International Money Express Inc
NASDAQ:IMXI
Earnings Call Analysis
Q4-2023 Analysis
International Money Express Inc
Intermex has proudly presented its fourth quarter earnings, highlighting a robust performance that is deeply rooted in the company's identity. In an 11.2% year-over-year revenue increase to nearly $172 million, alongside a substantial 40% jump in diluted GAAP earnings per share (EPS) to $0.49, Intermex is showcasing the potency of its strategic choices and operational efficiency. Adjusted EBITDA followed suit with a 14.5% rise to $33.3 million, coupled with a 21.7% growth in adjusted diluted EPS to $0.56.
The company has nurtured a commendable growth trajectory, capturing a significant 21.4% share in its primary Latin American markets in 2023. This is a reflection of its ability to grow sustainably while maintaining attractive margins, with the fourth quarter EBITDA surpassing 20%. This feat was achieved through a metrics-driven strategy and by nurturing a value-added relationship with its retail agents, which has in turn deepened the company's competitive moat.
A testament to Intermex's growth aspirations, they've decided to augment their sales force by six new positions, bolstering their already strong team of 40. They've also strategically expanded their inside sales team threefold to 36 members, deploying these offshore to heighten market penetration. This strategic sales force expansion promises to amplify same-store sales and drive growth, marking a commitment expected to yield substantial returns in the next 12 to 18 months.
The iTransfer business in Europe saw a healthy 17% growth in the fourth quarter, with anticipation of leveraging more opportunities ahead. Simultaneously, the La Nacional endeavor in the U.S. has strengthened, offering potential for increasing margins notably through expansion in the Mexican corridor. This indicates a strategic move towards capturing new and profitable market segments, enhancing its global footprint.
While Intermex confronts certain market headwinds, its quarter results demonstrate a resilient growth story, underpinned by its operational discipline and the successful execution of strategies to capture additional business. While acknowledging revenue challenges, the company prevailed and delivered a robust quarter, indicating their capacity to adapt and overcome market volatility.
In light of unpredictable key market behaviors anticipated in 2024, Intermex remains steadfast in its efficient operations and execution focus. With confidence in their market differentiation, they are poised to continue generating substantial free cash while committing to scaling up their stock buyback program, aiming to double existing efforts and evaluate beneficial block trades for shareholders.
Digital growth remains a resilient aspect of Intermex's portfolio. With an impressive 42% increase in digital transactions and robust margins, it highlights the company's confidence in its product lineup, its digital partnerships, and the dedicated team that is bringing these offerings to market.
Intermex's financial health is reflective of its prudent strategy and robust execution. Adjusted net income and adjusted diluted EPS both saw double-digit increases. The company has a sound balance sheet, with a leverage ratio well below 1x, when considering average daily debt against the adjusted EBITDA. They have pursued aggressive, highly accretive stock buybacks, investing $25 million in the last quarter, and expressed a commitment to double these efforts, while also being selective with mergers and acquisitions to ensure value-based capital resource allocation.
Looking to 2024, Intermex has laid out its guidance, anticipating revenues to be between $681 million to $701.8 million. With GAAP EPS projected to be $1.81 to $1.96 and adjusted EBITDA forecasted at $124 million to $127.7 million, the company prepares itself for a more modest market growth environment, particularly in the Mexican corridor. Nonetheless, they aim to outpace market growth in both retail and digital segments, sustain strong margins, pivot to a leaner operation model, and aggressively pursue share buybacks, showcasing a vision that combines prudence with boldness.
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Good day, and welcome to the International Money Express conference call. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Alex Sadowski, Investor Relations Coordinator. Please go ahead, sir.
