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MoneyGram (MGI) Up Despite Q3 Earnings Miss, Revenues Up Y/Y
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Shares of MoneyGram International, Inc. have inched up 0.5% since reporting third-quarter 2022 results on Nov 8. Despite an elevated expense level, investors might have been impressed by a gradual recovery of its money transfer revenues, and improved fees and other revenues. Strong contributions from the Global Funds Transfer and Financial Paper Products segments also contributed to the quarterly results.
MoneyGram reported third-quarter 2022 adjusted earnings per share (EPS) of 11 cents, which lagged the Zacks Consensus Estimate by 15.4%. The bottom line also fell 15.4% year over year.
Revenues improved 3.5% year over year to $330.8 million and beat the consensus mark by 1.5%.
MoneyGram International Inc. Price, Consensus and EPS Surprise
Fee and other revenues of $319.1 million inched up 0.4% year over year in the third quarter but missed the consensus mark of $320 million. Investment revenues increased more than six-fold to $11.7 million year over year, higher than the Zacks Consensus Estimate of $5.5 million.
Total operating expenses escalated 8.8% year over year to $133.1 million, mainly due to higher transaction and operations support, and compensation and benefits expenses. Interest expense of $12.2 million fell 6.2% year over year in the quarter under review.
Adjusted EBITDA declined 3% year over year to $54.8 million due to strengthening dollar value against major currencies. Adjusted EBITDA margin of 16.6% deteriorated 110 basis points (bps) year over year.
Segments in Detail
Global Funds Transfer
The segment reported revenues of $308 million, which inched up 0.7% year over year on the back of growing money transfer revenues. Segmental gross profit grew 3.5% year over year to $140.5 million.
Money transfer transactions improved 6% year over year in the third quarter. Cross-border online revenues of MoneyGram Online climbed 17% year over year, while transactions climbed 15% year over year. Active cross-border customer growth rose 11% year over year in the quarter under review.
Digital transactions surged 39% year over year, accounting for 45% of MoneyGram’s money transfer operations at the third-quarter end. Digital revenues attained a record figure of $95 million, climbing 36% year over year.
Financial Paper Products
Total revenues of $22.8 million soared 67.6% year over year. While money order revenues of $11.1 million improved 11% year over year, official check revenues increased more than three-fold to $11.7 million year over year. The segment reported a gross profit of $15.7 million for the third quarter, which grew 18% year over year.
Financial Position (as of Sep 30, 2022)
MoneyGram exited the third quarter with cash and cash equivalents of $126.7 million, which plunged 18.4% from the 2021-end level. MGI’s payment service obligations of $3,543.5 million slid 1.3% from the figure at 2021 end. Net debt dipped 0.1% from the figure as of Dec 31, 2021, to $785.7 million.
Adjusted free cash flow of $16 million plunged 52.2% year over year in the third quarter.
Capital expenditures came in at $17.8 million, up 74.5% year over year.
Outlook
MoneyGram is expected to be acquired by Chicago-based private equity firm Madison Dearborn Partners, LLC, for $1.8 billion. The deal is likely to close in the December quarter of 2022.
Of the Finance sector players that have reported third-quarter results so far, the bottom-line results of Bank of New York Mellon Corporation (BK - Free Report) , State Street Corporation (STT - Free Report) and MarketAxess Holdings Inc. (MKTX - Free Report) beat the respective Zacks Consensus Estimate.
BNY Mellon’s third-quarter 2022 adjusted earnings of $1.21 per share surpassed the Zacks Consensus Estimate of $1.10. The bottom line rises 11% from the prior-year quarter’s number. Total revenues grew 6% year over year to $4.28 billion. The top line outpaced the Zacks Consensus Estimate of $4.18 billion. On a fully taxable-equivalent (FTE) basis, BK’s net interest revenues were $929 million, up 44.3% year over year.
State Street’s third-quarter 2022 adjusted earnings of $1.82 per share outpaced the Zacks Consensus Estimate of $1.79. The bottom line was 9% lower than the prior-year level. The total revenues of STT were $2.96 billion, decreasing 1% year over year. Also, the top line missed the Zacks Consensus Estimate of $2.98 billion. The net interest margin rose 35 basis points year over year to 1.11%.
MarketAxess reported third-quarter 2022 earnings per share of $1.58, beating the Zacks Consensus Estimate by 6%. The bottom line improved nearly 4% year over year. Total revenues of $172.1 million rose 6% year over year in the quarter under review but fell short of the consensus mark by a whisker. MKTX’s commission revenues of $153.2 million climbed 7.2% year over year.
