Earnings Call Transcript - IMXI Q4 2023

Operator, Operator

Good day, and welcome to the International Money Express Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Alex Sadowski, Investor Relations Coordinator. Please go ahead, sir.

Alex Sadowski, Investor Relations Coordinator

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 2024 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 two 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, EVP of Retail Sales; Marcelo Theodoro, Chief Digital Officer; Beth Erickson, Chief Human Resources Officer; Andrew Kugbei, EVP, Finance and Business Intelligence; and Karim Baroni, Director of Financial Analysis. Let me now turn the call over to Bob.

Bob Lisy, CEO

Good morning. Intermex is proud to announce fourth quarter earnings that are a testament to who we are as a company. On Page 3, you can see that in the quarter we delivered revenue of just under $172 million, up 11.2% year-over-year, and diluted GAAP EPS of $0.49, up 40% year-over-year. Furthermore, adjusted EBITDA was up 14.5% to $33.3 million, and adjusted diluted EPS of 21.7% to $0.56. We continue to deliver solid earnings and cash generation for our shareholders in every environment, and our fourth quarter results fully demonstrate that. We believe our omnichannel strategy is the most efficient way to serve the varying needs of the consumer in this market. Intermex continues to offer our best-in-class service and loyalty offerings through both our Retail and our Digital products. This is an advantage that no other provider can claim. Our Retail network required years of careful precision effort to build, and as a result, is very difficult to replicate. Our technological advantage makes transacting fast and convenient for both Digital and Retail consumers. These critical factors have made our model highly profitable and drive exceptional generation of cash. How we deliver our products and service to the market is even more important. At Retail, Intermex has taken and will continue to take a highly refined rifle-shot approach while building our network of retail agents. This strategy enabled the company to deliver products and services to consumers through the highest-performing retail agent network in the industry. All this occurs while maximizing agent retail performance that drives ROI and profitability. We are most interested in connecting with consumers in markets where our value-added approach resonates the strongest. This is when and where Intermex is able to best differentiate our value-added service, where we can in turn capture margin and where we ultimately benefit our shareholders. Our Retail model requires a modest investment. Our sales and marketing costs are roughly 8% of gross margin and only 3% of total revenues. In our Digital offering, we continue to demonstrate that same focus on efficiency and profitability while growing our transactions 43% this quarter and achieving that by way of a highly efficient customer acquisition spend. As a result, we are delivering a highly attractive margin. Finally, we continue to develop and introduce new features and functionality to deliver a user experience that is among the best in class. We continue to upgrade our application, which has received a rating of 4.8 out of 5 from our users. Our expanding margins related to our Digital product place us in a great position to expand into new markets, including India, the Philippines, and others through our new partnership with Visa. In the broader market, significant amounts of capital have been spent by some providers to grow digital market share. In many cases, spending may not have achieved an ROI that would support that investment. Our strategy is to carefully cultivate and grow our digital business with the same efficiency that we have demonstrated while building our retail network. That is one key reason why our current digital business is profitable and growing. We’re taking the approach that no one else in the industry has taken by offering a value-added product and a carefully crafted strategy to capture share in the right markets. As we do with our Retail business, we will leverage our best-in-class customer service and our metric-oriented approach to drive profitable wire growth. This translates into consistent product expansion, strong margins, exceptional cash generation, and a fortress of a balance sheet. As we talked about previously, the La Nacional acquisition we closed in Q4 of 2023 brings in a meaningful presence in the US to Dominican Republic market. With that acquisition on board for over twelve months, you will see on Page 5 we have recast our market share calculation over time to include the DR. In 2023, we captured a 21.4% share in the top five markets in Latin America. We have successfully grown our market share over time while sustaining attractive margins year after year. Our Q4 EBITDA margins, excluding acquisitions, were well above 20%, some of the best we have seen in the history of the company. We have been able to attain these outside results through the execution of our metric-driven strategy. We