Good morning, and welcome to our quarterly earnings call. I would like to remind everyone that today's call includes forward-looking statements, including our 2024 guidance and actual results can differ materially from expectations. For additional information on International Money Express, which we refer to as Intermex or the company, please see our SEC filings, including the risk factors described therein.All forward-looking statements on this call are based on assumptions and beliefs as of today. You should not rely on our forward-looking statements as predictions of future events. Please refer to Slide 2 of our presentation for a description of certain forward-looking statements. The company undertakes no obligation to update such information, except as required by applicable law.On this conference call, we'll discuss certain non-GAAP financial measures. Information required by Regulation G under the Securities and Exchange Act for such non-GAAP financial measures is included in the presentation slides, our earnings press release and our annual report on Form 10-K, including reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. These can be obtained in the Investors section of our website at intermexonline.com.Presenting on today's call is our Chairman, Chief Executive Officer and President, Bob Lisy; and Chief Financial Officer, Andras Bende. Also on the call today are Chris Hunt, Chief Operating Officer; Joseph Aguilar, President, Latin America; Randall Nilsen, EVP of Retail Sales; Marcelo Theodoro, Chief Digital Officer; Beth [ Erickson ], Chief Human Resources Officer; Andrew Kugbei, EVP, Finance and Business Intelligence; and Karim Baroni, Director of Financial Analysis.Let me now turn the call over to Bob.
Good morning. Intermex is proud to announce fourth quarter earnings that are a testament to [ who we ] are as a company. On Page 3, you can see that in the quarter, we delivered revenue of just under $172 million, up 11.2% year-over-year and diluted GAAP EPS of $0.49, up 40% year-over-year. Furthermore, adjusted EBITDA was up 14.5% to $33.3 million and adjusted diluted EPS of 21.7% to $0.56. We continued to deliver solid earnings and cash generation for our shareholders in every environment, and our fourth quarter results will demonstrate that.We believe our omnichannel strategy is most efficient way to serve the varying needs of the consumer in this market. Intermex continues to offer our best-in-class service and loyalty offerings through both our retail and our digital products. This is an advantage that no other provider can claim.Our retail network required years of careful precision effort to build and as a result, it's very difficult to replicate. Our technological advantage makes transacting fast and convenient for both digital and retail consumers. These critical factors have made our model highly profitable and drives exceptional generation of cash.How we deliver our products and service to the market is even more important. At retail, Intermex has taken and will continue to take a highly refined rifle-shot approach while building our network of retail agents. This strategy enabled the company to deliver products and services to consumers through the highest-performing retail agent network in the industry. All this occurs while maximizing agent retail performance that drives ROI and profitability.We are most interested in connecting with consumers in markets where our value-added approach resonates the strongest. This is one in where Intermex is able to best differentiate our value-added service, where we can in turn capture margin and where we ultimately benefit our shareholders. Our retail model requires a modest investment. Our sales and marketing costs are roughly 8% of gross margin and only 3% of total revenues.In our digital offering, we continue to demonstrate that same focus on efficiency and profitability while growing our transactions 43% this quarter and doing that by way of a highly efficient customer acquisition spend. As a result, we are delivering a highly attractive margin.Finally, we continue to develop and introduce new features and functionality to deliver a user experience that is among the best-in-class. We continue to upgrade our application and it has received a rating of 4.8 out of 5 from our users.Our expanding margins related to our digital product place us in a great position to expand in new markets, including India, the Philippines and others through our new partnership with Visa. In the broader market, significant amounts of capital have been spent by some providers to grow digital market share. In many cases, spending may not have achieved an ROI that would support that investment.Our strategy is to carefully cultivate and grow our digital business with the same efficiency that we have demonstrated while building our retail network. That is one key reason why our current digital business is profitable and growing.We're taking the approach that no one else in the industry has taken by offering a value-added product and carefully crafted strategy to capture share in the right markets. As we do with our retail business, we will leverage our best-in-class customer service and our metrical orientation to drive profitable [ wire ] growth. This translates into consistent product expansion, strong margins, exceptional cash generation and a fortress of the balance sheet.As we talked about previously, the La Nacional acquisition we closed in Q4 of 2023 brings Intermex meaningful presence in the U.S. to Dominican republic market. With that acquisition on board for over 12 months, you'll see on