International Money Express Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 7, 2025

Key Takeaways

  • Intermex delivered 4% year-over-year growth in total principal sent but saw a 5% decline in transaction volume, leading to lower transfer fee and foreign exchange income despite higher average send amounts.
  • Digital transactions grew nearly 70% year-over-year in Q1 (and ~80% in April) with improved customer acquisition costs and retention, supported by increased digital marketing spend.
  • Retail remains the cash-generating engine with execution improvements including reducing transaction processing time from 20 to 9 seconds and maintaining 99.995% system uptime.
  • The company maintained cost discipline with only a 1% rise in salaries and benefits, realized ~$2 million in annual offshore savings, generated over $10 million in free cash flow, and ended Q1 with $151.8 million in cash while repurchasing $5 million of shares.
  • Amid transaction and consumer behavior shifts, Intermex discontinued quarterly guidance but provided full-year 2025 targets of $634.9–$654.2 million revenue, $1.86–$2.02 adjusted EPS, and $103.6–$106.8 million adjusted EBITDA.
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Earnings Conference Call
International Money Express Q1 2025
00:00 / 00:00

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Operator

Good day and thank you for standing by. Welcome to the International Money Express Inc. First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Operator

To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alex Sadowski, Investor Relations Coordinator. Please go ahead.

Alex Sadowski
Alex Sadowski
Investor Relations at International Money Express

Good morning, and welcome to the Intermex First Quarter twenty twenty five Earnings Call. I would like to remind everyone that today's call includes forward looking statements, 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.

Alex Sadowski
Alex Sadowski
Investor Relations at International Money Express

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 will 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 our presentation slides, earnings press release, and our quarterly report on Form 10 Q, 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 intermixonline.com.

Alex Sadowski
Alex Sadowski
Investor Relations at International Money Express

Presenting on today's call is our Chairman, Chief Executive Officer, and President, Bob Lisi and Chief Financial Officer, Andrew Spendi. Let me now turn the call over to Bob.

Robert Lisy
Chairman, President & CEO at International Money Express

Good morning, everyone. Thanks for joining us today on our first quarter earnings review. The past quarter brought many changes to the market that were difficult to anticipate. The economic, political, and immigration backdrop presented many challenges to our business model and to The US to Latin America corridor in general. Regardless of this challenging environment, our results reflect the strength of our brand, the excellence of our execution, and our corporate discipline that we continue to bring to our strong and healthy underlying business.

Robert Lisy
Chairman, President & CEO at International Money Express

The good news is the overall market for remittances to Latin America remains resilient. The downside is that for the first time in our public history, we have delivered a year over year volume growth while experiencing a decline in the number of transactions versus the same period last year. The principal amount per transaction increased, but money transfer fees were lower due to larger send amounts and fewer transactions. This dynamic also had an impact on our foreign exchange profit. While we believe this consumer behavior shift is not in long term, it is important dynamic to monitor and one that has impacted our first quarter results.

Robert Lisy
Chairman, President & CEO at International Money Express

It appears consumers are sending larger principal amounts less often due to certain factors about which we can only speculate at this time. Total revenue came in at $144,300,000 net income at $7,800,000 adjusted EBITDA at 21,600,000.0 adjusted diluted EPS was $0.35 per share. While these key metrics were all down year over year, total principal amount sent was up 4%. We believe this is a strong indicator of the underlying strength of our overall business and the resilience of the retail market. Transactions originating at retail remain the foundation of our business in our highly profitable and cash generating engine.

Robert Lisy
Chairman, President & CEO at International Money Express

Total volume sent in four out of our five top markets increased significantly with our Intermex brand. Less positive was the fact that four out of five top markets saw a decrease in transaction sent. Despite that softness, we protected our margins and continued to make smart, targeted investments in our retail business. We focused on the most profitable transactions and stayed disciplined with agent management and continued to optimize at a zip code level, prioritizing our most productive areas. We're also seeing benefits from our operational upgrades.

Robert Lisy
Chairman, President & CEO at International Money Express

The transaction processing time on our retail platform improved to directly enhance the agent experience. We reduced time from twenty seconds to nine seconds on a typical transaction. We continue to build on the best in class system reliability as well, resulting in a total uptime of 99.995%, further supporting our position as the premium retail partner for our highly efficient agent base. We continue to excel in all areas relating to our retail offering, including our best in class customer service and banking options for our agent retailers. Now turning to digital.

Robert Lisy
Chairman, President & CEO at International Money Express

While our retail platform is the cash engine of our business today, our digital business is the glue of our omnichannel strategy and the most important part of our growth and future. We're growing that business most successfully. In Q1, our digital transactions grew just under 70% year over year. Aligned with the digital business strategy, we invested more in the digital marketing than ever before in Q1. We will continue to do so intelligently through daily optimization and ensuring that every dollar is spent with maximum efficiency.

Robert Lisy
Chairman, President & CEO at International Money Express

Our customer acquisition costs and LTV projections remain intact as customer acquisition costs are better than projected, and our customer retention remains strong. We plan to ramp up our total spend more in the coming quarters as we discussed at our recent Investor Day event. At the same time, engagement across our app, which we believe is the best in class continues to improve. Our Amigo Paizano brand is now fully integrated and helping us further sharpen our digital acquisition strategies, and our Wires as a Service pipeline of new partners continues to expand as expected. The infrastructure for robust growth is in place.

Robert Lisy
Chairman, President & CEO at International Money Express

This includes technology, licenses, and payer relationships, and now it is all about scaling efficiently. We're very encouraged by the performance of our digital business and the long term opportunity it represents. Our underlying cost performance exhibits the discipline you would expect from Intermex. With salaries and benefits up only 1%, our G and A is up. However, the biggest single driver relative to increasing G and A was our planned digital marketing spend.

