Greetings, and welcome to the Euronet Worldwide Second Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. It is now my pleasure to introduce your host, Mr. Jeff Newman, Executive Vice President and General Counsel for Euronet Worldwide. Thank you. Mr. Newman, you may begin. Jeffrey B. Newman: Thank you, Sam. Good morning, and welcome, everyone, to Euronet's Quarterly Results Conference Call. We will present our results for the second quarter 2012 on this call. We have Mike Brown, our CEO; Rick Weller, our CFO; and Kevin Caponecchi, the President of Euronet Worldwide, on the call. Before we begin, I need to make a disclaimer concerning forward-looking statements. Statements made on this call that concern Euronet's or its management's intentions, expectations or predictions of future performance are forward-looking statements. Euronet's actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors, including conditions in the world financial markets and general economic conditions; technological developments affecting the market for the company's products and services; foreign currency exchange fluctuations; abilities -- the company's ability to renew existing contracts at profitable rates; changes in fees payable for transactions performed for cards bearing international logos over the company's networks; and changes in laws and regulations affecting the company's business, including immigration laws. These risks and other risks are described in our company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-Q. Copies of these filings may be obtained via the SEC's EDGAR website or by contacting the company or the SEC. Euronet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances. The company regularly posts important information to the Investor Relations section of its website. Now I'll turn the call over to Rick Weller, our CFO. Rick?

Thank you, Jeff, and welcome, everyone. I will begin my comments for the second quarter on Slide 5. For the quarter, revenue was $302.4 million; operating income was $19.9 million; and adjusted EBITDA was $39 million. Our cash EPS of $0.39 was in line with our guidance. This includes headwind of about $0.015 from FX, together with some benefits we received from tax. As many of you know, more than 75% of our revenues are generated outside of the U.S. So the decline in foreign currencies compared to the dollar had a significant impact on our second quarter earnings compared to the prior year, and for that matter, the prior quarter. To compare the current results to the prior year, we have also presented our results by eliminating the foreign translation impact. I will discuss the FX impacts in more detail when I talk about the segment-specific results. Next slide please. On Slide 6, we present the 3-year trend in transactions for each segment. The EFT segment continued to see strong 25% transaction growth in the quarter, with expansion across virtually all markets. India, Pakistan, Poland, Romania, our cross-border acquiring business and the addition of Euronet Middle East contributed the greatest growth this quarter. epay segment saw modest transaction growth of 3% in the quarter, primarily from the U.S., Germany, the U.K. and ATX. Offsetting these gains were declines in Brazil, which we discussed a couple of quarters ago; in Australia, which we reported in the third quarter last year; and Spain, where the economic landscape is challenging. Finally, Ria continued to see transaction increases across all regions. During the quarter, total transactions grew by 21%, driven by a 93% growth in non-money transfer transactions. Total money transactions -- transfers grew 10%, stemming from an 11% increase in U.S. initiated transfers. U.S. growth includes an 11% increase in transfers to Mexico. Transfers initiated outside of the U.S. grew 9% in the quarter despite the struggling European economy. The 93% growth in non-money transfers was largely from an increase in mobile top-up transactions sold through Ria agents, check cashing and bill payments. You will see the influence of non-money transfers in the average revenue per transaction for the Money Transfer segment where the average goes down simply due to mix. For example, our revenue on a money transfer is about $13 compared to $3 to $4 on non-money transfers. On Slide 7, we present the business segment results on an as-reported basis. As I mentioned earlier, foreign exchange fluctuations had a significant impact on our results this quarter. For perspective, the second quarter euro rate was 11% lower than the second quarter last year. The zloty was down by 17%, the Brazilian real down by 18%, and the Australian dollar down by 5%. In order to make more meaningful comparisons, I will center my discussions on the next slide where the financial results are presented, adjusted for currency changes. Next slide please. I'm on Slide 8 now. In the quarter, the EFT segment constant currency revenue, operating income and adjusted EBITDA increased 35%, 29% and 32%, respectively. These solid results can be attributed to the growth in ATMs, which drove 25% transaction growth, additional sales of our value-added product solutions and the full interest of our Middle East subsidiary. epay constant currency revenue increased 15%, operating income decreased 22%, and adjusted EBITDA decreased 9% compared to the same quarter the prior year. The increase in revenue is largely due to the September 2011 acquisition of cadooz. The decline in operating income stems largely from the previously announced changes in mobile operator distribution strategy in Brazil and retailers choosing to go direct with mobile operators in Australia discussed in the third quarter last year. While Australia's performance was relatively stable on a sequential quarterly basis, it still weighs down the year-over-year comps. And regarding Australia, we will partially lap it in the third quarter. Additionally, this quarter, our Spanish business was impacted by the declining economy. Tempering these losses was good growth in the U.S. and Germany, together with growth in non-mobile content, particularly in Germany. In the Money Transfer segment, constant currency revenue increased 12%, operating income increased 42%, and adjusted EBITDA increased 19%. This is the third sequential quarter we have seen double-digit constant currency growth in revenue, operating income and adjusted EBITDA for the Money Transfer segment. This expansion was driven by 21% total transaction growth resulting from additional network locations and product sales. All in all, this was a very strong quarter for our Money Transfer segment. Gross margins were relatively stable across all 3 segments, both sequentially and year-over-year. Operating margins in epay contracted both sequentially and year-over-year. However, both EFT and Money Transfer improved sequential operating margins and maintained operating margins year-over-year. The decrease in corporate expense compared to the prior year is largely attributable to lower short-term incentives and stock-based compensation accruals. Next slide please. On Slide 9, we provide a few highlights of our balance sheet for the quarter. Cash remained relatively the same. We essentially used free cash flows to pay down debt. As you know, we have $171 million principal amount of convertible bonds that can be put to us in October. With a conversion price of $40.48, we expect the holders to exercise their put. Anticipating such, we currently plan to repurchase the bonds using cash-on-hand and available capacity on our $265 million revolving line of credit. You may also remember in August last year, the Board authorized share repurchases up to $100 million or 5 million shares. During the quarter, we did not repurchase any shares, but we will continue to consider repurchases in light of the share price and liquidity flexibility. In summary, our balance sheet remains strong with modest leverage. With that, I conclude my comments and turn it over to Mike.