Page 5, we have recast our market share calculation over time to include the DR.In 2023, we captured a 21.4% share in the top 5 markets to Latin America. We have successfully grown our market share over time, while sustaining attractive margins year-after-year.Our Q4 EBITDA margins, excluding acquisitions, were well north of 20%, some of the best we have seen in the history of the company. We have been able to attain these [ outside ] results through the execution of our metrically driven strategy. We have a highly efficient base of retail agents who rely on our products and services. We offer and deliver these products to customer base who appreciates Intermex's value-added approach.We continue to strengthen our relationship with our retail agents while deepening our competitive moat and growing our mutually beneficial high-margin business.Additionally, we have the ability to carefully select where and when to aggressively pursue wires and reduce gross margins. This practice is put in place when meaningful incremental transactions can be captured in areas where Intermex has a low market share and the upside potential is quite large. This approach enables us to capture new business in such a way that we do not affect margins at our current high-profit retailers. As a result, we're able to generate incremental earnings for our shareholders.We refrain from reacting to market pressures with a broad brush approach that degrades margins for the company. Our approach is simple but not easy. It requires focus and disciplined execution. These behaviors are in our corporate DNA, but are very difficult to replicate.In our quest for new business and to catalyze incremental growth, we have launched bold strategies to penetrate previously untapped and underdeveloped markets. Our focus sharpens on locales [ right ] with untapped wire potential detailed to the ZIP code where our presence has been minimal.As a part of our aggressive approach to drive revenue in high potential areas, we've decided to expand our outside sales force by adding 6 new positions to our already robust team of 40. This expansion is a fresh strategy designed to intensify our market penetration and coverage.Moreover, we've taken a decisive step by significantly enlarging our inside sales team, a move that marks a departure from traditional methods by tripling the team size from 12 to 36 members and strategically position these roles offshore. We're not only enhancing our capacity to engage with our current agents, but also tripling our daily interactions in a cost-effective manner.This strategic enhancement is expected to dramatically boost our same-store sales, representing an almost 60% surge in our total sales force capacity. This considerable investment in our sales infrastructure is an approach we are confident will yield substantial returns over the next 12 to 18 months, signifying our aggressive pursuit of growth through innovative staffing strategies.From an inorganic perspective, we're also making great progress. The iTransfer business in Europe grew at 17% in Q4. We continue to expect ratings from our European division, including strong digital opportunity to access in the coming months. The La Nacional business in the U.S. is much more powerful and efficient than 1 year ago. We believe significant opportunities remain to expand to additional corridors through our current agent base.To Mexico alone now armed with the Intermex payer network and fee structure, we see potential for millions of dollars of increased margin annually. We have begun to execute against this plan. Additionally, there will be more efficiencies to be leveraged as the year unfolds. These businesses are proving to be great additions to Intermex, and we're excited and optimistic about their combined future.Before I turn the call over to Andras to go deeper into the numbers, a few final thoughts on operating discipline and why we say Q4 was a testament to who we are as a company. While almost all key measures were strong and exceeded market expectations, we faced some revenue headwinds. In spite of that, we persevered and delivered a solid quarter of growth.We talked about our plan to capture incremental wires in Q3. I am pleased to report that our efforts are continuing to be productive, and the sales team continues to execute on that plan. At the same time, shortly after Q3 earnings, we saw Mexico market growth slow considerably to levels we have not seen in years.In true Intermex fashion, we put a critical eye on our business and challenged every corner of the company to maximize efficiency. We delivered on what we set out to do and generated strong earnings despite a weaker-than-expected top line. While it is difficult to predict what our key markets will do in 2024, the guidance Andras will take you through later in the presentation, anticipates underlying softness in that market for a period of time. Our guidance also anticipates a tenacious focus on efficiency and execution that is part of our culture and why we feel better positioned than anybody else in the market.We are confident in our differentiators and the management team and the Board feel there is tremendous value in Intermex stock. We will continue to be highly profitable and produce considerable free cash in spite of the investments we are making in our future growth.And finally, we will use the share of that free cash to increase our stock buyback program. We anticipate being twice as active in our existing program and will continue to assess [ block ] trades that benefit our shareholders.With that, I'll turn the call over to Andras.