Robert Lisy
Chairman, President & CEO at International Money Express

In February, we completed the shutdown of one of our offshore operations centers supporting La Nationale. We have begun to realize those efficiencies, and we are on track to achieve the approximate $2,000,000 in annual savings we anticipate from those moves. Integration of La Nationale agents onto the Intermex tech platform will continue into the second half of twenty twenty five. This places us in a position to further streamline our back office and to ultimately surrender the La National state licenses, further reducing costs, while maintaining the look, feel and integrity of the La National brand. On the balance sheet side, we remain very strong.

Robert Lisy
Chairman, President & CEO at International Money Express

We ended the quarter with $151,800,000 in cash and generated over $10,000,000 in free cash during the quarter. Our net leverage remains low, giving us significant flexibility to invest in growth, continuing to pursue opportunistic share repurchases, and maintain our strong financial foundation. As mentioned, cash generation continues to be the hallmark of this business, and that again remains strong, even with the increased investments in digital, retail sales infrastructure, and a challenging macro backdrop. At Intermex, we are focused on what matters most, delivering the best possible service for our customers and doing it with operational excellence. We are a trusted brand for over 6,000,000 customers every year, whether it's through our retail locations or by way of our growing digital channels.

Robert Lisy
Chairman, President & CEO at International Money Express

Our customers know that they can rely on us to move their hard earned money quickly, securely, and reliably. We have the right foundation in place, including a profitable retail engine, a fast growing digital platform enhanced by our unique omnichannel strategy, and what we believe the strongest, most well respected brand in Latin American corridor. We are confident in our ability to continue to deliver value for our shareholders. With that, let me turn the call over to Anders to walk you through the financials in more detail.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Thanks, Bob, and good morning, everyone. As Bob mentioned, we delivered a disciplined and focused quarter navigating a unique retail environment of greater send volume, but negative transaction growth while maintaining profitability and strong cash flow. Total revenue for the quarter was 144,300,000.0 compared to 150,400,000.0 in the same period last year. Total volume sent was up 3.7% versus 1Q last year, while total transactions sent were down just over 5%, a unique and unprecedented market. As Bob mentioned, for the moment, US to Latin American consumers are sending larger transactions less frequently.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

For us, we believe this indicates the underlying market remains healthy and resilient. However, at least for a period of time, we'll likely continue to observe some shift in send behavior that puts pressure on transaction growth. Fewer transactions result in less fee income. However, the cost to fund and cost to bank consumer transactions go up when volume grows, and that is what transpired this quarter. While the company remains strong, profitable, and ready to navigate this dynamic, the impacts on the P and L for the moment are notable.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

In the other part of our book, growth in digital helped offset part of the pressure on transactions in retail with digital transactions up just under 70% this quarter. We invested more in digital marketing this quarter than any past quarter for Intermex. We'll continue to scale this investment in the quarters ahead. Wire transfer and money order fees net accounted for $120,200,000 and were down year over year in line with transactions. Foreign exchange income contributed $20,200,000 and was down slightly year over year, however, in percentage terms, less so than fees.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Larger individual send amounts helped drive FX income for the company. It's worth noting, however, that we observed sharpest increase in average send amounts in countries other than Mexico, where FX is a much heavier component to transaction unit economics. Service charges from agents and banks were $93,800,000 down from $97,900,000 last year. While agency and payer commissions were down in line with transactions, bank fees were up driven by higher volumes sent versus 1Q last year. Salaries and benefits were up only 1% from a year ago, as our cost and efficiency disciplines continue to serve us well.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

That end, we also incurred 300,000.0 restructuring charges in Q1, in line with our previously announced restructuring of foreign operations. Our selling, general and administrative expenses were 11,000,000 up year over year. However, as Bob mentioned, the single biggest driver there is the increase in digital marketing spend as we scaled that business in line with our long term plans for omnichannel. Provision for credit losses was $2,100,000 and depreciation and amortization came in at $3,600,000 We also recorded $1,200,000 in transaction related expenses associated with the previously announced strategic alternatives review. Operating income for the quarter was $14,100,000 down from $19,600,000 last year.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Adjusted EBITDA totaled $21,600,000 with adjusted EBITDA margins at 15%. We've mentioned before that each year Q1 margins are softest due to seasonality. However, the dynamic of transactions down and volumes up that we previously discussed weighed additionally on Q1 margins. For Q1 volumes sent via more normalized send amounts, we estimate revenue would have been stronger by 7,000,000 to $10,000,000 and operating income stronger by 2,000,000 to 3,000,000 Net income was $7,800,000 and diluted earnings per share was $0.25 Adjusted diluted EPS was $0.35 We ended the quarter with $151,800,000 in cash and cash equivalents, up from $130,500,000 at year end. Total debt was $147,400,000 down from $156,600,000 at year end. We repurchased approximately 368,000 shares during the quarter for $5,000,000 Our balance sheet remains strong and our liquidity position gives us continued flexibility to support our strategic growth initiatives. We remain focused on managing costs, protecting margins, and executing with discipline across both retail and digital. Based on our first quarter twenty twenty five financial results and the underlying market dynamic we have observed to date, the company is revising its previously issued full year guidance.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Current levels of uncertainty and volatility affecting market conditions and consumer behavior have increased the difficulty of reliably forecasting short term results. Moreover, as previously announced, the company is in the process of executing on a long term strategy of investing in its digital business offerings to increase their contribution to the company's revenue and to increase its profitability. Accordingly, the company is discontinuing for the moment issuing quarterly guidance. Full year 2025 guidance is as follows: Revenue of 634,900,000.0 to $654,200,000 diluted EPS of $1.53 to $1.65 adjusted diluted EPS of $1.86 to $2.02 and adjusted EBITDA of $103,600,000 to $106,800,000 With that, I'll turn it back to Bob for closing remarks.

