Currency Exchange International, Corp. (CXI:CA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicated strong financial performance with revenue and EBITDA growth, sustainable payments growth, and a solid cash position. The Q&A revealed optimism about SaaS and payments growth, though management was vague on some details. Despite lack of immediate shareholder returns, the focus on stock acquisition and potential NASDAQ listing are positives. Given the market cap, a positive stock reaction is expected.
Key Financial Performance
Net Income The group reported net income of $10.3 million for the year ended October 31, 2025, an increase of $7.8 million or 317% over the prior year. This increase was driven by $14 million of net income from continuing operations at CXI and a net loss of $3.7 million from discontinued operations, Exchange Bank of Canada. The prior year's results included nonrecurring items totaling $7.7 million.
Adjusted Net Income Adjusted net income from continuing operations increased to $14.5 million, a 10% increase, and the group's adjusted net income increased to $10.8 million, an increase of 6%. This was due to restructuring and nonrecurring charges being excluded.
Revenue (Q4 2025) Revenue grew to $19.8 million, up by $1.4 million or 8% compared to the same quarter in 2024. This growth was driven by a 31% increase in the payments product line and a 4% growth in banknotes revenue.
Operating Expenses (Q4 2025) Operating expenses increased to roughly $13 million, up by $743,000 or 6%. This was due to increased shipping costs, bank service charges, and marketing expenses, partially offset by a decrease in variable compensation costs.
EBITDA (Q4 2025) Reported EBITDA grew to $6.4 million, roughly 4%, and adjusted EBITDA grew to $6.8 million, an increase of 10% over last year. This was due to revenue growth and cost management.
Payments Revenue (Q4 2025) Payments revenue grew by $800,000 or 31%, supported by a 40% increase in business trading volume to almost $2.1 billion. This was due to increased activity from existing financial institution customers and the onboarding of new customers.
Direct-to-Consumer Banknotes Revenue (Q4 2025) Direct-to-consumer banknotes revenue grew by $600,000 or 8%, driven by increased demand for exotic foreign currencies and the addition of new states and agents.
Revenue (Full Year 2025) Revenue grew to $72.5 million, up by $3.5 million or 5% compared to 2024. This was driven by a 19% growth in the payments product line and a 3% growth in banknotes revenue.
Operating Expenses (Full Year 2025) Operating expenses grew by $1.2 million or 3% to a total of $48.5 million. This was due to increased shipping costs, bank charges, and marketing expenses, partially offset by a decrease in variable compensation costs.
EBITDA (Full Year 2025) Reported EBITDA grew to $23.3 million, up $1.6 million or 7%, and adjusted EBITDA grew to $24 million, an increase of 10%. This was due to revenue growth and cost management.
Payments Revenue (Full Year 2025) Payments revenue grew by $2 million or 19%, supported by a 31% increase in trading volumes to almost $6.7 billion. This was due to new customers and increased activity from existing customers.
Direct-to-Consumer Banknotes Revenue (Full Year 2025) Direct-to-consumer banknotes revenue grew by $1.1 million or 4%, driven by increased demand for exotic currencies and the addition of new states and agents.
Discontinued Operations (Exchange Bank of Canada) The bank had a net loss of $3.7 million for the year, compared to a net loss of $10.7 million in the prior year. This improvement was due to adjustments and recoveries, including a $1 million benefit from a Canadian Federal Court judgment.
Cash Position CXI reported a cash balance of $95.5 million as of October 31, 2025, with an additional $5 million held in EBC, resulting in a total cash position slightly exceeding $100 million. This was due to decreased working capital requirements and a well-executed exit plan for EBC.
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Operating Highlights
Payments product line growth: Revenue from the payments product line grew by 31% in Q4 2025, contributing 17% of total revenue. This growth was supported by a 40% increase in business trading volume, reaching $2.1 billion, due to increased activity from existing financial institution customers and onboarding of new customers.
Direct-to-consumer banknotes growth: Revenue from direct-to-consumer banknotes grew by 8% in Q4 2025, driven by increased demand for exotic foreign currencies and the addition of South Carolina to the online FX platform. CXI also added 51 new non-airport agents and opened a new branch in New York.
