

Thank you. Good morning. Congrats on the quarter. I wanted to first start, Bob, with the investments that you need to make in Europe to capture the opportunity. And to that effect, could you talk about what other markets you would be targeting on the SEM side? And who are the recipient countries in this case when you start to expand into Europe beyond the current countries that you mentioned?

Bob Lisy, CEO

The last part of it was who were the countries that, say that again?

Mayank Tandon, Analyst

Just to be clear, I was wondering if you are also looking to expand beyond the countries that you mentioned that La Nacional already has a presence in Spain, Italy, and Germany. And then also from a geographical standpoint, what are the corridors that we should be keeping an eye on?

Bob Lisy, CEO

Yes, there's a huge amount of opportunity as we've looked at it from first pass in Spain and Italy. And right now, we've just really cracked the seal in Germany. We only have one company-owned store. And so there's a lot to work through in those three countries. But in addition to that, France would certainly be a country we'd expand to in the longer run, possibly the U.K. But the first piece is that there's room in those three countries to expand greatly. Actually, we do more business today in Spain than in Italy, at least from a larger outbound market. And Spain is not exactly a huge market share at this time. So it's a fledgling business. The good thing about it is, though, is that the business, as small as it is, has been able to grow with its own power so far and is growing profitably. For us, what it will be is a couple of things. One will be the efficiencies that we bring, a really targeted approach to identify who the immigrants are, and where they are, how do we tap into them, and how do we provide a value-added quality approach to drive wires. The second will be investment, but we won't just invest; we recognize today our efforts are not 100% efficient. And so there are opportunities to recalibrate ourselves to expanding out in Europe similar to how we expanded out in the U.S. and create high-performing retailers that are capturing wires. That’s the first part. The second part is that there will be some corridors we already serve from Europe to a different set of countries than we necessarily do out of the U.S. Some countries will still be important. There’s still some decent amount of volume going to certain South American countries and some Caribbean countries. Obviously, Mexico won’t play as big a role in it. But, for instance, in Germany, you wouldn’t necessarily know; one of the biggest partners, one of the biggest corridors would be Turkey. So we’ll work to get a better relationship to send money back to Turkey. A lot of money going to sub-Saharan Africa, some going over to Asia, and more to Eastern Europe. We have some solid relationships in that area today without issues. But one of the things we’ll be doing is building better connectivity with payers in those countries. It’s very easy to get bank connectivity. There are large networks like Visa and Mastercard that can provide that for everybody. The key will be to layer on top of that, payers that will differentiate us as they differentiated us in the U.S., and payers that can do over-the-counter cash and can do various ways of disbursing cash, so that, again, we continue with the omnichannel model that we brought to bear in the U.S. and we carry that over to Europe.

Mayank Tandon, Analyst

Bob, that’s great color. Thank you for that. And just as a quick follow-up question. I wanted to ask about margins. You're already running ahead of the medium-term margin goal that you set last year. So just wanted to get your thoughts. Is there any reason to expect a step back in margins? Or have the dynamics changed so the medium-term target might be rendered too conservative?

Andras Bende, CFO

Yes, I think you're referring back to the Investor Day in 2022. I think we have an opportunity to do a bit better than what those margins would have guided to. I think as we increase the amount of business that we’re doing in digital, you’ll see a little bit of downward pressure, obviously, from bringing on La Nacional, which is a lower margin business by nature. They’ve gone down a bit. But I think we have the opportunity to do better than that.

Operator, Operator

Thank you very much. We'll get to our next question on the line from David Scharf with JMP Securities. Go ahead.

David Scharf, Analyst

Good morning. Thank you for taking my question. Bob, to start, I want to hear your updated thoughts on the slides about market share, particularly regarding the top five Latin American receiving countries. How should we think about the total addressable market and the opportunities for you? As you consider how this business can grow, do you approach it from a bottoms-up perspective by identifying underserved ZIP codes in the U.S. that could connect with these countries? Or do you take a top-down approach based on your experience and understanding of the market share dynamics? With a 21% market share already being quite strong, how should investors assess how much Intermex’s U.S. business can expand to these five countries?