Thank you, Rick, and welcome to everyone on the call. I am glad to be joining you this morning. I'm actually in Rome, Italy, where I am meeting with potential and prospective customers, as well as our epay and Money Transfer teams who've continued to do a great job for us in this market. I'm pleased with our second quarter earnings as our EFT and Money Transfer teams delivered exceptional results. These strong earnings helped us to overcome the challenges we are facing within the epay segment and to deliver consolidated constant currency revenue and operating income growth of 18% and 19%, respectively. With the significant portion of our revenue being generated in Europe, I have fielded a lot of questions about how the financial crisis in Europe is impacting our business. As the crisis has continued to unfold, we have been fortunate that a majority of our European revenue is generated in 2 of Europe's strongest economies, Germany and Poland. This has resulted in minimal overall impact to our business. We've also seen softness in the harder hit markets like Spain and Italy. However, our worldwide presence and extensive product portfolio have helped us to offset some of these negative impacts. The downturn has also presented us with unique and new opportunities. In the old days, we used to outsource and run ATMs for a bank, charging a monthly fee for ATM. Now in addition to cash withdrawals, we provide mobile top-up, advertising and a host of other value-added services on the ATM. These products bring additional revenue to Euronet and to our customers, creating exponential value for each ATM that we operate. Banks are starting to see the value that we bring to the EFT -- I mean, to the ATM networks, that they have always perceived really as a cost center for their distributions for their account. This results in more deals than ever for our EFT team. With that said, let's move on to Slide 12 and talk about the EFT segment in more detail. Here on Slide 12, we present our quarterly financial highlights for the EFT segment. In this quarter, we saw more of the same from our EFT division. They delivered more ATMs, more value-added services and more new agreements and more transactions. This translated nicely into constant currency revenue and operating income growth of 35% and 29%, respectively. This was an excellent quarter for our EFT team as they continued to capitalize on opportunities presented, and I expect more of the same next quarter. So now let's move on to the next slide, where I will comment on some of the highlights. On Slide #13, you can see we've signed a lot of agreements during this quarter, so I am only going to hit on the most noteworthy. In Romania, we launched a new independent automated deposit terminal network. These are the first deposit terminals to be operated with participation from multiple banks in that market. There are a number of benefits ADTs offer their customers, including 24/7 service, immediate funds availability and time-saving. Our EFT team also signed a global agreement with American Express to deploy ATMs at AMEX locations. We won this agreement because of our global presence, our processing expertise and our extensive value-added services portfolio. While this agreement won't cover a large number of ATMs, it speaks to Euronet's ability to create value for our customers, which I mentioned a few slides back. We continue to expand our footprint in Poland by signing an agreement to provide ATM driving services for SK Bank, one of the largest cooperative banks in the country. While this agreement is only for 35 ATMs, it is the first with a cooperative bank in Poland. And to give you a little bit better idea of what this means now and could mean in the future, there are 575 cooperative banks across the country, which operate a combined 3,100 ATMs serving as evidence of the opportunities that still exist within our largest EFT market. Finally, we renewed several agreements, including an outsourcing agreement with Standard Chartered Bank in India and network participation agreement in Poland and outsourcing agreements in Romania and Cyprus. So now let's just move on to Slide #14. Here you can see the highlights from our value-added services portfolio and ATM network expansion. During the quarter, we continued to expand our value-added services footprint by introducing new services on our IAD network, that means independent ATM deployer, IAD network in Ukraine, and our customer networks in Romania, Serbia, Montenegro, Bosnia, Bulgaria, Ukraine and the UAE. We also signed an agreement to provide value-added services on ATMs in POS terminals for the First Bank of Nigeria. In addition to growth and value-added services, we saw significant ATM expansion in the second quarter. We added over 1,400 ATMs across India and Europe, bringing our total ATMs under management to 17,048 by the end of the quarter. Our outsourcing backlog stands at 385 ATMs. Last quarter, we told you that we are going to deploy 1,000 ATMs in India during the quarter, and we delivered by installing 1,090. Not only did we deliver in India, but we installed more than 300 ATMs in Europe. A couple of calls ago, one of you asked me whether I thought 20,000 ATMs was achievable by 2014. I told you that it would absolutely stun me if we didn't get to 20,000 ATMs in 3 years. Being above the 17,000 mark 6 months later makes that number look well within sight. Overall, this was an outstanding quarter for the EFT business, and I'm excited to deliver more of the same in the third quarter. Now let's move on to Slide #16, and we can talk for a little bit about epay. Here first on Slide #16, we'll present the results for epay on an as-reported basis. I wish I could say that the story here at epay was as good as EFT, but the fact