Robert Lisy
Chairman, President & CEO at International Money Express

Thanks, Anders.

Robert Lisy
Chairman, President & CEO at International Money Express

To wrap it up, we delivered another quarter of disciplined execution. We protected profitability, we invested strategically in growth, and we continue to generate strong cash flow. Retail remains a critical and profitable part of our business. Digital is scaling with strong economics, and we're confident in the foundation we have built. We will stay focused, stay disciplined and keep delivering for our customers and our shareholders.

Robert Lisy
Chairman, President & CEO at International Money Express

Thanks again for joining us. We're now ready to take your questions.

Operator

Thank you. As a reminder, to ask a question, please press And our first question comes from Chris Zhang of UBS. Your line is open.

Chris Zhang
Chris Zhang
ED - Equity Research Analyst at UBS Group

Hi, good morning. Thanks for taking our questions. So the first question is about, I guess, some of the more near term trends, given the first quarter weakness and also the unique U. S. To Latin American market dynamic you're seeing.

Chris Zhang
Chris Zhang
ED - Equity Research Analyst at UBS Group

Maybe can you just help us first parse through, like what's the behavior in in the on the retail side versus the digital side? And then how that has been trending, probably, like, in the in the more recent months of March and April and what you're seeing to date? That'd be helpful. Thank you.

Robert Lisy
Chairman, President & CEO at International Money Express

Okay. Great. Thank you for the question. So the behavior proportionally is not changing much. Right?

Robert Lisy
Chairman, President & CEO at International Money Express

The the digital side of the house for the industry and us as a company has been growing much faster than retail. So digital this quarter grew at 70% year over year. And it's actually so far in April through April is increased to about 80% growth. So we're growing the digital very quickly. The retail continues to be more of a struggle.

Robert Lisy
Chairman, President & CEO at International Money Express

We think the retail market is still really strong. And as you may have heard from our remarks, the total amount of principal amount that we sent to Latin America to our overall business was up 4% year over year. And our business is dominated still by the retail side. The challenge we have today and in the short run, first of all, I'm completely excited about what's going on with our business. I think to grow the digital business at 70% in a difficult market where the current administration talks about zero crossings in the border is a very great achievement for us.

Robert Lisy
Chairman, President & CEO at International Money Express

And we think we've only just begun there. We think that we're just starting to click in with our advertising. We think that our Wires as a Service is going to get bigger and better. So we have a lot of strategic partnership there that we think will build it. The difference between us and some others and maybe sometimes where we separate with some of the marketplace analysts and others is we think that retail based on the fact that it grew at 4% or the overall market for us grew at 4% dominated by retail is still a very healthy business with very large profitability, great margins on a unit economics perspective and very low entry point to acquire customers.

Robert Lisy
Chairman, President & CEO at International Money Express

And so we'll continue to drive that business. And we would expect in difficult times where the overall market is flat as it is today, And we're dominated by Mexico, Sixty Five Percent of our gross margin there about comes from Mexico, Eighty Percent comes from Mexico, Guatemala. So when the border is tight, it's not like we have a lot of folks that are sending in a big part of our business that are South America and other places where may not be border crossings, right. So we think that as we go forward, that the retail market will be strong and will recover. But it's challenging when the overall market is flat, and you see digital as an industry maybe growing 30%.

Robert Lisy
Chairman, President & CEO at International Money Express

It tells you that the retail market is probably growing at minus eight or minus 10. So we're beating that and we're beating the digital side. And we've talked about this many times. We're just heavily weighted on retail, which is not performing well as an industry and underweight on the digital side. But we're doing a lot to change that as you can see with 70% growth in digital and that going to 80% growth in second quarter.

Robert Lisy
Chairman, President & CEO at International Money Express

And we really have just begun to advertise and drive customers to our digital site. So that's how I would delineate the two today. We expect retail to be softer over time. We think that we will get it back into positive year over year growth numbers. And we expect digital to continue to grow at high levels 60%, seventy %, eighty % year over year and continue to grow that.

Robert Lisy
Chairman, President & CEO at International Money Express

And once the balance starts to get better and the market gets better, you'll see us driving much more positive numbers between the two together.

Chris Zhang
Chris Zhang
ED - Equity Research Analyst at UBS Group

All Thanks a lot, Bob, for the color. Just have a follow-up on the revised full year guidance this year. I understand you're no longer providing the quarterly guide, but for the revenue for the full year revenue and also the EBITDA margin, you're both seeing some improvement from the Q1 level. I think it was a revenue growth and EBITDA margin. And can you maybe give us just a directional sense of the trajectory of the revenue growth and also the margin improvement throughout the year? Sure.

Robert Lisy
Chairman, President & CEO at International Money Express

There's two things, maybe the two lead things I would talk about is we're still ramping up from a revenue perspective, all the work we're doing on our digital business. So whereas it won't necessarily improve the margins a lot because we'll be investing in marketing to do that, it's going to drive revenues. We also think that we're going to be able to add a lot of our pipeline for Wires as a Service is very, very large right now. And we believe that we're going to be adding lots of those folks, which really don't do much to degrade or cost us money to promote. We're basically providing the technology and the licensing and various different ways with different companies we're providing for.

Robert Lisy
Chairman, President & CEO at International Money Express

And so I think those are going to drive that revenue from a digital side. On the retail side, we have we're doing I think better as we go forward and executing on plans related to retail. More people at the retail level that will be driving more agent retailers in specific areas. Not in any way a haphazard, just throwing retailers out there, but very targeted in the right zip codes, in the right places where we know there's wires. And that's going to have an impact on that second half as those start to accumulate in the waterfall from that happens.