have a highly efficient base of retail agents who rely on our products and services. We offer and deliver these products to a customer base that appreciates Intermex's value-added approach. We continue to strengthen our relationship with our retail agents while deepening our competitive mode and growing our mutually beneficial high-margin business. Additionally, we have the ability to carefully select where and when to aggressively pursue wires and reduce gross margins. This practice is put in place when meaningful incremental transactions can be captured in areas where Intermex has a low market share, and the upside potential is quite large. This approach enables us to capture new business in such a way that we do not affect margins at our current high-profit retailers. As a result, we’re able to generate incremental earnings for our shareholders. We refrain from reacting to market pressures with a broad-brush approach that degrades margins for the company. Our approach is simple, but not easy. It requires focus and disciplined execution. These behaviors are in our corporate DNA but are very difficult to replicate. In our quest for new business and to catalyze incremental growth, we have launched bold strategies to penetrate previously untapped and underdeveloped markets. Our focus sharpens on locales ripe with untapped wire potential, detailed to the zip code where our presence has been minimal. As a part of our aggressive approach to drive revenue in high potential areas, we've decided to expand our outside sales force by adding six new positions to our already robust team of 40. This expansion is a fresh strategy designed to intensify our market penetration and coverage. Moreover, we've taken a decisive step by significantly enlarging our inside sales team, a move that marks a departure from traditional methods by tripling the team's size from twelve to 36 members and strategically positioning these roles offshore. We're not only enhancing our capacity to engage with our current agents but also tripling our daily interactions in a cost-effective manner. This strategic enhancement is expected to dramatically boost our same-store sales, representing an almost 60% surge in our total sales force capacity. This considerable investment in our sales infrastructure is an approach we are confident will yield substantial returns over the next twelve to eighteen months, signifying our aggressive pursuit of growth through innovative staffing strategies. From an inorganic perspective, we're also making great progress. The I-Transfer business in Europe grew by 17% in Q4. We continue to expect great things from our European division, including strong digital opportunities to access in the coming months. While the Nacional business in the US is much more profitable and efficient than a year ago, we believe significant opportunities remain to expand to additional corridors through our current agent base. To Mexico alone, now armed with the Intermex payer network and fee structure, we see potential for millions of dollars of increased margin annually. We have begun to execute against this plan. Additionally, there will be more efficiencies to be leveraged as the year unfolds. These businesses are proving to be great additions to Intermex, and we're excited and optimistic about their combined future. Before I turn the call over to Andras to go deeper into the numbers, a few final thoughts on operating discipline and why we say Q4 was a testament to who we are as a company. By almost all key measures, we're strong and exceeded market expectations even as we faced some revenue headwinds. In spite of that, we persevered and delivered a solid quarter of growth. We talked about our plan to capture incremental wires in Q3. I am pleased to report that our efforts continue to be productive, and the sales team continues to execute on that plan. At the same time, shortly after Q3 earnings, we saw the Mexico market growth slow considerably to levels we have not seen in years. In true Intermex fashion, we put a critical eye on our business and challenged every corner of the company to maximize efficiency. We delivered on what we set out to do and generated strong earnings despite a weaker than expected top line. While it is difficult to predict what our key markets will do in 2024, the guidance Andras will take you through later in the presentation anticipates underlying softness in that market for a period of time. Our guidance also anticipates a tenacious focus on efficiency and execution, which is part of our culture and why we feel better positioned than anybody else in the market. We are confident in our differentiators, and the management team and the board feel there is tremendous value in Intermex stock. We will continue to be highly profitable and produce considerable free cash despite the investments we are making in our future growth. And finally, we will use a share of that free cash to increase our stock buyback program. We anticipate being twice as active in our existing program and will continue to assess block trades that benefit our shareholders.