is that we didn't do as well this quarter. Our weak performance is a little more evident than in prior quarters, but the story is still the same. In Brazil, the change in mobile operator distribution strategy has had a significant impact on our prepaid earnings. In addition, halfway through the third quarter last year, you may recall certain retailers went direct with mobile operators in Australia. As Rick mentioned, this continues to negatively impact our results year-over-year. However, we feel like the business in Australia has largely stabilized, and once we've lapped the loss of retailers next quarter, we'll see more of a positive picture in Australia year-over-year. This quarter, we also started to see our results in Spain impacted by the economic pressures in that country. The discussions we have had with mobile operators lead us to believe that the results -- that our results are consistent with the overall prepaid industry and economic conditions in that market. On a more positive note, 2 of our largest prepaid markets are delivering very, very strong results. The U.S. and Germany saw a nice growth in the quarter. We also continued to see good contributions from nonmobile sales, with 27% growth year-over-year. In the next couple of quarters, these comps will become better as we lap the negative event, continue to see strength in the U.S. and Germany and implement other initiatives that will help us overcome these losses. Now on to the next slide. On Slide #17, we present highlights from our Mobile business. During the quarter, we extended our relationship with Media Saturn, it's kind of like the Best Buy in Germany, to sell top-ups in 70 of their Spanish stores. We won this business because of our existing nonmobile relationship, a shift from our traditional lead in with mobile top-up. This highlights the increasing importance of nonmobile content in our product portfolio. We also launched Lycamobile, an MVNO, on 21,000 POS terminals in Germany, 8 MVNO brands to Dinosol supermarkets in Spain and 6 MVNO brands to Disa Shell petrol stations in Spain. Finally, we have taken advantage of our direct agreement with Vodafone in Italy by signing an agreement with Centrale Italiana to sell Vodafone mobile top-up. Centrale Italiana is the largest purchasing organization for large retailers in Italy, and it is one more step towards expanding the business through growth with large retailers in that market. Now let's jump to Slide #18, and you can see all the agreements that we signed for expansion of our nonmobile business. During the quarter, we were able to sign several new software distribution agreements, including global agreements with Adobe and Symantec. These agreements are important as the software distribution industry shifts away from the traditional box with the CD inside, more towards PIN activation on a POS terminal. These global agreements allow us to deliver these products in a more cost-effective method for the software publisher, it makes purchasing the software more convenient for the end consumer, and it creates what's called attachment opportunities to the hardware sales for the retailer. In this quarter, we also signed our fourth transportation agreement in Australia with ConnectEast to authorize toll pass distribution and bill payment. A couple of years ago, we told you about our first such agreement with Cubic Australia to provide toll pass distribution and top-up for public transportation in Sydney, similar to the Oyster cards you may be familiar with in London. This is a government contract, so it is taking a while to roll out, but the pilot is set to go live in the fourth quarter of this year. Finally, this quarter, we were able to leverage existing relationships to sell products across our other businesses. First, we use our EFT relationship with OMV to implement closed-loop gift cards for customers in Slovenia and the Czech Republic. We were also able to further integrate our cadooz acquisition by using our existing iTunes relationship, a relationship to allow cadooz to distribute iTunes in their B2B channel. Although I'm clearly disappointed with the impact that Brazil, Australia and Spain had on our results, the issues in each of these countries are very much market-specific. Just a couple of years ago, I was sitting here telling you about the rate declines in our 2 largest EFT markets, and that we would create opportunities someway, somehow, to fill that gap. As you can see through the outstanding results in the EFT segment, we have been successful in overcoming those challenges. While I can't change this quarter's results, I don't see these as long-term setbacks. I believe we have a resilient team that will overcome these challenges. With a number of aggressive initiatives that we have underway, including continued success with prepaid mobile sales and stronger markets, our nonmobile content around the world, the transportation agreements that I just talked to you about, we continue to win in our mobile operator solutions, I am confident that we will restore the growth trajectory to this segment. More specifically, I believe that with our immediate efforts, we will overcome the second quarter year-over-year operating incomes and declines in the third quarter. Now let's move on to Slide 20, and we can talk about money transfer for a moment. I'm glad to get back to talking about exceptionally strong performance, with Ria's 42% constant currency operating income growth. As was the case last quarter, network expansion was the leading contributor to our success this quarter. The economic uncertainty and FX rate volatility we saw in Europe led to slower growth in our international markets, particularly in Spain and Italy. Despite all of the well chronicled difficulties in these 2 