Robert Lisy
Chairman, President & CEO at International Money Express

The last piece is that we're lapping easier numbers in the second half of the year, because the downfall in the Mexico business particularly started to happen for us in the second half of last year in a more in a stronger way than it was in the first half. And so we're lapping a little bit easier numbers. We'll have better plans for retail. And the digital business will be catching on and getting more traction as the investment we put in it and some of the folks in the Wires as a Service start to come through.

Chris Zhang
Chris Zhang
ED - Equity Research Analyst at UBS Group

And if you could also comment on margin, that'd be awesome. Thank you.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Yes. And Chris, the only thing I would add to Bob's comment is, and I think you know you've followed us for while, but we do have some seasonality of the business with 1Q just being a softer quarter overall.

Chris Zhang
Chris Zhang
ED - Equity Research Analyst at UBS Group

Great. I appreciate the color and just get back in the queue. Thank you.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Sure.

Operator

Thank you. And our next question comes from Gus Gala of Monness, Crespi, Hart and Company. Your line is open.

Gustavo Gala
Analyst at Monness, Crespi, Hardt & Co., Inc

Hey, good morning, guys. Thank you for taking our questions. To start off, I wanted to focus on retention. I was hoping you could kind of walk us through the volume, maybe it's on a volume basis, maybe it's on net or a GP basis. Could you talk about what that's looked like historically in detail far as you have visibility?

Gustavo Gala
Analyst at Monness, Crespi, Hardt & Co., Inc

And then in digital, the core Intermex offering, what you've seen in retention versus what came on with Amigo PagSano? And just help us think of the levers that you're pushing on to help with the, you know, drive further retention in digital in particular? And I'll have a follow-up.

Robert Lisy
Chairman, President & CEO at International Money Express

Okay. So let me address the retail a bit, and then I'll ask Marcelo Patiodoro, who's our Chief Digital Officer, to talk a little bit about the digital side and retention. Even though we do have a personal relationship or a direct relationship with consumers at retail, we think about that more related to the agent network. The acquisition of customers happen through the retailers. So let me just take you through first, not to get off track, but that how do we look at how we acquire a new customer, keep a customer.

Robert Lisy
Chairman, President & CEO at International Money Express

Our acquisition costs at retail are CapEx and OpEx are about $2,500 to start up a retailer. And that retailer on the average at the end of year one, on the average will do about 200 wires, which means that we get a payback at retail from a new retailer in about seven months or so. Those retailers will be today, we look at three components at retail, we look at same store, we look at new store, and we look at churn. Churn is I'm sorry, the retail same store performance is operating about the same as the retail market. So we think the retail market is about a minus eight to a minus 10.

Robert Lisy
Chairman, President & CEO at International Money Express

And our retail existing agents, we define them as an agent that's here three sixty six days or more, they have a year over year number, they're behaving at about a minus nine, minus 10 minuteus eight, depending minus seven, somewhere in those high single digits. The way for us to be able to countervail that which by the way is performing the same as the market, which makes sense, your existing retailers perform about the same is to shorten that churn rate. Those are agents that did wires in last year and do none, and then grow our new agent base. And that's why as we talk about driving the wires at retail, we talk about additional people in specific markets like California, Texas, Illinois, where we have a lower market penetration rate, where we know that we have zip codes that are unfilled. But where we know for instance, markets that we do really well, the metric that we would use is we have about 1,000 or 1,200 foreign borns of a targeted market per agent in markets in the Southeast where we're very dominant, sometimes a 40% market share in a market.

Robert Lisy
Chairman, President & CEO at International Money Express

In California and Texas, we might have five or six foreign borns on the average in big pieces of geography per each agent retailer. What it tells us in some of those areas, we need three or four times more retailers. And that will be a big part of growing the overall retail business. We would expect that the average retailer will perform like the average market in a year over year. We'll be able to do a little better and some would targeting sort of finding out what the issues are, if there's some shrinkage there related to competitive incursion.

Robert Lisy
Chairman, President & CEO at International Money Express

But on the average, they're probably going to perform. The issue will be acquiring new real estate in places where we aren't where we're underdeveloped. And that's really the initiative at retail today. And I know it's not exactly what you asked, but we don't, we look at our consumers through the retailer on the retail side. We can tell you how often they use us and all of that and we do contact them at times with different marketing promotions, but it's mainly driven through the connectivity of the retail.

Robert Lisy
Chairman, President & CEO at International Money Express

Marcello, you want to talk a little bit about digital?

Marcelo Theodoro
Marcelo Theodoro
Chief Product, Digital & Marketing Officer at International Money Express

On the digital side, the retention is slightly better than prior quarter, despite the fact that we invested much more in marketing. So that's powering our growth as stated by Bob in the initial remarks.

Operator

Thank you.

Robert Lisy
Chairman, President & CEO at International Money Express

Sorry. You said you had a follow-up? I'm sorry.

Gustavo Gala
Analyst at Monness, Crespi, Hardt & Co., Inc

Yes, do. Sorry, I was I got myself stuck on mute. The other one I wanted to ask, if you could you maybe give us what the cadence was monthly in the quarter? If possible, if you could do it over the channel, that'd be awesome. I know you're not going to give us April, but just kind of is there any sense of have we maybe hit a trough in the retail foot traffic?

Gustavo Gala
Analyst at Monness, Crespi, Hardt & Co., Inc

Anything that shows that we've hit a trough or that we're nearing stabilization, anything around that would be super helpful. And thanks for all the color on the prior answer on retention. That's all very helpful. Thanks.