Andras Bende, CFO

Thanks, Bob, and good morning, everyone. On Slide 6, you can see both unique customers and transactions up double digits year-over-year. Most importantly, we grew this business at healthy margins, which you'll see reflected in the coming pages. On Slide 7, the strong trend in profitable digital growth continued. Transactions were up 42% at the best margins we've seen for our digital product. We're confident in our product, our digital partnerships, and the team that's bringing it all to market. Also worth mentioning is the growth on the Digital Receive side. Those transactions terminating by electronic payout methods like bank accounts, mobile wallets, etc., are a key factor in that almost 18% year-over-year growth you can see to the right. These transactions are typically very cost-efficient ways for us to deliver a wire, so this trend is also a nice margin tailwind for us. On Slide 8, we present a picture of our volume growth in the Average Principal Sent. On face value, it appears that the Average Principal is down year-over-year to $406 a transaction in Q4; that is mostly driven by the inclusion of La Nacional and iTransfer, where the send amounts are structurally lower. Principal amounts, excluding those businesses, were essentially flat for the quarter. On the next page, you can see revenue growth, up 11.2% for the quarter and 20.5% for the year. As Bob mentioned earlier, revenue was at the lower end of our guidance, as we were not immune to the slowdown in send to Mexico. However, as you see next on Page 10, our strategy to grow transactions in the core while preserving margins, coupled with a rigorous cost agenda, yielded strong earnings results. You can see net income up almost 34% for the quarter and diluted EPS up 40%. As we closed on the Nacional acquisition in Q4 last year, we're growing over about $2.5 million in transaction costs, which is bolstering the GAAP number. On the next page, you can see a little cleaner reflection, which among others, adjusts out of those transaction costs. Adjusted net income is up 13.5% and adjusted diluted EPS is up 21.7%. Finishing up the P&L, adjusted EBITDA grew at 14.5% in the quarter, with adjusted EBITDA margins at 19.4% versus 18.8% in the prior year. So again, our targeted strategy to grow wires in this environment without degrading margins is delivering for shareholders. Also worth noting, Q4'23 includes a full three months of La Nacional and iTransfer, both structurally lower margin businesses, yet our year-over-year margin still improved by 60 basis points, a testament to our focus to deliver a premium product through highly tactical execution. Finally, on cash on the balance sheet, we ended up the quarter on Sunday of a holiday weekend with $239 million on the balance sheet and $106 million undrawn revolver capacity. Free cash generated, which again removes day-of-the-week cyclicality, was up 26% year-over-year. The balance sheet remains in great shape, while the headline shows leverage of about 1.6 times. We have to remember that we closed on a weekend with $114 million drawn on the revolver, and most days of the week that revolver sits completely undrawn. If we look at our average daily debt position for 2023 versus our adjusted EBITDA for all of 2023, it implies leverage of below one times. As far as capital allocation goes, at the top of the list are aggressive incentives at retail that deliver highly accretive transactions and margin growth. After that, we continue to see great value in the stock. In the quarter, we purchased about $25 million in stock, $10 million via our regular quarterly program, and another $15 million through block purchases. As Bob mentioned earlier, we expect to double our quarterly underlying program from $10 million to $20 million, and we'll continue to make block purchases when and where it makes sense for our shareholders. Regarding M&A, we're always going to look for opportunities, especially with the balance sheet we have. However, we're going to continue to be selective stewards of the company's capital resources, exercising a prudent approach with robust screens for value. On the final slide, I'll take you briefly through our guidance for 2024 and for the first quarter. For the full year 2024, we anticipate the following: Revenue of $681 million to $701.8 million, fully diluted GAAP EPS of $1.81 to $1.96, adjusted EBITDA of $124 million to $127.7 million, adjusted diluted EPS of $2.13 to $2.31. For the first quarter, we anticipate the following: Revenue of $150.4 million to $155 million, fully diluted GAAP EPS of $0.32 to $0.35, adjusted EBITDA of $24.4 million to $25.1 million, and adjusted diluted EPS of $0.39 to $0.42. This guidance takes into account a noteworthy step down in market growth for Mexico, the key corridor in Latin America. While we're not immune to the effects of growth slowing at the single largest country-to-country corridor in the world, we anticipate four things. We'll continue to beat the market growth rate in both retail and digital. Our margins will remain strong, justified by a premium product and highly tactical execution. We'll pivot to an even leaner operating model, maximizing returns in the face of a market whose pace of growth has come back down to earth. And finally, we'll utilize our strong liquidity and ability to generate cash to more aggressively pursue shares via our buyback program. In summary, we continue executing the Intermex playbook and are well positioned to deliver another strong year for our shareholders. With that, I'll turn it over to the operator for questions.

Operator, Operator

Our first question comes from David Scharf with Citizens JMP. Please proceed.

David Scharf, Analyst

Great. Good morning, and thanks for taking my questions. Bob, can you provide a little more, I guess, background and geographic context for the sales force expansion since it's such a dramatic increase, particularly the internal team? Is this bolstering efforts in the western regions? Those zip codes, I know you've long been targeting or I thought you said something about offshore. Can you just provide some more background on how we ought to view this in a broader kind of multi-year context of what you think your footprint will look like?

