Vasu Govil

Vasu Govil from KBW asked for comments on the competitive environment, particularly regarding other providers targeting paycheck-to-paycheck consumers with short-duration loans, and any perceived changes in competitive intensity.

Answer

Mark Troughton, COO, clarified that Chime's primary competition remains large banks, as Chime is significantly larger than all other fintechs combined in primary account relationships. He noted that while some smaller fintechs offer liquidity services, their price points are far higher than Chime's SpotMe or MyPay. Despite some members using additional third-party services, Chime's position at the top of the repayment stack and competitive rates ensure these offerings are not impacting Chime's acquisition of primary account relationships, as evidenced by J.D. Power's findings.

Vasu Govil from KBW inquired about the competitive environment, specifically regarding third-party providers targeting paycheck-to-paycheck consumers with short-duration loans, and any changes in competitive intensity. He also asked about Q4 seasonality for new account ads versus volume growth.

Answer

Mark Troughton, COO, clarified that Chime's primary competition remains large banks, as Chime is significantly larger than other fintechs in primary account relationships. He noted that while some fintechs offer competing liquidity services, Chime maintains a superior position due to its lower pricing and top-of-repayment-stack advantage, without impacting primary account acquisition. Matt Newcomb, CFO, explained that Q1 and Q2 typically show the most seasonality due to tax refunds, while Q4 sees slightly higher spend around holidays but is otherwise a standard quarter for active member and purchase volume growth.

Vasu Govil inquired about the specific factors contributing to the slight softness observed in the EFT segment, seeking clarification on whether the weakness was concentrated in the ATM business or merchant acquiring, and if it was due to transaction volume or value slowdowns, especially given solid European travel trends but altered spending patterns. He also asked for more color on the money transfer segment's performance, particularly the deterioration in August and September after a strong Q2 and improving July trends, and the current exit run rate in October.

Answer

Chairman and CEO Mike Brown explained that consumers are being more cautious with vacation spending due to increased costs for hotels and flights, leading to less discretionary spending. This softness was more pronounced in the ATM business, though also present in merchant acquiring. For money transfer, Mr. Brown noted choppy trends, with October showing stronger performance than September, and highlighted Euronet's outperformance against a declining market, particularly in the U.S. to Mexico corridor. CFO Rick Weller added that the company is being cautious but is currently beating its Q4 forecast.

Vasu Govil asked about the slight softness in the EFT segment, seeking clarification on whether the weakness was concentrated in the ATM business or merchant acquiring, and if it was due to transaction slowdown or value slowdown. He also inquired about the money transfer segment, specifically the deterioration in August and September after a strong Q2 and July, requesting color on the exit run rate, October trends, and what factors changed.

Answer

Chairman and CEO Mike Brown explained that consumers are being cautious with vacation spending due to higher costs and global economic worries, impacting ATM usage more than the rapidly growing merchant acquiring business. Regarding money transfer, Mike Brown noted choppiness, with October showing stronger trends than September, and highlighted Euronet's outperformance against the market, particularly in the US-Mexico corridor. CFO Rick Weller also contributed to the discussion on money transfer.