Expansion of online FX platform: CXI expanded its online FX platform to South Carolina, now covering 46 states and 93% of the U.S. population. The company also added 51 new non-airport agents and opened a new branch in New York.
Operational cost management: Operating expenses increased by 6% in Q4 2025, but revenue grew by 8%, showing improved cost efficiency. Variable costs rose due to increased shipping and bank service charges, while salaries remained flat due to inflationary adjustments and headcount reductions.
Transition from EBC operations: CXI fully transitioned its check clearing and payment processing activities away from EBC, eliminating the use of EBC's correspondent bank for such transactions. This accounted for $150,000 in cost variance.
Exit from Canadian operations: CXI discontinued operations of its subsidiary, Exchange Bank of Canada (EBC), as of October 31, 2025. The company is in the final stages of regulatory approval for full discontinuance, expected in Q2 2026.
Focus on payments and M&A: CXI is focusing on growing its payments business and exploring strategic M&A opportunities in the payments space, although it remains cautious about overpaying for assets.
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Risk or Challenges
Discontinuation of Exchange Bank of Canada (EBC): The discontinuation of EBC operations has led to stranded costs, estimated at $3 million after tax, though now expected to be closer to 90% of this figure. Additionally, the process involves regulatory approvals and liquidation of assets, which could pose delays or unforeseen challenges.
Closure of Miami Vault: The closure resulted in restructuring charges of $400,000 and impairment charges of $270,000. This reflects operational challenges and costs associated with consolidating operations.
U.S. Federal Government Shutdown: The shutdown in October 2025 impacted several airports, leading to a slowdown in inbound international travelers and affecting wholesale banknotes revenue.
Inbound International Travel Slowdown: A decline in inbound international travelers, especially from Canada, has negatively impacted revenue from wholesale banknotes.
Increased Operating Expenses: Operating expenses increased by 6% in Q4 2025, driven by higher shipping costs, bank service charges, and marketing expenses. This could pressure profit margins if not managed effectively.
Dependence on Banknotes Revenue: Banknotes revenue, which constitutes a significant portion of total revenue, remains flat due to reduced customer activity and lower inbound travel. This dependency poses a risk if the trend continues.
Regulatory and Compliance Costs: The company incurred nonrecurring legal and advisory charges of $650,000 related to discontinued operations, highlighting ongoing regulatory and compliance challenges.
Economic and Market Conditions: Economic uncertainties, such as fluctuating foreign exchange rates and inflationary pressures, could impact operational costs and revenue streams.
Competition in Payments and Banknotes: The company faces competitive pressures in both the payments and banknotes segments, requiring continued investment in technology and marketing to maintain growth.
Strategic Execution Risks: The company’s focus on expanding its payments business and direct-to-consumer channels involves significant investment and execution risks, particularly in onboarding new customers and maintaining service quality.
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Guidance & Outlook
Regulatory Approvals for EBC Discontinuance: Management anticipates that all required regulatory approvals for the discontinuance of Exchange Bank of Canada (EBC) will be granted during the second fiscal quarter of 2026.
Consumer Unit Growth: CXI plans to continue expanding its e-commerce channel, which currently delivers currency to homes or businesses in 46 states, covering over 93% of the U.S. population. The company sees significant growth potential in selling currencies across America and plans to add more brick-and-mortar stores and agent locations.
Wholesale Banknote Business: Despite flat performance, CXI sees upside potential in the wholesale banknote business due to a strong pipeline of financial institutions, including credit unions and banks.
Payments Business Expansion: CXI will continue to diversify its revenue sources in payments, focusing on international and U.S. dollar payments. The company is investing in partnerships with core bank software providers like Jack Henry and Fiserv and is in the final stages of onboarding with a major stablecoin operator to test USDC capabilities for domestic dollar transfers.
Mergers and Acquisitions (M&A): CXI is actively seeking strategic and accretive acquisitions in the payments space but will not overpay for assets. This remains a key focus for the management team and Board of Directors.