Robert Lisy
Chairman, President & CEO at International Money Express

Yeah, I think that it's a little bit of a funny quarter in the sense that February was a twenty eight day versus 29. So, there is a little bit of a downturn, if you will. It's 1% naturally baked into this quarter, right? And then February was a bit of a downturn from January by what you might expect. The reason we don't usually talk about month to month is because they're not perfect comparisons.

Robert Lisy
Chairman, President & CEO at International Money Express

We look in four week segments, because what happens is in January, you have three what we call stump days, the twenty ninth, the thirtieth and the thirty first. If last year those days were Friday, Saturday and Sunday, and this year those days are Saturday, Sunday, Monday, it's going to be a different number. And even worse if last year they were ended on Monday and this year it ends on Tuesday, which Monday still is a strong day and Tuesdays, one of the weakest days of the year of the week. So we really don't look at the business on a monthly basis. We look at it when we look at how we grew transactions and principal, we look at it in four weeks segments because that's a perfect comparison.

Robert Lisy
Chairman, President & CEO at International Money Express

And if we look at it by the month, it kind of, you know, February is the perfect example last year it's 28 for 29 versus 28. But even in January, the stump days would be different, which will throw that number up. So you can get a sense about, oh, we did better. Oh, wait, we did worse. But really, when you look at the four weeks, it's relatively stable.

Robert Lisy
Chairman, President & CEO at International Money Express

We think that a lot of whether the trough is there or not. I think there's two things that will react to how we perform in retail going forward versus the macro environment. And I think once that settles into a new normal, I don't even think there has to be an easing of the current administration's approach to immigration. I mean, if you look, there's been prior administrations, if you play their speeches, President Obama said similar things to Trump, President Trump and said, you know, if you're here illegally, you're you know, you will be deported. So it's those things will be gotten used to, if you will, hate to say it that way. But the new normal will come in. There are a huge amount of immigrants here working and there's no way easy way to deport them all nor is there a way to replace the work they do particularly in agriculture. So, I think that there probably will be some easing over time.

Robert Lisy
Chairman, President & CEO at International Money Express

But if there isn't a new normal will kind of set in. I think we have consumers today and talking to our retailers that don't necessarily want to go to retail. But they have to because many, many consumers either don't trust or not equipped to do digital. It's not because of the technology, it's because of the banking. If you're undocumented, you may not have the banking relationship to be able to do a digital transaction.

Robert Lisy
Chairman, President & CEO at International Money Express

And we think that group could be 6070% of the, you know, when you hear the numbers, but administration makes sense could be 6070% of the folks that are here. I think that's the first piece of it. The second piece is is we're, we're shifting our approach a bit at retail. And whereas we are a value added high quality provider. We also recommend also recognize that at the increment, we will be different and more aggressive for incremental wires.

Robert Lisy
Chairman, President & CEO at International Money Express

So we'd much rather do 6,000,000 wires a month versus 5,000,000. If that last million wires actually brought down our average margin, we're not going to touch the 5,000,000 that we have in the basket, but we can be aggressive in states like California and Texas, and make a lot more money deliver a lot more EBITDA and create even better EBITDA margins we have by being aggressive in a rifle shot approach. And that's the kind of stuff that I'm talking about that underway as we speak that the waterfall has not yet been created that will impact that second half. And it will be I don't want you to think that these high margins we have in places like Tennessee or other parts of the East. I just gave signals to all the little crap guys out there.

Robert Lisy
Chairman, President & CEO at International Money Express

They're not on the but to go after our states. But in the Southeast, those margins aren't going to be touched, because we don't need to because we're doing great. What we need to do is on the margin, where we have opportunities, and we're going to be much more nimble at that. And we have a data scientist now that does nothing but work on the pricing. He works with our Chief Operating Officer from the retail side, Andrew and working through all of that on a daily basis. And we think we're making huge headway with that.

Gustavo Gala
Analyst at Monness, Crespi, Hardt & Co., Inc

Great. I appreciate all the great color. I'll jump in back into the queue.

Operator

Thank you. And our next question comes from Mike Grondahl of Northland. Your line is open.

Mike Grondahl
Head of Equities & Director of Research at Northland Capital Markets

Hey, Bob and Andres, thanks. Hey, first question, have you thought at all about pulling back on your incremental investment in digital? Or I don't know, pushing it out a quarter or two? Or is it kind of full systems go there? It's full systems go.

Robert Lisy
Chairman, President & CEO at International Money Express

We know it's the right thing for the business. We think a balanced business portfolio that approaches looking like the market in terms of proportionality. It's a moving target. So when we get there, if we get there, but we're going to continue to move that digital business. And we think we're moving it and we'll move it very profitably with the current customer acquisition and the lifetime value of the customer that it will be a profitable business.

Robert Lisy
Chairman, President & CEO at International Money Express

And I think this is the time to do that. I think it's the right time, and it's the right time for that investment for us. And again, we're not in a position nor is it the style of our company to go over invest and not manage that. We've been very good operators, very custodians of every nickel in the company. And we'll continue to do that and monitor the response of that.

Robert Lisy
Chairman, President & CEO at International Money Express

But it is the right time. And I think our Wires as a Service for us is a positive sleeping giant, right? I think that there's just a lot of business out there that we can get with people that we can process for that may not be millions of wires per but could be 10,000 here and 20,000 there. These things add up. The margins on them are not quite as good as our own business.

Robert Lisy
Chairman, President & CEO at International Money Express

But what's really great about them is there's the investment. It's just simply things we've already done our technology, our licenses, our banking relationships, not all needed in every case. It's a cafeteria style. So the wires as a service client may not need all of those, but those are all available for them. And those are great can be a great boost, continue to be a great boost for our digital business overall, while we invest specifically into our growing our own brand, Intermex and our other brand now, Amigo Paisano.