Thanks, Bob, and good morning, everyone. On Slide 6, you can see both unique customers and transactions up double-digits year-over-year. Most importantly, we grew this business at healthy margins, which you'll see reflected in the coming pages.On Slide 7, strong trend in profitable digital growth continued. Transactions were up 42% at the best margins we've seen for our digital products. We're confident in our product, our digital partnerships and the team that's bringing it all to the market.Also worth mentioning is the growth on the digital receive side. Those transaction [ terminating ] by electronic payout methods like bank accounts, mobile wallets, et cetera, are a key factor in that almost 18% year-over-year growth, you can see to the right. These transactions are typically very cost-efficient ways for us to deliver a wire. So this trend is also a nice margin tailwind for us.On Slide 8, we present a picture of our volume growth and average principal sent. On face value, it appears that the average principal is down year-over-year to $406 in transaction in Q4. That is mostly driven by the inclusion of La Nacional and iTransfer where the sent amounts are structurally lower. Principal amounts excluding those businesses were essentially flat for the quarter.On the next page, you can see revenue growth up 11.2% for the quarter and 20.5% for the year. As Bob mentioned earlier, revenue was at the lower end of our guidance as we were not immune to the slowdown [ and ] sent to Mexico.However, as you see next on Page 10, our strategy to grow transactions in the core while preserving margins coupled with a rigorous cost agenda yielded strong earnings results. You can see net income up almost 34% for the quarter and diluted EPS up 40%. As we closed on the La Nacional acquisition in Q4 last year, we're growing over about $2.5 million in transaction costs, which is bolstering the GAAP number.On the next page, you can see a little cleaner reflection, which, among others, adjust out those transaction costs. Adjusted net income is up 13.5% and adjusted diluted EPS is up 21.7%.Finishing up the P&L, adjusted EBITDA grew at 14.5% in the quarter, with adjusted EBITDA margins at 19.4% versus 18.8% in the prior year. So again, our targeted strategy to grow wires in this environment without degrading margins is delivering for shareholders.Also worth is to note, Q4 '23 includes a full 3 months of La Nacional and iTransfer, both structurally lower-margin businesses, yet our year-over-year margin still improved by 60 basis points, a testament to our focus to deliver a premium product through highly tactical execution.Finally, on cash on the balance sheet. We ended up the quarter on a Sunday of a holiday weekend with $239 million on the balance sheet and $106 million undrawn revolver capacity. Free cash generated which again removed day-of-the-week cyclicality was up 26% year-over-year. The balance sheet remains in great shape. While the headline shows up with us about 1.6x levered, we have to remember that we've closed out a weekend with $114 million drawn on the revolver and most days of the week that revolver sits completely undrawn.If we look at our average daily debt position for 2023 versus our adjusted EBITDA for all of 2023, it implies a leverage of below 1x. As far as capital allocation goes, at the top of the list are aggressive incentives at retail that deliver highly accretive transaction and margin growth. After that, we continue to see great value in the stock.In the quarter, we purchased about $25 million in stock, $10 million by our regular quarterly program at another $15 million through block purchases. As Bob mentioned earlier, we expect to double our quarterly underlying program from $10 million to $20 million, and we'll continue to make block purchases when and where it makes sense for our shareholders.As far as M&A goes, we're always going to look for opportunity, especially with the balance sheet we have. However, we're going to continue to be selective stewards of the company's capital resources, exercising a prudent approach with robust [ screens ] for value.On the final slide, I'll take you briefly through our guidance for 2024 and for the first quarter. For the full year 2024, we anticipate the following. Revenue of $681 million to $701.8 million. Fully diluted GAAP EPS of $1.81 to $1.96. Adjusted EBITDA of $124 million to $127.7 million, adjusted diluted EPS of $2.13 to $2.31.For the first quarter, we anticipate the following. Revenue of $150.4 million to $155 million. Fully diluted GAAP EPS of $0.32 to $0.35, adjusted EBITDA of $24.4 million to $25.1 million and adjusted diluted EPS of $0.39 to $0.42. This guidance takes into account a noteworthy step down in market growth for Mexico, the key corridor in Latin America. While we're not immune to the effects of growth slowing at the single largest country-to-country corridor in the world, we anticipate 4 things.We'll continue to beat the market growth rate in both retail and digital. Our margins will remain strong, justified by a premium product and highly tactical execution. we'll pivot to an even leaner operating model, maximizing returns in the face of a market whose pace of growth has come back down [ earth ]. And finally, we'll utilize our strong liquidity and ability to generate cash to more aggressively pursue shares by our buyback program.In summary, we continue executing the Intermex playbook and are well positioned to deliver another strong year for our shareholders.With that, I'll turn it over to the operator for questions.