economies, we have seen our competitors reduce their workforces and retrench, and our team has approached the difficult economy just as we did with the U.S. over the last few years. They remain focused on their core business, increasing market share and positioning us to emerge stronger when their economies recover. Now while I don't want to sound overconfident, because I don't believe the European crisis is over, there are plenty of other markets in Europe where we are enjoying tremendous growth. In fact, we continue to see strong double-digit growth in nearly every other European market, including France, Germany, the Nordics and the U.K. And the same applies outside of Europe, with Money Transfer, in the U.S., Australia and Canada. So let's move on to Slide #21 for a few more specifics. Year-over-year, our total network grew by 19%. Key drivers for this quarter's growth were the 15 new correspondents that we launched, which, combined with new locations launched through existing correspondents, added approximately 8,000 locations to our network. The most significant of these were in the Philippines, Pakistan and Thailand. The addition of the most significant of these -- I'm sorry, the addition of National Bank of Pakistan gives us approximately 5,000 locations and a top 10 global remittance corridor. We also added 1,700 cash-payout locations through Thailand. Until now we have only been able to provide bank deposit service to Thailand, so this is a key service upgrade. I should also mention that we added the post office locations in Portugal and Romania, which will allow us to capitalize on the sharp increases we have seen in remittance volumes to and within Europe. In addition to these launches, we signed 17 new correspondents in 12 countries during the quarter that will add 5,100 locations when we get them launched. Perhaps the most significant of these are the addition of 800 locations in Morocco. Again, we are already seeing strong demand for this service in Europe, so this is a key strategic addition for our team, and we look forward to launching it as soon as possible. In Israel, we signed an agreement with a correspondent, which will not only give us payout service in Israel, but will enable them to leverage our network to send transactions as well. Finally, the launch of a new correspondent in Rwanda will mark our first entry into that market. So let's move on to Slide #22, and we can talk about the transaction growth in the quarter. On Slide #22, you can see that this segment, Money Transfer, continued strong transaction growth, with 21% increase in total transactions. Our charts that look like these sure make it easy to discuss Ria's success. So let's first focus on money transfers, where despite a tough quarter in a couple of European markets, we really see a lot of positive development. In the U.S., we grew transactions 11% in the quarter. This is the third consecutive quarter our U.S. division has delivered year-over-year double-digit growth in money transfer. The 11% growth rate in the U.S. to Mexico transfers also represents the third consecutive quarter of double-digit year-over-year growth. To shed some perspective on the turnaround in our U.S. to Mexico corridor, the 11% year-over-year growth rate this quarter compares to 17% in Q1, which we believe was at least partially influenced by the unseasonably warm weather that resulted in accelerated hiring during the winter month, but it compares to 2% decline in Q2 of last year. We are cautiously optimistic that we will continue to see high single-digit or low double-digit growth to Mexico in Q3. Non-money -- non-Mexico transfers from the U.S. also grew at 11%. As we continued to diversify and improve our network, we're seeing more and more success in transfers sent outside of the U.S. to Mexico corridor. This not only reduces the U.S. division's dependence on Mexico and the Latin American corridors, but it will also improve our ability to expand our correspondent network in these regions as the banks recognize our growth potential in the U.S. I'd also like to talk about the growth we're seeing in our non-money transfer transactions, which we have been highlighting over the last several quarters. This quarter, these transactions increased a whopping 93% year-over-year. The bulk of this growth is from our success in cross-selling mobile top-ups through Ria agents in Europe and the U.S. and from bill payment and check cashing transactions in the U.S. While these revenues are still relatively small compared to our core products, you can see that there is tremendous opportunity here. Also keep in mind that these products make us much more sticky with our partners and differentiate and protect our margins from our competitors. So let's move on to Slide #23, and we'll wrap up the quarter. Okay, Slide #23. Here you can see with these 6 bullets that we met our cash EPS guidance of $0.39. And as Rick mentioned, that was with currency headwinds. EFT continued its momentum, benefiting from strong ATM and transaction growth and continued success with our value-added services portfolio. epay is working through challenges in Brazil and Australia, but saw a nice growth from the U.S. prepaid mobile business and nonmobile content, particularly in Germany. Money Transfer saw outstanding growth, as the network expansion led to volume growth in North America, Europe and Asia. We plan to purchase the remaining 171 million of convertible bonds in October, with cash on hand and the available capacity of our revolver, and finally, we expect our third quarter adjusted cash EPS to be approximately $0.41, assuming consistent foreign exchange rates from today. With that, I will conclude my comments, and I'll be glad to take questions. Operator, will you please assist.