Robert Lisy
Chairman, President & CEO at International Money Express

The thing that I think that we've never yet encountered and it's because of the strength of retail. When we see that principal amount be almost 4% growth in the company overall, but our retail principal amount is very flat. So it means this melting ice cube that people speak about is not there. It's not true. We see the retail is highly profitable.

Robert Lisy
Chairman, President & CEO at International Money Express

But if we started to see a sharper drop there, we can be much more aggressive in providing the digital opportunity for consumers that are leaving retail. And we do some of that today. But we don't believe we're in a catastrophic or anywhere near that situation, where we want to risk the very high profitability retail and the reagent relationships we have to be able to aggressively convert those customers. So we feel we've got a ton of options at our disposal. We're still one of the largest we are the largest provider in the world to Guatemala.

Robert Lisy
Chairman, President & CEO at International Money Express

And we are still amongst those two Mexico, the two most profitable largest markets to Latin America. And we will continue to do that, but continue to do it very carefully so that we're growing that digital side without degrading our overall profitability and value of earnings per share for our shareholders.

Mike Grondahl
Head of Equities & Director of Research at Northland Capital Markets

Got it. Bob, you've mentioned kind of a strong pipeline for Wires as a Service. Is much of that embedded in kind of baseline 2025 guidance? Does that represent upside? Or how should we think about that as it comes online?

Robert Lisy
Chairman, President & CEO at International Money Express

Yes. I think we've been really conservative about how we've looked at that because we wanted to make sure that we had an engine related to there's a lot of things with Wires as a Service that have to be at that front end, our legal side of the business, our accounting side and our technology. And we put aside now a team of people that work directly within the departments, but are also siloed with Marcello that are making sure that we're able to push these things through more quickly and get the all of the necessary components of the Wires as a Service done faster. And so all of that is an upside because we're continuing to evolve it. And so we want to make sure that these things are all different.

Robert Lisy
Chairman, President & CEO at International Money Express

The contractual piece can be put through really quickly and the accounting piece because sometimes we're going to have the revenue by regulation, sometimes they're going to have the revenue, we have to decide on all of those different factors. But and then ultimately, the technology, once we have a basic couple of components that you can pick as a whereas as a service, and we're getting to that now, the technology piece will be really easy. It's kind of a plug and play. And we think that there's will be soon in a place where we'll put more people on the street to actually be selling our Wires as a Service. And we think there's a lot of right in the marketplace and also adjacent customers for that.

Robert Lisy
Chairman, President & CEO at International Money Express

And we haven't counted that upside in our numbers today.

Mike Grondahl
Head of Equities & Director of Research at Northland Capital Markets

Got it. And then one last one, the larger principal amounts happening a little bit less often. I'm assuming that was the primary reason for the slightly softer quarter and revised guidance? Is it are you able to quantify that in 1Q like that was a couple of million for $5,000,000 Is that thinking generally correct?

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Yeah. Mike, we commented on it in the script, but I think the answer is yes. I think if the same amount of principal was sent in more normalized amounts, you would have seen 2,000,000 to $3,000,000 more in EBITDA in the quarter and probably 7,000,000 to $10,000,000 more in revenue when we went and did the calculation. So that was the real difficulty for us to navigate in the quarter. It's just volume was there. It was just coming in.

Mike Grondahl
Head of Equities & Director of Research at Northland Capital Markets

It came the mix was different.

Robert Lisy
Chairman, President & CEO at International Money Express

Exactly.

Mike Grondahl
Head of Equities & Director of Research at Northland Capital Markets

Okay.

Robert Lisy
Chairman, President & CEO at International Money Express

Yeah. Mean, just the unit economics for everyone on the phone that when someone sends a thousand $800, we still get a $10 fee, we make a lot more FX because we make the effects on the $800 But if they send to 400, we get to $10 fees, plus the same FX. So the FX in the margin that we're getting per wire kind of looks good because principal amounts up and there's more FX, but it reduced, not necessarily two to one, but maybe five to four or maybe six to five or whatever.

Robert Lisy
Chairman, President & CEO at International Money Express

And we're not sure as we said in the script, we don't know what exactly causes could be people want to be out in public less often could be that people want to send any extra money they have out, but we do think that if we had sent, but it does it. I think it's two things. One, says where we would have been without without that shift, but to the vibrancy still of the retail market for those people that think this is falling off a cliff. There's no way we can have 91% of our business in retail and grow our principle at 4% in a market that was crashing. It's just not especially a market that where the border is sealed, That still shows the strength of the overall retail market and particularly our retail business.

Robert Lisy
Chairman, President & CEO at International Money Express

And again, I want to be careful. I know you didn't ask this Mike for those others listening out there. This does not mean that we're I know people have a real problem with understanding how we can do two profitable things. They think you got to lose a shitload of money like some people to just be all digital. We just happen to think it'd be really great to return a lot of money to our shareholders on a quarterly basis while we build a great digital business and not go and hawk on our shareholders backs to do that.

Robert Lisy
Chairman, President & CEO at International Money Express

And I know there's a lot of analysts out there that think the retail business is dead. Well, they're wrong. It's not. That's why we're in it. I've been at this a long time, and we'll continue to build digital, but we'll build it from these proceeds and profits that we have from the strong retail market, which we excel at.

Mike Grondahl
Head of Equities & Director of Research at Northland Capital Markets

Sounds good. Hey, good luck this summer, guys. Thank you.

Operator

Thank you. And our next question comes from Alex Markgraf of KBCM. Your line is open.