Bob Lisy, CEO

Yeah. The inside team has been primarily located in Miami, with a few folks out in California to be more productive relative to time zones. We had 12 people that were directly responsible for contacting agents by telephone. Those were separate and apart but supporting our efforts at retail with our outside sales team. We recognized that our reach could be benefited by having more folks available. What we did is, created 24 positions in Guatemala with people that are fully bilingual, which will augment those 12 folks, and then work in teams of three people, one in the US, two in Guatemala, that will have a set of agents, approximately 12 different teams. Each team will have about one-twelfth of our existing agents. They will be calling those agents and looking at opportunities where we might have a decline in wires or where it's a slow startup with a new agent. Our experience is that contact drives many more wires, and the payback is really good, especially if the US team is involved, but the fact that it's much more efficient cost-wise to do this in Guatemala allows us to triple our reach from the inside perspective without anywhere near tripling the cost of that function. Now additionally, we have had 40 district sales managers in the US that have been separating or accounting for our existing business and going after new business. Those will be augmented by a 15% increase. So, we've tripled the size of the inside team and added a 15% increase to the folks in the US at retail who will be visiting our existing agents and will have the primary responsibility for adding new agents in the vacant zip codes where we have opportunities. We've coupled this with an approach that looks at different offerings that will be more attractive to both the agent and to the consumer in certain zip codes where we haven't penetrated. As we discussed, these are opportunities where we're not giving away any margin—even if we take a lower margin, we are focusing on transactions because we have not penetrated those zip codes in the past. So, it represents a total remake of what we are doing from an aggressive perspective in the west, but also reorienting our support of our existing base and becoming more proactive at retail. We expect this will yield large dividends in the next 12 to 24 months, and we will see an ascension of our rate of growth that further separates us from the overall market growth during that period.

David Scharf, Analyst

Got it. Understood. As a follow-up to the idea of increasing the internal sales team’s focus on monitoring existing agents, it seems that a lot of the forward guidance is influenced by what you're seeing in Mexico. Despite some changes with the Bronco data related to Mexico, I recall one of the largest global players stating they have started to regain market share in Mexico after a significant period, and you have mentioned pricing pressures in that region in previous calls. Do you believe you are maintaining your market share from the US to Mexico with your more established agents?

Bob Lisy, CEO

Yeah, I mean, we believe there are two things going on. We think we're gaining share at retail and we're gaining share at digital. The challenge for us is today our business is not weighted the same way as the market. So we're not having 20% of our business to Mexico go digital. That's the faster growth piece in the business. I think we believe we're growing just as well as the digital pieces and just as well as the retail pieces, but our percentages are more like 95% retail today and 5% digital. So that weighting causes our growth to maybe look not as good as it actually is. We think, again, we're beating and exceeding at retail and beating and exceeding at digital. This program where we're adding not only new folks to target but also looking at what we're willing to offer the agent and the consumer at retail in underserved or unserved areas will significantly improve our position, distinguishing us from market growth while gaining further market share.

David Scharf, Analyst

Understood. And I thought just a quick follow-up for Andras. I guess, salary benefit, the largest OpEx after agent charges, was $72 million last year. There may be some noise from La Nacional, but as we think about the increase in sales headcount, I don't know if it's all variable and commission-based, but is there a kind of good figure we ought to think about for an annualized figure in salary and benefit this year? It seems like that would be the line item moving the most.

Andras Bende, CFO

Yeah, I think it's relatively small, these additions. In terms of our salary movement year-over-year, you will see an aggregate increase for the business of 4% to 5%. So, we've really dialed that back. As a result, the impact of these additions is relatively small, and considering all the other areas where we're dialing back costs as much as we can, it won't have a visible impact.

Operator, Operator

Our next question comes from Mike Grondahl with Northland Securities.

Mike Grondahl, Analyst

Hey, good morning, guys. Did you call out the revenue number from La Nacional and iTransfers? I'm trying to back into an organic growth rate in Q4.

Andras Bende, CFO

Yeah, sure, Mike. La Nacional in Q4 was about $18 million. iTransfer in Q4 was about $5 million. This means your organic growth in the core was about a little under 5.5%.