[Operator Instructions] Our first question comes from David Scharf with [indiscernible] JMP.
Bob, can you provide a little more, I guess, background and geographic context for the sales force expansion since it's such a dramatic increase, particularly the internal team? Is this bolstering of efforts in the Western regions, those ZIP codes, I know you've long been targeting? Or I thought you said something about offshore. Can you just provide some more background and kind of how we ought to view this in a broader kind of multiyear context of kind of what you think your footing will look like?
Yes. We -- the inside team has been primarily located in Miami with a few folks out in California, to be more productive relative to time zones. And we had 12 folks that were directly responsible for contacting agents by telephone. Those are separate and apart, but supporting our efforts at retail with our outside sales team. We recognize that our reach could be benefited by having more folks available. And what we did is created 24 positions in Guatemala with people that are fully bilingual that will be augmenting those 12 folks. And they work in teams of 3 people, 1 in the U.S., 2 in Guatemala, that will have a set of agents, approximately 12 different teams. So each team will have about 1/12 of our existing agents. And what they'll be doing is calling those agents and looking at opportunities where we might have a decline in wires, where it's a slow start-up with the new agent.Our experience is that contact drives many more wires and the payback is really even good if the U.S. team -- but the fact that it's much more efficient cost-wise to do this in Guatemala, we're able to triple our reach from an inside perspective without anywhere near tripling the cost of that function.Now additional to that, we've had 40 district sales managers in the U.S. that have been separating or accounting for our existing business and going out after our new business. Those will be augmented by a 15% increase. So we've tripled the size of the inside and then a 15% increase of the folks out there in the U.S. at retail that will be visiting our existing agents will have the primary responsibility for adding new agents in the vacant ZIP codes where we have opportunities.We've coupled this with an approach that is looking at different offerings that will be more attractive to both the agent and to the consumer in certain ZIP codes where today we haven't penetrated. And as we talked about and signaled in the text that, these are opportunities where we're not giving away any margin where even if we're taking a lower margin, be more aggressive. It's all found transactions because we have not penetrated those ZIP codes in the past.So it represents a total remake of what we're doing from an aggressive perspective in the west, but also a remake relative to supporting our existing base and becoming more aggressive at retail. So we think that it will pay large dividends in the next 12 to 24 months, and we'll see an [ ascension ] of our rate of growth of -- further separation from our rate of growth over the market rate of growth in that period of time.
Maybe -- and as a follow-up along that, thought of increasing the internal sales force focus on monitoring existing agents. It looks like a lot of the forward guidance is impacted by what you're witnessing in Mexico? I mean, notwithstanding some of the movement in some of the [ Banco ] to Mexico data. I know kind of -- one of the largest global player, I know on their call had mentioned they had returned to gaining share in Mexico after a long time. And you've talked about pricing pressures in that corridor in past calls.Is there -- are you -- do you feel like you're maintaining share and -- in U.S. to Mexico at sort of your mature agents...?