Alex Markgraff
Alex Markgraff
Vice President - Equity Research at KeyBanc Capital Markets

Hey, everyone. Thanks for taking my question. Sort of along the lines of the principal amount and transaction dynamic, Andres, I know you mentioned an expectation that continues into the near future. I guess just maybe level set for us within the guide, what's assumed there? Any sort of worsening assumed in that guide around that dynamic?

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Yeah. I think we expect the trends to continue in Q3 and Q4 where that year over year transaction is down, volume up, let's speak more broadly. But I think we've modeled in that getting a bit better towards year end because we do believe in time there's going to be a reset to the new normal. But I think if you look year over year in the guide, we still do have that dynamic of transactions down and volume up year over year. So that's what we're anticipating.

Alex Markgraff
Alex Markgraff
Vice President - Equity Research at KeyBanc Capital Markets

Okay. And then if I could just ask one on OpEx, and I'd appreciate any comments just on the agility in the organization. Just from your current position, you have exhibited quite a bit so far. Just sort of curious what sort of agility is left on the table as you think about the OpEx base and some investment priorities.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

Yeah. No, in terms of the agility on OpEx, think one of the things about the company is we're very much built around efficiency, so there's not a lot of fat that sits to cut. We zero base everything every year, so it's not like we have a big slate of 200 folks worth of costs we can take out. We're continuing leveling up and leveling down the cost as needed. That's why from a salaries perspective, you're talking maybe 1% year over year. You will continue to see G and A grow, and most of that G and A growth is really going to be the investment in digital.

Andras Bende
Andras Bende
Chief Financial Officer at International Money Express

We continue to be as stingy as we need elsewhere. So I would expect you're going to see salaries and benefits staying relatively stable, maybe down some as we get some efficiencies. But from a G and A standpoint, that is going to go up because of the marketing and digital.

Alex Markgraff
Alex Markgraff
Vice President - Equity Research at KeyBanc Capital Markets

Okay. That's super helpful.

Alex Markgraff
Alex Markgraff
Vice President - Equity Research at KeyBanc Capital Markets

If I could just squeeze in one more on the digital revenue number for this quarter. I think sequentially it was a little bit lower than the fourth quarter. Is that just seasonality? Or is there anything else to understand about that?

Marcelo Theodoro
Marcelo Theodoro
Chief Product, Digital & Marketing Officer at International Money Express

No. It's mostly related to the volumes. The first quarter tends to be a little bit lower than the fourth quarter. But when we look at Q2, we see the trend growing again more than we did in Q1.

Robert Lisy
Chairman, President & CEO at International Money Express

Yes. In the industry, October and December are amongst the biggest months of the year, in fourth quarter obviously. And in first quarter, the weakest month of the year is January and tied for the second with November is February. So your sequencing the one of the strongest quarters, if not the strongest quarter of the year with the weakest quarter of the year. So that's why we kind of always in our industry look at a year over year number and the year over year growth.

Robert Lisy
Chairman, President & CEO at International Money Express

And so that's why we focus on the 70% year over year growth, not the sequential.

Alex Markgraff
Alex Markgraff
Vice President - Equity Research at KeyBanc Capital Markets

Okay. I appreciate all the answers. Thanks, guys.

Operator

Thank you. And our next question comes from Andrew Hart of BTIG. Your line is open.

Andrew Harte
Director & FinTech Analyst at BTIG

Hi team. Thanks. I appreciate the question. Bob, I appreciate the commentary, right? I think you said you can't speculate right now why there's fewer transactions and higher principal per transaction going on.

Andrew Harte
Director & FinTech Analyst at BTIG

But I think something you did say is longer term, you do not think that it's long term shift in the consumer behavior. So I guess, can you just kind of share a little bit of why you have confidence that it will shift back to what it's historically been like? And have you seen any of that shift so far here in the second quarter?

Robert Lisy
Chairman, President & CEO at International Money Express

Yeah, I think first, I want to be clear, there's a lot of land between think and confidence, right? So we said we think it will go back. We're not confident it will go back. We've never suggested that. We don't have that in our plans, in our projection.

Robert Lisy
Chairman, President & CEO at International Money Express

We're not assuming that. So I think the reason that we would think that is that historically, we haven't had sharp increases like this unless there is an FX reason for it. Like you might have an election in Mexico, and the peso weakens to 24. And you'll see huge principal amounts go up, because in people's minds, the pesos on sale, and the money is worth more money on the other side of the border at 24 pesos per dollar than it is on the northern side of the border. But we haven't seen these kinds of phenomena.

Robert Lisy
Chairman, President & CEO at International Money Express

It is a little bit different times either from a perception perspective or a reality perspective with the border. And I think, however, we don't know, we suspect they talking to our retailers. It's not an exact science. Our retailers are small business people. But they believe that foot traffic is down, there's less wires and they feel like the reason is, is that consumers are concerned with being congregating at places where many of them might be and having a visit from ice, Immigration that might come there and check IDs and deport people, right?

Robert Lisy
Chairman, President & CEO at International Money Express

So whether that's we don't know it's unscientific. That's the best data we have right now. We're not seeing any shift yet in that. But, again, it's sort of a perspective that we have in trying to identify what's happening.

Andrew Harte
Director & FinTech Analyst at BTIG

That's really helpful color. Thank you. And then on the digital side of the business, I guess two questions here. The first part with the 70% growth, I think obviously that was aided a bit by Amiga Posano. So can you just share kind of what did you look was not.

Robert Lisy
Chairman, President & CEO at International Money Express

No, let me be really clear for everybody listening. It was not aided in any way. Amigo Paizano was in our number before and it's in our number now. So it was not there's no there's nothing in here that's non organic. This is organic growth between our Wires of Service, Amigo Paizano and our own business.