[Operator Instructions] Our first question comes from Peter Heckmann of Avondale Partners.

Can you give us an update on the cadooz acquisition? Talk about the growth rate year-over-year of that business as well as some of the ability to take that strong presence in Germany, import it into some of your other European countries?

I've got a few comments, but I think Kevin might be a little bit closer to that. Kevin, do you want to shoot for this one?

Yes, sure. So the cadooz business, as we mentioned before, is a seasonal business. It's typically strong first quarter and fourth quarter. We've had success time, as we mentioned on the call, we've had success with some of our core content partners, specifically this quarter with iTunes, trying to help introduce iTunes into the B2B channel in Europe through cadooz. At the same time, we're leveraging some of our positions in some other markets to take cadooz' B2B business into some of our markets outside of Germany. We have not announced to the market as to which markets those are, but we're working on some of those opportunities as we speak. And additionally, the promotion side of cadooz, we've talked to -- Rick has talked to, specifically, about what the business model is in the past. And the promotion side continues to gain strength. While we didn't have any of those promotions go live this quarter, we have a number of promotions in the works for some future quarters. Does that address it, Pete?

It does. And will you remind me, that acquisition was relatively more of the business really to in kind of employee incentives, or was it more customer loyalty?

It was about, let's say 60-40 or some, in that kind of ballpark, Pete. So more weighted towards B2B incentive as opposed to -- or product type of incentive as opposed to pure employee incentive.

But actually, with our retail relationships, Pete, we're -- that mix is being worked.

Okay, okay. And then a follow-up question on the value-added services. Can you talk a little bit about, and I know you've tried to quantify in the past, but a little bit more in terms of kind of percent of overall transactions and the relative growth rate, and when do we kind of see the tipping point where the relatively more attractive economics of value-added services start to outweigh some of the maturity of the mobile top-up business?

Well, you saw that we had strong growth. It was, I think, 27% kind of year-over-year increase in the mobile operator -- in the nonmobile transaction. I tell you that we would have overcome, in the normal scheme of things with mobile operators and just the kind of flattish growth rate there, I mean, we would have more than overcome that this quarter had it not been for those 2 a little bit more extraordinary changes that happened in Australia and Brazil. So I think as we lap those, you'll start to see that more evident in the numbers.

On the mobile gross, Pete, obviously, there's a bit more seasonality over the Christmas season.

Yes, yes. That's a good point. In fact, something like 40% of a lot of these value-added products, whether they be software sales or iTunes or whatever, are sold in December, not even just in the fourth quarter but in one month. So you see that stuff really kick up in the fourth quarter.

Okay. So with the growth of the value-added services and the acquisition of cadooz, as well as the normal seasonality of the business, I mean, we are seeing a greater portion of profits continue to be generated in the fourth quarter for Euronet?

Absolutely. Absolutely. And then you see -- just to prepare you, I mean, in Q1, you see, for all those same reasons, you see a bit of a step down too.

Our next question comes from Greg Smith of Sterne Agee.

The purchase of Euronet Middle East, what impact did that have on the segment results exactly?

Just a few percent. I mean, literally, a few percent.

Okay. And then, Mike, you mentioned some sort of initiatives in epay that you're working on to really -- to you kind of just mentioned that generally, what were you talking about there specifically, if you can expound about that?

Well, it's just kind of more of the same kinds of things. When I was talking about cadooz you meant, or just in general in that category?

No, in general. I thought at the end of your comments, you just said you guys were working on some other initiatives to...

Well, we are -- it's really more of the same. So it isn't as much top-secret as it is the reality that it just takes hard work and elbow grease, kind of like we got ourselves out of the hole with the EFT division. So we're just out there selling -- signing up more retailers and signing more nonmobile content, along with the mobile content, and as mentioned in my comments, too, in one case, we actually -- we led with our nonmobile content and ended up with the mobile content of a retailer in Spain. So it's just what we do. We need to sign up more retailers, and we need to sign-up more content providers, and put the 2 together, so that we make the commission in the middle.

Got it. Okay. And then the U.S. contribution to epay, how big is that today, and sort of you mentioned strength in the U.S., how big can that become as a percentage of the segment?

Rick, I don't have that percentage right here in front of me.

Well, it's -- let me just take a real quick look at the number here before I just rattle it off the top of my head. It's a meaningful part of our total contribution. I would put it in the category of about a little less than 20%. And I would tell you that it has the opportunity -- it certainly has the opportunity to double, based upon where we see prepaid product here in the U.S. together with a lot of the success that you see out of products like the Crickets, the Sprint, Boost, the Virgin, those kinds of products which tend to be kind of all-you-can-use plans that are proving to be very attractive to the prepaid market. So it's a meaningful piece of our prepaid business, and I really do believe that it has the opportunity to double.

And another add on that is mobile operators are always judged on their ARPU. And for a long time, the revenue per user per month was lapped at with a prepaid user than a postpaid user. But what we -- and the numbers used to be in the neighborhood of like call it $50 or $60 for a postpaid user versus $15 to $25 maybe for our prepaid user, depending on what the country is and so forth. But with this all-you-can-eat plan that Rick just mentioned in places like Boost and others, what this has done is that it captured a larger wallet share out of these consumers. Now currently this is really only happening in the United States, but Cricket, Metro PCS were the first guys to pioneer that. Boost, Virgin and a lot of these guys have tried to mimic that, but what's wonderful for us is they give you an all-you-can-eat plan for call it $45 a month. So our ARPU that we collect money on has gone up, and remember we get paid a commission, so if somebody is usually spending $20 month and now he spends $45 a month. This is really good for us. So as more markets decide to try this plan, it could be very interesting for us, and just doing more of the same and having more conversions along those lines in the U.S. is good. I keep praying that this will hop out to the Atlantic and get to the mobile operators in Europe, because if they took their cue from the U.S. in this case, you could see substantial growth in our business. But so far, nobody's quite dipped their toe into that water.