Yes. I mean we think there are 2 things going on. We think we're gaining share at retail, and we're gaining share at digital. The challenge for us is today our business is not weighted the same way as the market. So we're not having 20% of our business to Mexico go digital, and that's the faster growth piece of the business. I think we believe we're growing just as well as the digital pieces and just as well as the retail pieces. But our percentages are more like 95% retail today and 5% digital. So that weighting causes our growth to maybe look not as good as it does. We think, again, we're beating and exceeding at retail and beating and exceeding at digital.And we think this program where we're adding -- not only adding the folks to target but also the fact that we'll be taking a look at what we're willing to offer the agent and the consumer and retail in these underserved or unserved areas is going to make a lot of difference and we'll make a further separation between us and market share, also in the market growth, which will gain further market share for us.
And just a quick follow-up for Andras. I guess, salary benefit, the largest OpEx after agent charges, I guess, it was $72 million last year. There may be some La Nacional noise. But as we think about the increase in sales headcount, I don't know if it's all variable and commission based, but is there a kind of good figure we ought to think about for an annualized figure and salary and benefit this year? It seems like that would be the line item moving the most.
Yes. I think it's relatively small, these additions. I mean we have -- in terms of our salary movement year-over-year, you're going to see an aggregate for the business 4% to 5%. So we've really dialed back on that. So that impact of these adds is relatively small and taking into account all the other areas where we're dialing back costs as much as we can. It's not really going to push through to be a visible impact.
Our next question comes from Mike Grondahl with Northland Securities.
Did you guys call out the revenue number from La Nacional and iTransfer? I'm trying to just back into an organic growth rate in 4Q.
Yes, sure, Mike, because we're all on the main call together. La Nacional in Q4 was about $18 million, iTransfer in Q4 was about [ $5 million ], which means your organic growth in the quarter was about a little under 5.5%.
And then last quarter, you guys kind of talked about, I'll call it, 4 growth drivers that you were sort of strategically heading towards or implementing. One was sort of targeted counter offers. One was new agents. One was some overall selected pricing actions and I think kind of new market strategies. Could you handicap like which one of those 4 you're ahead on? Maybe which ones you're kind of behind on? Just let us know how each of those 4 are going?
Yes. I think the most important and the one that we're doing the best in is the targeted offerings. So that's what we mentioned in the text was that, that program is going quite well, and we've executed well against it. We've brought in tens of thousands of wires on that program, which we're essentially paying a little bit of commission upfront, let's say, to an agent. And then we're reducing the amount of payment that the agent gets over time. So it doesn't have a huge impact on our commission that the agent gets or our gross margin over time, but it's more of an upfront payment to bring back wires that we haven't had in the past. That has done quite well, and I think we're executing and continuing to execute against that.The second one is new agents. We continue to drive growth for our new agents, and that's going well as well. We -- targeting that growth in specific ZIP codes. It's the thing that we're going to spend more time on, and that will be sort of a targeted along with new agents, which will be this sort of new price offering where we'll be a little bit more aggressive with both the agent and the consumer.But again, I want to highlight and make sure I underscore that, that does not mean we're going to where we have 4-plus million wires and we have it at X margin. We're not going and discounting there. We're being aggressive with price where we're not getting wires, where we have a small level of market penetration, where we might not be serving in the ZIP code at all. And we feel both of those strategies are going well.The overall -- actually, our overall approach to the market has been better margins. We've brought the pricing component into finance. And Andrew Kugbei who's the Head of the Sales Planning and Analysis, has been running the pricing, and we've actually done much better in terms of margins versus the margins 1 year ago. And that's been done because we've done less of sort of wholesale changes in the market and more specific changes related to when we get wires as a benefit of moving price.New markets, I'm not sure what that piece was. I think we have Canada. We certainly have the growth in La Nacional. Let me touch on La Nacional for a minute. We think La Nacional has got a lot of pent-up growth in that it became really a Dominican Republic product. And we've now given them the payer relationships we have in Mexico and our payer cost to Mexico, and we've already seen an uptick in those wires. There's a lot more to do.There's a lot more of putting them on our payer network and a lot of volume of transactions in their retail network, both the company stores and the retailers that have not been tapped in the past because La Nacional was focused primarily on the Dominican Republic. So we still see a lot of growth opportunity there.And then additionally, Europe has been growing well. We think there's a lot more opportunity in Italy. We think we're looking at things in other parts of Europe as well. So those are the new markets where growth will come from.