Robert Lisy
Chairman, President & CEO at International Money Express

And it is a year over year growth, a real growth of 70% in first quarter. And that is increased to 80% in April.

Andrew Harte
Director & FinTech Analyst at BTIG

Okay, that's great clarification. And then the second part is the commentary on customer acquisition and digital is better than expected. So I guess, is that giving you confidence or want to actually lean into it even more as opposed to pull back on the other side of the coin?

Robert Lisy
Chairman, President & CEO at International Money Express

There's a third option, just follow our plan, right, is what we're trying to do. So I'll let Marcelo comment more on that, but we're certainly not planning on pulling back. But we can evaluate if we're getting a really great return, then that's certainly something we can take a look at whether we would invest more. Marcela, do you want to?

Marcelo Theodoro
Marcelo Theodoro
Chief Product, Digital & Marketing Officer at International Money Express

No. Perfect, Bob. We are very confident with the results that you achieved in Q1. We keep investing very meaningfully but thoughtfully about exactly what was in the plan. We also are seeing growth in value added services that we are offering through our digital solutions.

Marcelo Theodoro
Marcelo Theodoro
Chief Product, Digital & Marketing Officer at International Money Express

So now we are offering top up, we are offering bill payments. So while we are still reporting the gross margin per transaction related to remittance, there is additional companies that is more revenue coming from the same consumer with other products. Our vision for the industry that we didn't mention yet during this call is to be a financial service provider. So, every dollar that we invest in customer acquisition has the potential to become a higher return per consumer than we had in the past. So to confirm your question, yes, we are confident of what we did and we are going to keep investing as planned.

Andrew Harte
Director & FinTech Analyst at BTIG

Thank you. I appreciate the questions.

Operator

Thank you. We have a follow-up from Gus Scala of Monness, Crespi, Heart and Company. Your line is open.

Gustavo Gala
Analyst at Monness, Crespi, Hardt & Co., Inc

Hey, Bob. Just wanted to see if I could get you to riff a little bit on what you're seeing in terms of pricing rationality across retail and digital in the industry? Any interesting observations, how are people behaving? I think in the past, we've seen people try to take down price when they're struggling. Just talk about rationality in the industry. That would be helpful. Thanks.

Robert Lisy
Chairman, President & CEO at International Money Express

Yes, I think that there's I won't mention names, but there's one key independent provider that is private equity owned that we think has pulled back a bit because of just wanting to make money hopefully, private equity from sponsoring them. We see that in more cases where we think that pricing we've taken again, I've talked about that reporting to Andrew, we have a data scientist. And when we're looking at it, today, we're very competitive price wise at retail. There's places we're better than the competition, places where we're worse. But we do believe we have a superior product.

Robert Lisy
Chairman, President & CEO at International Money Express

And we think pricing, we're in a really good spot. We talk about overall and the agents we're in. Now what I've been talking about though is to go out and acquire another 25% more wires, Those wires are in markets that are more competitive. And we may require in those places for us to be more aggressive in price. But from our perspective, if we picked up a million incremental wires and our average margins today are between four dollars and $5 I won't be any more specific than that.

Robert Lisy
Chairman, President & CEO at International Money Express

And that million wires came in at $3.75. We're delighted at that. That's going to drive the bottom line dramatically. It's about that's almost it's more than $40,000,000 in gross margin annually, which we probably bring down 15,000,000 to $20,000,000 of that to the very bottom line. So we will use, from our perspective, price as an attacking mechanism where we don't have wires, we're getting a margin of $3.75 on 1,000 wires is a wonderful thing because we had zero wires.

Robert Lisy
Chairman, President & CEO at International Money Express

But what we don't see is a need for us to degrade the core pricing that we have, which in March from our all in business was 4,700,000.0 wires. And again, that's a mixture of La Nationale and Transfer and all everything together, But we don't see a need to be aggressive in price in that area because we think if anything, pricing has probably been a slight bit of a pullback. There's still a couple of guys out there that are really aggressive in price. But you have to be really careful because what you hear, not that you hear it, but what we might hear from our because the salespeople are always going to tell you the other guys much better FX. But when we have really do the survey and we have independent people even in our company do that with the data scientists, we find that pricing is not nearly the issue that we might hear if we're dealing with directly data that comes from our agent retailers, for instance, that are always going to want us to add a few centavos makes their job easier, right? So that's where we I would describe it today.

Gustavo Gala
Analyst at Monness, Crespi, Hardt & Co., Inc

Thank you for all the helpful color, guys. Good luck, Summer.

Robert Lisy
Chairman, President & CEO at International Money Express

Thank you. Appreciate it.

Operator

Thank you. I'm showing no further questions at this time. I'd like to turn it back to Bob Lissy for any closing remarks.

Robert Lisy
Chairman, President & CEO at International Money Express

Thank you all for your time and attention, and I know we'll be speaking to some of you here in the upcoming hours. We look forward to that. Have a great day. Thanks.

Operator

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

Executives
    • Alex Sadowski
      Alex Sadowski
      Investor Relations
    • Andras Bende
      Andras Bende
      Chief Financial Officer
    • Marcelo Theodoro
      Marcelo Theodoro
      Chief Product, Digital & Marketing Officer
Analysts
    • Robert Lisy
      Chairman, President & CEO at International Money Express
    • Chris Zhang
      ED - Equity Research Analyst at UBS Group
    • Gustavo Gala
      Analyst at Monness, Crespi, Hardt & Co., Inc
    • Mike Grondahl
      Head of Equities & Director of Research at Northland Capital Markets
    • Alex Markgraff
      Vice President - Equity Research at KeyBanc Capital Markets
    • Andrew Harte
      Director & FinTech Analyst at BTIG
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