MoneyGram, the money transfer company, showed results Friday (Oct. 28) that topped net income expectations on The Street, as the traditional money sending business showed growth and online initiatives gained even faster traction.
Investors sent the stock up more than 9 percent to $6.62.
MoneyGram said that its total sales in the quarter came to $383 million, up 5 percent on a constant currency basis. The latest number was just below The Street at $389 million. The adjusted earnings per share stood at $0.25, beating consensus by four pennies. Expense control, obviously, helped margins. And though the mid-single-digit growth was otherwise muted by some geopolitical events, management said that new products and expansion initiatives in digital and elsewhere were strong enough to continue to drive activity.
The bulk of revenue came from money transfers, at $339.6 million, and outbound revenues were up 8 percent on funds sent abroad from the U.S. Most of that was sent to Latin America and parts of Asia and Africa. Management pointed to digital money transfer revenues that were up 12 percent year over year, gaining to 13 percent of sales. The transactions within this segment were up 4 percent and, as a percent of total transactions (in number), stood at 15 percent, buoyed by MoneyGram.com and other initiatives, including MoneyGram Kameleon. MoneyGram.com, according to the firm, grabbed more than 225,000 new active customers in the quarter.
CEO Alexander Holmes stated that growth in the top line has remained on track, despite challenges in some of the firm’s “larger send markets.” In addition, Holmes also said that growth hinges on “outside of the U.S.” and the emerging markets, even as areas such as parts of the Middle East have had a dampening effect otherwise. New initiatives, such as those with Walmart (via Walmart2Walmart Mexico), may help MoneyGram grab market share going forward, Holmes said on the analyst call.
With focus on the digital side of the business, Holmes said that transaction growth has now rebounded into the double digits since the end of the quarter. MoneyGram, management said on the call, expanded its digital footprint in the September period, in tandem with a push into direct-to-account services across 16 new countries. That direct service allows for online conduits for people to send their money to accounts across 40 countries. “This service now reaches more than 2 billion bank accounts, including traditional bank accounts, mobile wallet accounts and other virtual accounts,” said the CEO. “Through MoneyGram’s global direct-to-account network, we now have the ability to reach 66 percent of the world’s banked adult population.”