The last thing I'd add that is sort of a different dynamic, that are things worth talking about, is that in the U.S., most of our growth is being generated from mobile airtime growth or gaining market share for the traditional mobile airtime business, whereas a lot of our growth outside the United States is related to the nonmobile. And the plan is or the strategy is to take some of the things that we're doing in the U.S. that's resulting in that growth and export those ideas to other markets.

Got it. And then just one last quick one, I mean obviously, you're getting hurt on the foreign currency side, but yet you made your guidance and your guidance for next quarter looks pretty good. Are you holding -- is there something you're doing that really offset that, stepping back on investments, or is it just kind of the out-performance frankly in the EFT segment picking up the slack? What's the right answer there?

Certainly, it isn't the former. We have not stopped our investment. Because when you think about when you make an investment kind of decision, you make a lot of these decisions, and then it takes a year even to implement them. It takes them awhile to kind of get up, up to speed, but we'll watch foreign currency flux within a quarter. So we don't really gauge our investment based upon where the euro is this week. Basically, it's been strong underlying fundamentals of the business. I mean you take a look at the huge percentage growth in constant currency of Money Transfer and the EFT division and you can't help but see that, that's what's offsetting the fluctuations in foreign currency.

Our next question comes from John Kraft of D.A. Davidson.

I just wanted to drill down a little bit on the money transfer. It's pretty clear that you're gaining share in the U.S. to Mexico corridor, and we heard Western Union talk about some heightened compliance effort that they're doing that sort of impacting them. I guess I was hoping to get your take on that, whether it is share gains, and if there's any plans in your eyes that you may need to follow suit with some of those enhancements?

Well, first of all, I don't want to speak ill of the bigger guy, but the reality is their growth rate and number of transactions this quarter was considerably less than ours. So we have to take market share from somebody. I'm not sure if it was them. But when you look at the growth that we have, which was significant, 11% growth in the U.S., we had to take it from somebody. So I'm sure a little bit came from them and came from others. Don't forget, too, that we signed and went live last quarter with Elektra, which formerly was a unique Western Union payout for them in Mexico. We picked up a lot of transactions from there that used to be them, and I think when we did an analysis, something like 75% or 70% of them were not our customers before we did those transactions. So we've -- they must be ex-Western Union guys. So I don't think we're the source of their problems, because they're considerably bigger than us. But when you've got a really good program, you've got good agents. We've got an excellent P&L manager in the U.S. who's run that business now for the last 2 or 2.5 years. Those are the things that are winning us market shares. And with respect to compliance, we still guard that. That is our family jewel. We make -- we watch that everyday. We have headaches about it everyday, because we want to make sure our compliance is second to none. And we don't anticipate any kind of change in our compliance policies, because we believe we've had very strong policies and have been complimented on them by the regulators many, many times.

Okay, that's encouraging. And then just one other question, if I may, on epay. You talked about Australia stabilizing at least sequentially, but it didn't sound like Brazil is stabilizing. I guess I was wondering whether or not you see that continuing to get worse, or how long before that region stabilizes with some of those mobile strategy changes?

Go ahead, Rick.

I was going to say, we'll continue to see kind of year-over-year pressure just on a comp basis through probably at least the fourth quarter, that's when we announced that distribution strategy change in the mobile operator out there. We've, obviously, tried to take initiatives to stem that. We expect some nonmobile product in that market to start launching at the first part of the year. But it falls in the category of just plain old hard work everyday, so our teams are focused on it, but in summary, I think we'll see that pressure through the first quarter -- I mean, through the fourth quarter, and then I would like to think that we would start seeing a little more resilience in that market at the beginning of the year.

Our next question comes from Tim Willi of Wells Fargo.

A couple of questions. Europe, in terms of just say -- you get this question every quarter, I think, but I'd be curious for your thoughts on tones of discussion, the focus of the banks on cutting costs and outsourcing. Have you seen any change, or has this saga has continued? Is it getting better for you? Are people less focused on striking deals? It seemed that the value-added service success you're having would say, no. But I'd be curious maybe more about the larger institutions versus the smaller ones, given if there is a way to think about it that way.

Well, I would just -- funny you should mention that, but I mean I was just with one of those, a very large bank in Italy today, early this morning. And I'll tell you what's doing it, he says, dealing with the labor issues and so forth in Western Union -- I mean, Western Europe are always challenging. So the idea of just signing an outsourcing contract to cut costs and cut heads is always more challenging than you'd like. With our value-added service offering of new ways to make money on those ATMs, he says, that's exactly the kind of stuff they'd love to see. And several of the banks here in Europe wanted also to differentiate themselves strategically and technologically from their peers, and those are the people who are more open-minded to kind of more services on the ATM, more unique kinds of products. So everything we're seeing points to the same thing. This crisis has caused these banks to be a little bit more humble, and a lot more inclined to have discussions with us, and then you couple that with the fact that we've got now kind of a pallet full of value-added services offerings that are all revenue generators for them on a very expansive distribution network, retail distribution network, and we kind of got that kind of a one-two punch. And that's like, I've said it before, I don't know the exact numbers, but we probably signed or extended more agreements in the last 18 months or so than we did in the prior 5 years combined. So -- and that continues.