In terms of the buyback, did I hear correctly, you guys had been kind of programmatically buying at $10 million a quarter. Starting 1Q '24, that's going to uptick to $20 million a quarter?
That's right, Mike. And we'll also be active in terms of our block purchases if they're going to benefit the shareholder as well. But we feel that we'll have an underlying $20 million that we'll be able to pick up each quarter. But we have some price parameters built into that as well. So it's not at all cost, but I feel pretty good about being able to pick up $20 million worth of the quarter and then blocks on top of that.
And just lastly, are you able to put like a revenue range for -- in terms of growth, what Mexico is acting as a headwind for '24, like 5 points of revenue growth, 4 points, 7 points? What do you see that headwind as roughly as compared to like '23?
Yes. I think right now we see that the Mexico growth in fourth quarter as an industry was only at 3.5%, and our assumptions in the plan we presented assumed that kind of growth sustaining itself throughout 2024. So we're not dependent on that coming back at all if the market starts to come back. Just to put it in perspective, in Q2 of 2020, which was the height of COVID, the market grew at 3.6%. And in Q4 of 2023, it grew at 3.5%. So it actually grew [ 0.10% ] slower than it did during COVID in Q4, and we kind of projected that through '24. Our upside is these investments that we're making in sales from a growth perspective, that are totally been assimilated into our cost structure because we've done a lot of zero-based budgeting as well that's eliminated some, I think, unjustified or inefficient costs, right, that we've now put back into the sales perspective. We think that our target and our aspiration is to separate ourselves further from that growth number, but our assumptions are based on Mexico staying around 3% or 4% growth as an industry through '24.
Our next question comes from [indiscernible] with UBS.
So my first question is about the Visa Direct opportunities. It's relatively new. I understand it's kind of nascent and talked about that enabling you to go into input markets such as India and the Philippines and a couple of others to call out at the last call and potentially some more this year. So the first part, maybe can you talk about a little bit about the potential opportunities and the expansion plans this year? And what are your kind of longer-term outlook from the Visa Direct partnership? And then the second part, is how much of that Visa Direct opportunities for new markets do you -- have you baked into the plan this year for the 2024 guidance?
It's Marcelo here. I'm going to cover the first question. So we see a huge opportunity in this partnership because it makes the company moving from a multi-country, multi-region approach to a global approach. So there are important corridors that we're going to embrace like India or Philippines, as you said. Those are huge markets that we believe we can address at a lower cost and a great experience, as Bob mentioned before. We didn't incorporate that to our projections to 2024. But of course, it's increasing number throughout the year due to our current focus on Latin America. So it's a new target audience that we have to embrace. We see some traction already, but it's a midterm exercise that we're going step by step.
Yes. And I would just jump in, Chris. This is Andras. I think the overall contribution that -- from an overall company perspective is still quite small, what was baked into 2024. I think we could see it as an option if it really pops. But right now, the contribution from the overall materiality of the plan is quite small at the moment.
And the second part, I just wanted to ask a little bit about the fourth quarter performance, I guess, outside of the Mexico market, what were some of the trends you saw in the market and how [ was ] the performance in, I guess, the rest of the [ LatAm ] regions compared to what you had expected going into the quarter?