Mike Grondahl, Analyst

Got it. And then last quarter, you talked about, I'll call it, four growth drivers that you were sort of strategically heading towards or implementing. One was targeted counteroffers, one was new agents, one was some overall selected pricing actions, and I think kind of new market strategies. Could you handicap which one of those four you're ahead on? Maybe which ones you're kind of behind on? Just let us know how each of those four are going?

Andras Bende, CFO

Yeah, I think the most important and the one that we're doing the best in is the targeted offerings. This program is going quite well, and we've executed well against it. We've brought in tens of thousands of wires with this program, paying a little bit of commission upfront to an agent and then reducing the agent's payment over time. So it doesn't have a huge impact on our commission that the agent gets or our gross margin over time, but it's more of an upfront payment to bring back wires that we haven't had in the past. That has performed quite well, and I think we're executing and continuing to execute against that. The second is driving growth for our new agents, which is going well as well. Targeting that growth in specific zip codes will be crucial. The overall approach has been focused on better margins. We have merged the pricing component into finance, and Andrew Kugbei has been running the pricing, allowing us to perform better in terms of margins versus the pricing the previous year. This has been because we have executed fewer wholesale changes in the market and more specific changes related to when we receive wires as a benefit of altering price. New markets are not mentionable right now; I think we have Canada and continued growth in La Nacional. For La Nacional, we see a lot of pent-up growth due to its previous focus primarily on the Dominican Republic, and we have given them payer relationships in Mexico with a valuable payer cost to Mexico. We've already seen a profitable increase in those wires, as there's a lot more growth potential in both company stores and our retail network.

Mike Grondahl, Analyst

Got it. In terms of the buyback, did I hear correctly that you have been kind of programmatically buying at $10 million a quarter starting 1Q '24? That's going to increase to $20 million a quarter?

Bob Lisy, CEO

That's right, Mike. We’ll also be active in terms of block purchases if they are going to benefit the shareholder as well. I feel pretty good about being able to pick up $20 million worth a quarter and then blocks on top of that.

Mike Grondahl, Analyst

Got it. And just lastly, are you able to provide a revenue range or determine the growth headwinds Mexico poses for 2024—like, five points of revenue growth, four points, or seven points? What do you see as that headwind versus 2023?

Andras Bende, CFO

Yeah, I think right now, we see that Mexico's growth was only at 3.5%. Our assumptions based on the plan we presented are that growth will continue at around 3% or 4% throughout 2024. We're not dependent on that growth returning if the market starts to recover. To put it in perspective, in Q2 of 2020, which was the height of COVID, the market grew at 3.6%. In Q4 of 2023, it has decreased to 3.5%. We believe that our investments in sales from a growth perspective could keep us separated from that growth number, and our assumptions are based on Mexico sustaining at around 3% or 4% growth as an industry through 2024.

Mike Grondahl, Analyst

Got it. Hey, thank you.

Operator, Operator

Our next question comes from Chris Vang with UBS.

Chris Vang, Analyst

Hi. Thanks for taking our question. My first question is about the Visa Direct opportunities. It's relatively new. Understand that it's kind of nascent, and you talked about that enabling you to go into important markets such as India and the Philippines, among others, that you called out at the last call. Can you discuss the potential opportunities and your expansion plans this year and provide a longer-term outlook from the Visa Direct partnership? Additionally, how much of that Visa Direct opportunities for new markets have you integrated into your plan for 2024 guidance?

Marcelo Theodoro, Chief Digital Officer

Hi, it's Marcelo here. We see a huge opportunity in this partnership because it allows the company to move from a multi-country, multi-region approach to a global approach. There are important corridors that we are targeting, like India or the Philippines. Those are significant markets that we believe we can address at a lower cost and with a better experience, as Bob mentioned before. We have incorporated this into our projections for 2024. However, the number is increasing throughout the year due to our current focus on Latin America. It's a new target audience that we have to embrace, and we see some traction already, but it's a mid-term exercise that we will approach step-by-step.

Andras Bende, CFO

I would just add, Chris. The overall contribution from Visa Direct, from an overall company perspective, is still quite small at this stage. What we have baked into our 2024 plan is still quite minimal, but we could see it significantly increase if it really takes off.

