Gus Gala

Gus Gala at Monness, Crespi, Hardt asked about Coinbase's collaboration with Circle and USDC for real-world volume commercialization on commerce and developer rails, the expected timeline for B2B payments to reach an S-curve, and how this contrasts with consumer-centric USDC volumes on Base.

Answer

CFO Alesia Haas explained that Coinbase develops its own products for USDC payments, engaging in both partnership and competition with Circle. The company's objective is to establish the premier platform for businesses to conduct USDC transactions on Base. She noted that this initiative is in its early stages, with significant product and API advancements made in Q4, and the current focus is on go-to-market strategies and customer adoption.

Gus Gala from Monness, Crespi, Hardt & Co. inquired about Coinbase's collaboration with Circle and USDC for real-world volume commercialization, the expected timeline for B2B payments adoption to reach an S-curve, and how this differs from the revenue S-curve, contrasting it with USDC on Base for consumer-centric volumes.

Answer

CFO Alesia Haas explained that Coinbase works on its own products to drive USDC payments, partnering with Circle on some items while also competing. Their goal for 2026 is to establish a leading payments vertical for businesses to transact in USDC on Base. She noted that this is an early product journey, with Q4 advancements in product set and APIs, and a current focus on go-to-market and customer growth.

Gus Galá asked about the strategy of porting the European retail model to the U.S., considering differences in retail formats and city setups between the two regions.

Answer

Devin McGranahan (CEO) explained that the European model features a strong independent agent network and significant postal system partnerships, while the U.S. has large strategic accounts and a less penetrated independent agent channel for Western Union. He emphasized the opportunity to import the independent agent model to the U.S. city-by-city, accelerated by Intermex, believing the model is right for both regions.

Gus Galá asked about the strategy of porting the European retail model to the U.S., specifically inquiring about differences in retail format focus (smaller vs. larger), city setups, and the changes required to approach retail in the U.S.

Answer

CEO Devin McGranahan explained that while the European model has a significant independent agent network and uses postal systems for omnipresent distribution, the U.S. has a large base of strategic accounts and a strong independent channel where Western Union has historically had less presence. He highlighted the Intermex acquisition as an opportunity to accelerate presence in the independent agent channel and noted that the model is being implemented city-by-city in the U.S., similar to Europe, but will take longer due to the larger geographic scope.

Gus Galá asked about pricing dynamics within the money transfer segment during the quarter, specifically if there was a return to a less rational pricing environment, how it evolved compared to past instances with smaller marginal players, and its impact across digital versus retail channels, and domestic versus abroad. He also questioned the potential future penetration of digital transactions in the money transfer base, given the current growth from 29% to 32% and approximately 13% penetration.

Answer

CFO Rick Weller stated that pricing was generally consistent with historical trends, with some pressure in Middle East corridors influenced by black markets and currency movements, but no meaningful adverse impact on revenues or gross profits per transaction. Chairman and CEO Mike Brown and Mr. Weller discussed the goal of achieving higher digital growth rates, aiming for 40%, and reaching 30%-35% market penetration. They emphasized that while digital is growing, many customers, especially from less developed countries, still prefer over-the-counter services due to comfort and security concerns, noting that digital money transfers have only reached about one-third market penetration after two decades.

Gus Galá inquired about pricing dynamics in the money transfer segment during the quarter, particularly pricing drops in corridors like US-Mexico, and whether this indicates a return to a less rational pricing environment. He also asked about the digital penetration of the money transfer transaction base, noting the growth from 29% to 32%, and the potential long-term penetration given the current 16% of total transactions.

Answer

CFO Rick Weller stated that pricing was largely consistent year-over-year, with some pressure in Middle East corridors but no meaningful adverse impact on Q3 results. Chairman and CEO Mike Brown expressed a goal for digital growth rates closer to 40%, emphasizing efficient marketing. Rick Weller added that while digital transactions are 16% of total, the market's digital penetration is estimated at 30-35%, and customer preference for over-the-counter products remains significant, especially in less developed countries. Mike Brown reiterated the importance of an omnichannel approach.

Gus Gala of Monness, Crespi, Hardt & Co., Inc. asked about the potential to improve CoreCard's margins, the unit economics of the new U.S. bank deal, and current performance trends in the Money Transfer segment for July.

Answer

Chairman, CEO & President Michael Brown confirmed they see opportunities for cost synergies and margin improvement at CoreCard, primarily by increasing transaction volume. EVP & CFO Rick Weller characterized the U.S. bank deal as a high-margin software transaction but emphasized its strategic importance over immediate P&L impact. Mr. Brown highlighted that the Money Transfer segment 'crushed it' and saw a 'big uptick' in July over June for both digital and retail channels, with no signs of a trough.

Gus Gala of Monness, Crespi, Hardt & Co., Inc. questioned the market's expectation for an acceleration in volume for fiscal 2026, asking if this is realistic. He also inquired about deal timing and potential slowdowns in bank activity.

Answer

CEO Ryan McInerney addressed the Value-Added Services (VAS) momentum, noting the strategy to enable all payment types is gaining traction. CFO Chris Suh commented on fiscal 2026 planning, stating that while it's early, the company is evaluating various macro scenarios, renewals, and pricing, and sees tremendous opportunity across its three growth engines. He deferred a detailed outlook to the next earnings call.

Gus Gala of Monness, Crespi, Hardt & Co., Inc. asked about the feasibility of volume acceleration in fiscal 2026 and inquired about any impacts from lower bank activity levels or deal timing shifts.

Answer

CEO Ryan McInerney addressed the second part by highlighting the strong, broad-based momentum in the Value-Added Services business. CFO Chris Suh responded to the fiscal 2026 question by stating that while the company is in its planning phase and sees tremendous opportunity, it will provide detailed guidance on the next earnings call.

Gus Gala of Monness, Crespi, Hardt & Co., Inc. asked about the realism of fiscal 2026 volume acceleration expectations and inquired about the impact of lower bank activity levels on deal timing.

Answer

CEO Ryan McInerney discussed the strong momentum in the value-added services (VAS) business, driven by a multi-faceted strategy. CFO Chris Suh addressed fiscal 2026 by stating that while the company is in its planning phase and sees significant opportunity, more detailed guidance will be provided on the next earnings call.