Great. 2 other questions. First was 7-Eleven, just curious how that's progressing, to what degree you think that has been key to the good metrics you've been putting up in the U.S. and U.S. to Mexico relative to the...

I'd like to say, Tim, that, that was a real butt kicker. The reality is it's doing okay. It's growing a little bit more every month. It hasn't been operatively, statistically beneficial to our numbers in the U.S. We're just doing really well in the U.S. in every other area. So 7-Eleven still likes us, they're looking at new kinds of products and product pricing to push more of this, to make a little bit more money on it. So we're still working with them to make it as big as we hope it can be. But so far it hasn't changed our numbers significantly.

Okay. And then my last question was on the cross-border acquiring, which I think you've now called out at least, in this quarter if not in a prior quarter, is contributing to some of the strong performance in EFT. How are you feeling about that business in terms of -- obviously, the relationship with OMV seems to be going quite well, but just other perspective customers and ongoing expansion of that platform? And if you could throw in to that, maybe for Rick, sort of what the incremental margin profile? Does it still look extremely strong as that business grows, or is there anything that's changed with that platform that's toned back the margin expectation for that product?

I'll let Rick answer the margin thing, but I don't think much has changed, it's still good. With respect to that next new retailer, we're getting some nibbles to do this. But understand, to do what OMV did, and they were an early adopter, you have to make a substantial investment in your own IT to save money over the long term. With the kind of the challenges that are in Europe right now with respect to the economy, these large retailers aren't in the mood to invest $2 million or $3 million or $5 million to save $5 million a year. So that's the problem that we got. It isn't that we have a system that doesn't work, because they like it and OMV has become an even stronger partner than when we first signed it, we're going in all kinds of new markets with them, as I mentioned. Last time we signed a loyalty deal with them, with their new virtually 100% investment now in Turkey. So -- but I can't tell you that next quarter and the quarter after that, we're going to nail another OMV. But luckily, OMV itself is quite a bit bigger than it was when we signed them. The number of transactions that we are acquiring are in excess of both of our projections at the time we did the deal, and we're selling new things like loyalty and mobile top-up and other kinds of products through there, so it could be its own little profit center even with one customer.

And Tim, the margins are really quite attractive in terms of incremental customers that we add. So if we add that next customer, it should be a good contribution.

Our next question comes from Mike Grondahl of Piper Jaffray.

The first one is really about India. Mike, it sounds like you added a 1,090 ATMs there in the quarter. Could you tell us where you're at now in total ATMs, and kind of describe that opportunity, and where you think it's going?

You mean total ATMs with the brown label?

Yes.

I think that number is around 1,300 or 1,400. Is that right, Rick?

Brown label is about 1,400, correct.

Right. And so, much like what we told you last quarter as we did a kind of a trial of this in fourth quarter of last year, all the numbers looked good. So we made the decision that we were going to put 1,000 ATMs in as fast as we could this year. We started rolling those things out basically late February, early March of this year. We've got them all hooked in, bolted down, filled with cash by call it the end of April, and we are going to watch the performance of these very carefully to see how closely that matches our original test group. And I would imagine that after 6 months or so, taking a look at these, we'll have an idea if their -- if the ramp is consistent with our original numbers, if it's running a little bit slower, but it still gets there, it's running faster and it gets there. And then after that, we'll make a determination whether to increase those numbers. But so far, everything's looking good, and the numbers are bearing out what we thought they would do. And if that's the case, it wouldn't surprise me that we invest in quite a number of more ATMs. But I can't tell you exactly how many of those that will be for a little bit of time.

Sure. And the margin profile on the ATMs in India, is it similar or different from kind of your Europe business?

It's about the same. It's about the same. You might call it contribution per ATM.

That would be on the brown label as we would -- versus outsourcing.

Yes. Outsourcing is standard. We've already told you that. It's centered on -- both in China and India, it's centered on outsourcing than it is in Europe, but that was what was nice about the brown label, our test batch and the ones that we've started to bring on live, now is that we expect that they'll have every bit of the contribution of -- or we hope that they will, of all the ones that we've been having in Europe, which is quite a bit higher.

Great. And then if you handicap where you're placing incremental capital, whether it's India ATMs or Europe ATMs, over the next 12 to 18 months, where do you -- where are the bigger opportunities for units, or which one is bigger?