Bob Lisy, CEO

It would be bottom up. To me, a top-down approach is a bit of a fantasy; it's a bit of an arbitrary number. And so we look at it from the bottom up. And I think that my support for that would be that a consumer sitting in Salinas, California doesn’t care that we have a huge share in Atlanta, Georgia; we still have the same opportunity to gain share and get more wires from that consumer there. And so we look at what our performance looks like ZIP code by ZIP code. Frankly, some of these ZIP codes have more challenges than others, and we’ve talked about that for years. We are not as early as an entrant. There’s some irrational exuberance from competitors that over-discount to gain what they think is share on unprofitable wires. But at the same time that we look at that, we see a massive opportunity, and when we talk about our growth and the growth opportunity, we’re not talking about attaining, in the Western states or in California, anything close to the kind of margins we’ve never projected to the market that we attain in certain states in the Southeast or even the same market share that we have. We recognize that there is a huge amount of headroom and a huge amount of open field for us to compete in, and that can still drive market share. Now there are two ways to think about that. One is Mexico and Guatemala, where we are clearly a market leader. In Guatemala, we’re the #1 brand in the world for sending money to Guatemala, be it digital or retail. In Mexico, we are among the two largest brands for sending money. But there are also countries that are coming online with tremendous growth and have huge upward opportunity. We’ve seen a lot of growth in countries like Nicaragua, Ecuador, and Colombia. These don’t have the same margins as Mexico, but there’s a huge amount of growth there. So we have those core countries that still have a lot of open territory, a lot of ZIP codes that are either not fully built out or not built out at all. And then you have these other countries in Latin America that we purposefully built that way because we started with the foundation in Mexico and Guatemala for a number of reasons; they are the largest markets and the most profitable transactions. This is all part of that plan. So we believe there is still an opportunity to move our overall share to those big five and then the next group, which includes countries like Nicaragua, Ecuador, and Colombia, which make up about 90-some-percent of the market. We think there’s a tremendous opportunity still to gain share in those markets, and by the way, those markets are also growing. So there’s going to be growth by holding service, and there’s growth that we think will grow faster than the market.

David Scharf, Analyst

Got it. Understood. Thank you for the color. A couple of just quick follow-ups for Andras. Any input on the tax rate for the quarter we ought to think about for the year?

Andras Bende, CFO

Yes, that's a good point to note and talk about. With the acquisition of La Nacional, that comes with a lot of revenue driven in the New York, New Jersey area, so higher state tax jurisdictions. It's just apportionment attracting more of our bottom line and overall tax rate. So it's really due to La Nacional and the spillover from that concentration of business.

David Scharf, Analyst

Should we think about the full year effective rate then is this?

Andras Bende, CFO

Yes, I think closer to 29% versus the 27% that you would have seen in the past is probably a better way to look at it.

David Scharf, Analyst

Got it. And recognize on the cash side, obviously, ending on a Friday, I think as much as half of your cash can get eaten up by prefunding for the weekend. But more broadly, can you update us on how we ought to think about sort of a conversion rate of EBITDA to free cash flow, what you're running at as we think about how much is ultimately left for...

Andras Bende, CFO

It's about 60% to 65%.

David Scharf, Analyst

60%, 65%. Got it. And then lastly, somewhat related, as we think about buybacks, can you also remind me, are there any covenant restrictions? I mean, I know some companies might have an aggressive authorization, but they're limited by loan covenants that, for example, repurchasing only 50% of net income on a trailing basis. Is there anything restricting the level of buybacks in the period?

Andras Bende, CFO

Yes, we can operate with leverage up to 2.25 times. Beyond that, we receive a percentage allocation based on the trailing 12 months each year, even if we exceed that 2.25%. This information is detailed in our previous releases.

David Scharf, Analyst

Got it. Got it. Perfect. All right. Thanks.

Andras Bende, CFO

And by the way, our covenant calculation isn't the straight up where you end on the quarter because we have that revolving factor, right? So you're taking about a 14-day average, which would suggest that, on average, our leverage is pretty low from a covenant perspective.

Operator, Operator

We'll get to our next question on the line from Mike Grondahl with Northland Securities. Go ahead.

Mike Grondahl, Analyst

Hey guys, good morning. Could you break out revenue from La Nacional in Q1? And what's embedded in Q2? Do you think we can understand the core revenue growth rate?

Andras Bende, CFO

Yes, no problem. Happy to do that. In Q1, La Nacional's revenue was $17.5 million. For the year, La Nacional U.S. is probably going to be around $75 million. And then for three quarters of i-transfer, which is going to be around $12 million to $13 million.

Mike Grondahl, Analyst

Got it. That’s helpful. We can back into that Q1 core growth then.

