MoneyGram International Inc. (MGI) is a well-known money transfer company that offers consumers low-cost and dependable money transfer services to families and friends all over the world. Whether it be online, in-app, or at a kiosk, MoneyGram connects consumers anytime and anywhere they need it. The company has gained strong momentum in its digital performance and surge in quarterly revenue year-on-year during the pandemic, enabling growth opportunities. MoneyGram, in addition to being a leader in the remittance market, is also taking a chance by embracing cryptocurrency. After the partnership with Ripple dissolved in March, the company recently re-entered cryptocurrency, providing people access to bitcoin around the U.S.
MoneyGram International Inc. (MGI) is a leading money transfer company based in Dallas, Texas. While its operations center is located in St. Louis, Minnesota, the company has about 347,000 offices in more than 200 countries, with 70 countries already digitally enabled. The company offers its services to people and businesses via a network of agents and financial institutions.
MoneyGram’s operations are focused on two main segments: Global Funds Transfers and Financial Paper Products. The Global Funds Transfer category operates as a money transfer and bill payment service provider through third parties such as supermarkets, local retailers, financial institutions, digital solutions, etc. The Financial Paper Products category offers money orders to clients as well as official check outsourcing facilities to banks and credit unions.
Earnings Results for Q1 of 2021
MoneyGram set new records for clients, transactions, and profit in Q1. The company reported total revenue of $310.1 million, which was a 6.6% increase year-on-year. Gross profit was $144.8 million, an $8.3 million rise generated by the intensity of money movement sales and offset by a fall in investment profits. Further, digital sales hit a new high of $60.4 million, reflecting a year-over-year revenue growth rate of 77%, and digital collaborations resulted in a 47% increase in sales volume. At the end of March, digital transfers accounted for 32% of all money transfer transactions.
“As part of the next phase of our digital transformation and in response to market demand to access our leading capabilities, we launched a new business line to open our platform to new customers and use cases. Over the last few years, we’ve built an API-driven infrastructure that enables us to seamlessly scale volume through our global network, and we’re excited about this strategic growth opportunity to monetize our capabilities in new ways.” Said Alex Holmes, the CEO of MoneyGram.
As for the Q2 2021 outlook, based on continued growth in its money transfer sector, the company anticipates overall sales in the $315 to $325 million range. This range covers a possible cost of up to $10 million due to the launch of new competition in the Walmart Marketplace, which began in late April. Furthermore, adjusted EBITDA is forecast to be between $50 and $55 million. This range takes into account the sales dynamics mentioned before as well as the absence of any gain from Ripple bonus fees, which were $8.8 million in Q2 2020.
The remittance industry has grown dramatically in recent years as a result of companies with consumers and clients working abroad. In 2020, the global digital remittance industry was estimated to be worth USD 16.28 billion. From 2021 to 2028, it is projected to rise at a compound annual growth rate (CAGR) of 13.3%. Payment integration and digitalization are projected to drive industry growth. Many digitally oriented consumers around the world are opting for digital remittances, which is driving demand growth.
The U.S. had the largest market share in the emerging digital remittance industry in 2019. MoneyGram was one of the prominent financial services and communications companies that contributed to the market share. According to Grandview Research, the COVID-19 pandemic is expected to have a favorable effect on the industry. According to the study, as a result of human movement constraints, demand for international digital remittances is projected to rise. Customers are also shifting to digital wallets because they are the most reliable, fast, and easiest way to move money overseas since the pandemic began.
MoneyGram Re-enters Cryptocurrency
This month, MoneyGram partnered with Coinme enabling investors to buy and sell bitcoin using cash at 12,000 MoneyGram retail locations in the U.S. This will make it quick and simple for those in the U.S who prefer to use cash to purchase cryptocurrencies or sell Bitcoin at MoneyGram’s physical locations. Coinme, the leading digital currency exchange, plans to extend its stores to 20,000 in 32 states by the third quarter, in addition to its current operations of 6,000 retail locations facilitating cash-for-Bitcoin trades.
Based on the partnership, both companies will take 4% of the customers’ transactions, including a commission of $2.75. MoneyGram locations operated by Walmart would be $2 more expensive. Additionally, MoneyGram CEO Alex Holmes has hinted that the company is considering allowing its customers to use stable coins, a form of cryptocurrency intended to maintain its value against a fiat currency such as the US dollar. Demand for Bitcoin is increasing as a result of global volatility and the current economic condition, as people seek alternatives for the dollar. Furthermore, in recent years, there has been a surge in demand from first-time buyers who are generally tech-averse. This demonstrates that blockchain can play a significant role in the company’s prospects.
MoneyGram is aggressively expanding its presence globally through partnerships worldwide. Even though we are yet to see how the company will perform in the cryptocurrency market, what we know is that MoneyGram has shown positive progress compared to the last few years. Despite the uncertainties hanging over the remittances industry, growth investors might want to take a look at MoneyGram International stock.
Disclosure: The author does not own any shares mentioned in this article.
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