Well, I think we have to be -- I think to say that it's one place or the other is not really good. Doesn't really makes much sense to do. The nice thing is we've got a lot of capital, we've got a great balance sheet, you can see that. If it looks like I can make $250, $300 per month per ATM in India and it cost me $13,000 to buy one of those, you can -- and end up with long-term, that kind of a return, I'm going to do those all day long. And it would be the very same thing in our IADs that we might do across Europe. As long as the numbers prove out, we'd be foolish not to use capital to continue to expand. So we'll just keep putting money where we get a very good return. And the nice thing is I don't have such a finite amount of that. And when you really think about it, let's say we put in 1,000 new ATMs somewhere, that's going to cost me $13 million. A lot of times we even get leases on that, anyway, and doesn't even come out -- directly out of our bank account. So you, as a shareholder, would want me to continue to invest where I get those kinds of returns.

Yes, of course. Let me ask it a slightly different way, Mike. I think that in the fall, if these first 1,400 in India have gone well, you could potentially deploy 1,000 to 2,000 more over the next year. Do you think you can deploy 1,000 to 2,000 ATMs in Europe over the next 12 months?

Well, we did 300 in Europe just last quarter. I'll just let you multiply.

Okay, great. And then just last question. Kind of on expenses, if you will. SG&A have been relatively flat now for 4 quarters and salaries and benefits have been relatively flat for 4 quarters. Is the -- those expenses something now you can leverage more going forward? Have you kind of hit that critical mass? Or will they grow as revenue grows?

Well, what you've had is something that Kevin and Rick and I and our managers spent a lot of time on. We're trying to be tied on expenses. And particularly in SG&A, and it's a fight, because everybody always wants to hire somebody else. It's going to make your life a little bit easier. But what we want to do is try to control that, because that's how we get the leverage of our transaction processing business. As we go in to a few new markets, that's going to take a few heads, because you need people who can manage the local markets with the local tongue. But hopefully, our processing centers can be leveraged. We don't need any new processing centers. We're getting a little bit more effective in what we do, we're trying to work on more tools to help us do that. So our goal is to try to be as flat as we can in those 2 areas and still take on more work.

Mike, I would add that I think when we do look at adding bodies, it's to technology and innovation to introduce new products, where we're particularly tight, or continue to be very, very tight, is in our operations. So we try to get the leverage out of our operations, and where we have an opportunity to innovate, create value or add a new product, we're more open to reviewing whether we need an extra engineer or 2. Jeffrey B. Newman: We're beyond the top of the hour here. So maybe one more question, and we should probably close down then.

Our final question comes from Chris Shutler of William Blair.

In the ATM business, can you give us a sense of how much revenue in that business came from value-added services in the quarter, and maybe just, at a high level, how that might have compared to a year ago? Just to give us a sense how much that's growing.

Compared to a year ago, it has some good growth. We try not to be totally transparent on this. Because a lot of these value-added services are some of our key competitive advantages. So, I mean the reality is we added a boat load more ATMs, so you can't forget that. And then value-added services continue to grow for us, as we keep signing up more and more banks. So I'm going to kind of dodge your question just a little bit.

I mean the other thing I would add to it is that when you negotiate a package deal with a customer, sometimes it's a little judgmental, arbitrary in terms of which side, which product you sign the revenue to. So that's not just a perfect science, Chris.

Okay. And then in terms of margins, whether it's EBITDA or operating income, can you just kind of talk about the trajectory that you see for the 3 different segments over the next several quarters? Should we expect EFT and Money Transfer to continue to see improvements and epay to continue to see kind of year-over-year declines? Anything that would change those trajectories?

I would expect those to be reasonably similar. As Mike said, as we go into the third quarter, he kind of expects to see good kind of similar results out of EFT, prepay and money transfer. So, yes, I think it would be -- our story looks pretty good and would hold together consistent with what we had this quarter.

And of course, in Q4, because of the seasonality, we get a kind of a bump up in probably all 3 segments. But also know that as we keep doing more and more transactions, when we sign a new bank with EFT, we bring a very large portion of that straight to the bottom line. And so that helps improve our margins. On the Money Transfers side, we bring about 35% to 40% of our revenues, is our kind of our incremental margin after we pay our agents to collect the money and our payout bank to payout the money. And you know the game on epay, classically, we give away 80% of that in a split with our retailers. So kind of our incremental margin in that next transaction kind of as it approaches infinity is 20% there.

Okay. And then, if you don't mind, just one last one. It feels like EFT and Money Transfer are both clicking along pretty nicely right now. epay, obviously, some struggles there. It sounds, Mike, like you're very committed to that segment. But I'm just curious, how seriously, or if at all, have you considered any more strategic actions in epay, whether it's exiting certain geographies or anything like that?

I don't think we're there yet. We're trying to get a lot of good synergy between the divisions. I mean the reality is had there not been this big old change in Brazil, we'd be looking at -- we'd have a whole different story for today. And so we just got to get past the Brazil change, and we made to continue to grow our business. As I look at several of these areas within epay, they're very exciting to look at. So we're not -- and part of the -- one of the things that make us successful is we can go to these content providers and the large mobile operators and show them we have a worldwide kind of footprint. So just yanking ourselves out of one of these markets isn't necessarily the best thing for the whole unit. And for everybody, I want to thank you for taking the last 67 minutes to be with us, and I look forward to talking to you in about 90 days.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.