I think we've seen the broader market and certainly not only Mexico, but Guatemala and other key countries for us, slow down relative to growth, not as acutely as Mexico has, but we also see some really strong growth where we've executed well in certain countries and have, at times, been on the border line of triple-digit growth to countries like Nicaragua and others where we've been growing very quickly. So I think the overall market has slowed a bit to virtually just about every country in Latin America. But we've been able to grow well outside the size of the market in certain markets like Nicaragua, I believe Ecuador, [ Colombia ], we're growing much faster than the market in those areas.Dominican Republic, we're seeing that. There's some slowing in that market. We think that's a market that's moving a little faster to digital, Dominican people in the U.S. tend to be more likely banked. And if they're more likely banked, they have more options, meaning that they have the option to go to digital easier and more fluidly than somebody who's maybe an undocumented member of the workforce from Mexico or Honduras or Guatemala. So those are -- that's how I would sum up the overall trends.
Our next question comes from Sam Salvas with Needham.
I was wondering if you guys could provide some insight into some of the pricing dynamics you saw in the fourth quarter? I know earlier in the year -- I think it was in the third quarter, you guys mentioned some pricing pressures stemming from competitors. So could you guys just talk about what you saw in the fourth quarter and maybe how you guys are thinking about pricing in 2024?
Yes. What we saw is that we've actually been able to extend our margins in fourth quarter and increase them by being more efficient and slicing it a little bit thinner. Previously, we made bigger movements with price related to the whole market. And now our price movements are related to places where there is an incremental upside in terms of wires. What we're very careful about is that we don't want to be discounting where we have wires in-house, where people are perfectly happy with the pricing and those wires are already wires we're going to get.Now as we look at '24, the big opportunity for us is certain areas of the country where there still remains -- for instance, Southwest, we have 1 million foreign borns living in ZIP codes in California that we haven't tapped into at all. As big as our California business is in which it's several million wires a year, we haven't tapped into those ZIP codes at all. We also have another set of ZIP codes that have about 1.7 million people where we've tapped into very slightly. And so those are the places where you'll see a different pricing perspective, a different pricing action.We'll be much more aggressive there, but that doesn't degrade at all our current margins. Our current margins are going to stay relatively stable. Those margins will be ones that will come in at a lower gross margin per transaction, but will be incremental transactions. So the overall average might come down a bit, but nothing will be done to degrade the core business.
And then just a quick follow-up. Could you guys talk more about some of the momentum you're seeing in the iTransfer business? And any expectations or any goals you guys have for the upcoming year?
Yes. I would say that we built a plan that we feel comfortable can be in the mid-teens if we're operating the business similar to how it's operating today, but a little bit more efficiently. I think what we're trying that -- to do is create more of a big bang plan, which if we get off to the right start, we'll be investing quite a bit in the front end, I think, in the second half of the year. Italy, in particular, is a really interesting opportunity. I think structurally, the margins are better in Italy, and I think our penetration there in what's a really big economy shows a lot of opportunity. But we're doing well in Spain as well. I mean, I think they were -- I think they've restarted their growth trends in Spain as well. I think that geography is a little bit trickier because the margins aren't as good. But again, I think that mid-teens is the baseline and on the upside from there.
What I'd add to that is that today we're generally just in 2 countries in Europe continent. We have one store in Germany. It's a huge market opportunity. We think there's opportunities for us with our European license not only to expand further in Germany in the middle run, but also in France. And we're also looking at opportunities in the U.K. to get started there. So I think you'll see us be much more active in Europe. We think Europe is a great opportunity at retail. But because of the nature of the consumer there, we believe that our digital opportunity will catch on even faster because more consumers are already ready to do digital wires. They have bank accounts. They're paid on the books, on the payroll card. And so we were looking forward to getting our digital app up and going in Europe and then also [ target ] expansion as we grow through other key countries like Germany, France and ultimately U.K.
[Operator Instructions] Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to the speakers for any closing remarks.
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