Andras Bende, CFO

Q1 core growth is about 11.5% in terms of transaction revenue.

Mike Grondahl, Analyst

About 11.5%, okay.

Andras Bende, CFO

I think that gets you 11.5% just on the core business.

Mike Grondahl, Analyst

Got it. And then kind of for Bob, I think you talked about hiring 12 regional directors, 12 salespeople. One, how recent did you hire those? And what triggered that? You’ve always had this very large outsized opportunity out West. So I’m curious as to what triggered the hiring of those 12, especially if it was really recent. And then I hate to tie one more, but obviously, that’s going to drive some agent growth there. Can you talk about what new agent growth has been and sort of what your expectations are for it? I know you don't give us an exact number, but just how we should think about the growth rate for agents?

Bob Lisy, CEO

I'd like to start by saying we're never trying to deliver agent growth. We're trying to deliver transaction and revenue growth. So it's really easy to deliver agents. We could add double our agent network tomorrow. We probably have the smallest network of any company doing the kind of volume of business we have in the market today. So this is about driving revenue. Agents are a vehicle, and they're our channel partners, and we respect and value them. But it's not about adding; it's about adding quality agents. I want to just reemphasize the importance of how we target the right places by prequalifying an agent that we know or believe will deliver a certain amount of transactions, not just putting up agents. The second part is that it's not necessarily just that we've always had and they're called RSUs, their regional sales executives, and there are people that float. So what that means is they might not be in an exact district. They might be in Southern California, and there might be four districts in Southern California selling in two or three of them, or they might be selling in one, and Randy will deploy them as necessary based on the open opportunities. Those open opportunities have been there. That’s correct. There’s no doubt about it, and we’ve been working against those. But this year, we felt that we needed to put a little bit more generation in new retailers that would be driving wires that would start to build the pipeline a little bit faster, particularly in the western states, and we’re able to put them in the plan and still be able to be in line with consensus. So the opportunity was to invest a bit more in those areas. We also think that the marketplace has gotten a little tougher in the West. There’s aggressiveness, as we talked about, relative to particularly some of the private companies, but at least one or two of the public companies that have been discounting in a way that we need to be more assertive to continue to grow our market share in those states. So all of those factors being considered, that's where the investment comes from.

Mike Grondahl, Analyst

And maybe just a follow-up. So the 12 were all added in '23, like really recently? And are most of them out west? Or can you say sort of what percentage of them are...

Bob Lisy, CEO

They were not added in '23, number one. Some of them are with us in the fourth quarter, and they’re not all west. There’s a disproportionate share; if you think of the West as Texas and beyond, there’s a bigger share, but we have some in some markets in the East as well, where we have opportunities to grow our market.

Operator, Operator

And we'll move on to our next question from Chris Zhang with Credit Suisse. Please go ahead.

Chris Zhang, Analyst

Thanks for taking my question. So I had one on the value-added services that you highlighted at your Investor Day, which include co-branded processing, the GPR card, and additional incremental products, including in the international market. So maybe can you give us an update on the size of the value-added service in terms of what portion of contribution they have on your overall revenue? And what’s the growth rate there? And also with the La Nacional acquisition, what are some of the opportunities in value-added service that you're seeing?

Bob Lisy, CEO

We wouldn’t consider them value-added; we consider them products on their own. When we talk about value-added, we talk about all the ingredients of our core products. But if we talk about the GPR card or our payroll card, those are fledgling products that are in early stages. We think that over the course of the next several years, they can be significant contributors in revenue, but even more so in terms of EBITDA; they're really high-margin products. We think we’re well positioned because no one is really delivering a card to the Latin American community the way that some folks have done through Walmarts and the like. No one’s really done that in our community of consumers. So we think there’s a huge opportunity there, but it’s really early on, and you’re not going to see a significant impact from either card, that’s our payroll card or our GPR card, in terms of our revenue or EBITDA growth for a couple of years. It’s going to be non-material, but it will grow. We’re very satisfied with how we’ve been able to grow the payroll card. But at this point, it’s a small business.

Chris Zhang, Analyst

I appreciate all the color, Bob. And just a follow-up on the quarter in terms of the unique customers at the end of the quarter. This was a very slight decline from 3.7% to 3.6%. I understand there might be some rightsizing with the La Nacional acquisition or maybe some seasonal factors...

Bob Lisy, CEO

Maybe unpack...