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MoneyGram (MGI) Up Despite Q3 Earnings Miss, Revenues Up Y/Y
Shares of MoneyGram International, Inc. have inched up 0.5% since reporting third-quarter 2022 results on Nov 8. Despite an elevated expense level, investors might have been impressed by a gradual recovery of its money transfer revenues, and improved fees and other revenues. Strong contributions from the Global Funds Transfer and Financial Paper Products segments also contributed to the quarterly results.
MoneyGram reported third-quarter 2022 adjusted earnings per share (EPS) of 11 cents, which lagged the Zacks Consensus Estimate by 15.4%. The bottom line also fell 15.4% year over year.
Revenues improved 3.5% year over year to $330.8 million and beat the consensus mark by 1.5%.
MoneyGram International Inc. Price, Consensus and EPS Surprise
MoneyGram International Inc. price-consensus-eps-surprise-chart | MoneyGram International Inc. Quote
Quarterly Operational Update
Fee and other revenues of $319.1 million inched up 0.4% year over year in the third quarter but missed the consensus mark of $320 million. Investment revenues increased more than six-fold to $11.7 million year over year, higher than the Zacks Consensus Estimate of $5.5 million.
Total operating expenses escalated 8.8% year over year to $133.1 million, mainly due to higher transaction and operations support, and compensation and benefits expenses. Interest expense of $12.2 million fell 6.2% year over year in the quarter under review.
Adjusted EBITDA declined 3% year over year to $54.8 million due to strengthening dollar value against major currencies. Adjusted EBITDA margin of 16.6% deteriorated 110 basis points (bps) year over year.
Segments in Detail
Global Funds Transfer
The segment reported revenues of $308 million, which inched up 0.7% year over year on the back of growing money transfer revenues. Segmental gross profit grew 3.5% year over year to $140.5 million.
Money transfer transactions improved 6% year over year in the third quarter. Cross-border online revenues of MoneyGram Online climbed 17% year over year, while transactions climbed 15% year over year. Active cross-border customer growth rose 11% year over year in the quarter under review.
Digital transactions surged 39% year over year, accounting for 45% of MoneyGram’s money transfer operations at the third-quarter end. Digital revenues attained a record figure of $95 million, climbing 36% year over year.
Financial Paper Products
Total revenues of $22.8 million soared 67.6% year over year. While money order revenues of $11.1 million improved 11% year over year, official check revenues increased more than three-fold to $11.7 million year over year. The segment reported a gross profit of $15.7 million for the third quarter, which grew 18% year over year.
Financial Position (as of Sep 30, 2022)
MoneyGram exited the third quarter with cash and cash equivalents of $126.7 million, which plunged 18.4% from the 2021-end level. MGI’s payment service obligations of $3,543.5 million slid 1.3% from the figure at 2021 end. Net debt dipped 0.1% from the figure as of Dec 31, 2021, to $785.7 million.
Adjusted free cash flow of $16 million plunged 52.2% year over year in the third quarter.
Capital expenditures came in at $17.8 million, up 74.5% year over year.
Outlook
MoneyGram is expected to be acquired by Chicago-based private equity firm Madison Dearborn Partners, LLC, for $1.8 billion. The deal is likely to close in the December quarter of 2022.
Zacks Rank
MoneyGram currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Finance Sector Releases
Of the Finance sector players that have reported third-quarter results so far, the bottom-line results of Bank of New York Mellon Corporation (BK - Free Report) , State Street Corporation (STT - Free Report) and MarketAxess Holdings Inc. (MKTX - Free Report) beat the respective Zacks Consensus Estimate.
BNY Mellon’s third-quarter 2022 adjusted earnings of $1.21 per share surpassed the Zacks Consensus Estimate of $1.10. The bottom line rises 11% from the prior-year quarter’s number. Total revenues grew 6% year over year to $4.28 billion. The top line outpaced the Zacks Consensus Estimate of $4.18 billion. On a fully taxable-equivalent (FTE) basis, BK’s net interest revenues were $929 million, up 44.3% year over year.
State Street’s third-quarter 2022 adjusted earnings of $1.82 per share outpaced the Zacks Consensus Estimate of $1.79. The bottom line was 9% lower than the prior-year level. The total revenues of STT were $2.96 billion, decreasing 1% year over year. Also, the top line missed the Zacks Consensus Estimate of $2.98 billion. The net interest margin rose 35 basis points year over year to 1.11%.
MarketAxess reported third-quarter 2022 earnings per share of $1.58, beating the Zacks Consensus Estimate by 6%. The bottom line improved nearly 4% year over year. Total revenues of $172.1 million rose 6% year over year in the quarter under review but fell short of the consensus mark by a whisker. MKTX’s commission revenues of $153.2 million climbed 7.2% year over year.