Chris Vang, Analyst

All right, thanks a lot to both of you. That's very helpful. The second part, I wanted to ask a little bit about the fourth quarter performance. Outside of the Mexico market, what were some of the trends you saw in the market, and how did performance in the rest of the Latin America regions compare to what you had expected going into the quarter? Thank you.

Bob Lisy, CEO

I think we've seen the broader market, and certainly not only Mexico but Guatemala and other key countries for us, slow down relative to growth—not as acutely as Mexico has. However, we also see some strong growth where we've executed well in certain countries and have sometimes been on the verge of triple-digit growth in markets like Nicaragua and others, where we've been growing very quickly. I think the overall market has slowed a bit across nearly every country in Latin America. But we've been able to grow well outside the market size in certain regions like Nicaragua, Ecuador, and Colombia, where we are growing much faster than the market. For the Dominican Republic, we are noticing some slowing within that market. We think this market is transitioning into digital more effectively, as Dominican workers in the US tend to be more likely to have bank accounts and thus more options compared to other markets like Mexico, Honduras, or Guatemala.

Chris Vang, Analyst

Right. Thank you so much. That's very helpful. Let's come back to the queue.

Operator, Operator

Our next question comes from Sam Salvas with Needham. Please proceed.

Sam Salvas, Analyst

Great. Thanks, guys, for taking the questions. I'm hopping on for Mayank today. I was wondering if you could provide insight into some of the pricing dynamics you saw in the fourth quarter. I know earlier in the year, and I think it was in the third quarter, you mentioned some pricing pressures stemming from competitors. Could you talk about what you saw in the fourth quarter and how you're thinking about pricing in 2024?

Bob Lisy, CEO

What we saw is that we've been able to extend our margins in Q4 and increase them by being more efficient and slicing things a bit thinner. Previously, we made bigger movements with price related to the entire market, and now our pricing movements are based on places where there's an incremental upside in terms of wires. We are careful to avoid discounting where we currently have wires in-house, where people are perfectly satisfied with the pricing. Looking forward to 2024, our biggest opportunity lies in certain areas of the country where there remains untapped potential. For example, in the Southwest, we have a million foreign-born individuals living in zip codes in California that we haven't exploited at all. As big as our California business is, comprising several million wires a year, we haven't fully penetrated those zip codes. Additionally, we have other areas with approximately 1.7 million people where we’ve only slightly tapped in. These will see differing pricing strategies, and we will be much more aggressive there without degrading our existing margins. Our current margins are set to remain stable, and any change will lower the gross margin per transaction but increase overall incremental transactions.

Sam Salvas, Analyst

Got it. Okay, that's super helpful. Could you also elaborate on the momentum you're seeing in the iTransfer business and any expectations or goals for the upcoming year?

Andras Bende, CFO

I would say we've built a plan that we feel comfortable can achieve mid-teens growth if we operate the business as it is now but with a bit more efficiency. We are working to create a bigger bang by investing in the front end, primarily in the second half of the year. Italy, in particular, presents a really interesting opportunity because structurally the margins are better there, and our penetration within that large economy shows substantial potential. However, we are also doing well in Spain, where we believe growth trends have restarted. While that geography is a bit trickier due to lower margins, we think the mid-teens growth is a solid baseline with the potential for upside.

Bob Lisy, CEO

What I'd add to that is that today we are primarily present in just two countries on the European continent. We have one store in Germany, which presents a huge market opportunity. We believe there are opportunities for us with our European license to not only expand further in Germany in the medium term but also in France. Additionally, we’re exploring opportunities in the UK. We envision becoming much more active in Europe, as we see it as a great opportunity at retail. Due to the nature of consumers there, we believe our digital opportunities will also catch on even faster since many consumers already have bank accounts and salary cards. We look forward to enhancing our digital app and expanding into other crucial countries like Germany, France, and eventually the UK.

Sam Salvas, Analyst

Yeah, that makes sense. All right. Thanks, guys.

Operator, Operator

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to the speakers for any closing remarks.

Bob Lisy, CEO

Thank you all for tuning in. I look forward to talking to you all soon. Thanks again. Have a great day.

Operator, Operator

The conference has now concluded. Thank you for attending this presentation. You may now disconnect.