Chris Zhang, Analyst

Can you explain the reason behind the slight decline? I also recognize that you are concentrating more on transaction revenue growth, which showed strong growth in the first quarter. I'm just trying to understand.

Bob Lisy, CEO

I just want to make sure you're referring to the decline. Is that year-over-year? Or is that fourth quarter to first quarter you're referencing?

Chris Zhang, Analyst

Fourth quarter to first quarter, so from last quarter.

Bob Lisy, CEO

We've cautioned all the analysts like a lot of times. I can do it again, that sequential quarters do not work in our industry. The weakest month of the year is January, and the second weakest month is February. The strongest months of the year are in the fourth quarter: October and December. So by design, you're going to have a lot more new customers. I’m pleased that we would be that close, really if you then appreciate that this shows that our business is doing better in the first quarter than in the fourth quarter by holding the line that close with that less business relative to how things seasonally are slower in January and February.

Chris Zhang, Analyst

Yes, that’s fair. I do see that seasonality in the first quarter of '22, although in the first quarter '21 is flattish. I just want to make sure that's more seasonal, and that will answer my question. Thank you.

Bob Lisy, CEO

Okay, great. Thank you.

Operator, Operator

I will now proceed with our final question for today from Alex Markgraff with KeyBanc Capital Markets.

Alex Markgraff, Analyst

Thanks for taking my question. Just a follow-up on the sales count commentary. I'm just curious, after the 12 or so hires that you outlined, how you're thinking about it through the balance of the year. Is there more opportunity or desire to kind of continue to add at that pace? Just any comments there is the first question.

Andras Bende, CFO

Right now, we are on hold in terms of additional hires. We want to make sure that we maximize the efforts. Now we’ll have a significant upgrade in the number of people out in the marketplace. The key will be to ensure that we’re efficient in driving increased transactions and gross margins from each of those people's book of business. We could add more later, but there’s not a plan at this point. We’ll first make sure that these additional headcounts are driving and basically getting to a point where they’re paying for themselves within the timeframe we expect that to happen, which is within six or seven months where they’re bringing in enough business that they’ve exceeded their cost and then they’re starting to be contributors.

Alex Markgraff, Analyst

Very clear. Bob, I would like to revisit your view of the competitive landscape in the various end markets you mentioned in Europe. Perhaps you could provide an analysis similar to what you did for the U.S., which would be helpful.

Bob Lisy, CEO

Yes. So the question is an assessment of the competition in U.S. to Latin America?

Alex Markgraff, Analyst

No, sorry, just around the various end markets that you noted across Europe that you're currently in and kind of are looking to get into.

Bob Lisy, CEO

I don't know that we have all the data. I think some of the same players are there. Some of the public or three public companies that you know over there. There's another strong competitor that has some decent size by in a small world. And there are some small regional players. It’s equally as fragmented. I would say from my early assessment, it’s a market that’s not unlike the U.S. with its fragmentation of some smaller players and regional players. Think of the countries there almost like states and regions here in the U.S. Some people are in Italy, some people are in Spain. So there will be and there will be the three public companies present, obviously, that you’re familiar with. But the game will be a little bit different. The process that we undertake, which is really to determine how big is the market, who owns it, how do we capture it, and what do we get if we get it. We’re, I think, different than almost any company in the industry that we don’t aimlessly go after opportunities just because they’re large. We ask can we capture that business? What do we get if we capture it? Is there a return on investment? We will analyze the market and find the key opportunities as we have in the U.S. that can drive the business forward fastest. It’s really easy for us to expand into 30 or 40 or at least 10 countries in Europe quickly, but the business will be driven by Spain, Italy, France, Germany, maybe another one or two countries. So our focus will be similar to what it's been in the U.S. From the U.S., we focus primarily on Mexico and Guatemala. We drove tremendous volumes, high market shares and high profitability from that foundation that we built from there. So for us, I don’t want to sound like we’re not concerned about competition, but it’s about execution, market analysis, and awareness of the opportunities and return on investment, the same basic core competencies that we brought to the business in the U.S., played out in a different marketplace. And so that’s the way we’ll approach it.

Operator, Operator

Mr. Lisy, we have no further questions on the line. I would like to turn the call back to you for any closing remarks.

Bob Lisy, CEO

Well, thank you all for joining us. We appreciate your time, and we look forward to talking to you all soon. Have a great day.

Operator, Operator

Thank you. And that does conclude the conference call for today. We thank you for your participation. Please disconnect your lines. Have a good day, everyone.