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Shareholder Return Plan
Share Buyback Program: Maximizing shareholder returns through share buybacks under the normal course issuer bid (NCIB) continues to be a primary objective. Over the past year, CXI acquired and canceled 312,300 common shares at prevailing market prices on the TSX totaling $4.75 million. On November 26, 2025, the TSX accepted CXI's notice of intention to make another NCIB and an automatic share purchase plan to purchase for cancellation a maximum of 360,000 common shares, representing 10% of the company's public float as of November 18, 2025. As of the date of the call, CXI purchased for cancellation approximately 170,000 common shares.
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Key Q&A
Q:Are the $3 million expenses fully reflected in the expenses?
A:A lot of them are included. Bank charges and salaries for transferred employees are fully incorporated in Q4, but not in the yearly numbers. Full incorporation will occur in Q1 '26.
Q:What are your thoughts on the future growth of Software as a Service?
A:The company has piloted with 4 financial institutions in the U.S. using the Fed Direct program. Revenue from Software as a Service is expected to grow, but it is not yet material enough to have a separate line item. Growth rates in payments are sustainable and may increase.
Q:Are you adding more people to grow the payments business?
A:The company is conservative on hiring and believes the current sales team of 10 is sufficient. They are adding one person for banknote sales but are comfortable with the current team for payment sales. The pipeline is strong, and new clients are being added weekly.
Q:What is the ramp-up of revenue and profitability when entering a new state?
A:The company requires a business case to support obtaining a license in a new state. Revenue and profitability depend on factors like online home delivery and agent opportunities. Each state is different, and the decision is based on financial incentives and administrative costs.
Q:Do you expect growth on the online platform as newer states ramp up?
A:Yes, the online platform shows the most growth potential in the consumer unit. There is still a 50% increase in capability for home delivery, and the company is refining its marketing plan. Growth is expected in both consumer and wholesale units.
Q:Any thoughts on a special distribution or SIB given the cash position?
A:The Board considers this every quarter. While there are strategic opportunities being explored, the current focus is on acquiring and retiring stock. A special distribution or SIB is a possibility but not imminent.
Q:Have you considered changing your year-end back to December 31?
A:The company has discussed this but prefers to finish the current year-end at October before revisiting the idea. The focus is on completing discontinued operations and focusing on the operating entity.
Q:Any comment on future listing plans, particularly moving from the Toronto Stock Exchange to NASDAQ?
A:The company is considering a move to NASDAQ after fully exiting Canada and achieving clean quarters. This could happen around 2027, but there is no immediate plan.
Q:What is the natural growth rate of the payments business, and what is your share in the market?
A:The payments business is expected to sustain or exceed the 31% growth rate. The market is large, and the company is gaining reputation and larger financial institutions. The pipeline is strong, and growth is expected to continue.
Q:What percentage of the business comes from integrated relationships like Jack Henry and Fiserv?
A:Integrated relationships account for well over 50% of the payments business. These integrations drive growth by providing enhanced features to banks already using core banking systems.
Q:What is the penetration level of the distributor business relative to the available market?
A:The entire market is available as every bank uses a core system. The company is a small provider with significant upside potential, competing with large fintechs and mega banks.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the natural growth rate of the payments business and the exact penetration level of the distributor business relative to the available market. Additionally, there was no clear timeline or commitment regarding the potential move to NASDAQ or the implementation of a special distribution or SIB.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bank Canada
CXI result
Canada EBC
DTC
EDC
Exchange Bank
FX platform
Gerhard
Miami vault
agent location
approval
bank account
bank charge
bank loss
banknote
branch
charge closure
closure Miami
compensation
discontinuance
group income
impairment
income increase
increase trading
institution
loss period
payment product
peso
processing
product line
restructuring
tax
trading volume
travel
SBH Transcript
Currency Exchange International, Corp. (CXI:CA) Q4 2025 Earnings Call Transcript
Positive1-22
The earnings call indicated strong financial performance with revenue and EBITDA growth, sustainable payments growth, and a solid cash position. The Q&A revealed optimism about SaaS and payments growth, though management was vague on some details. Despite lack of immediate shareholder returns, the focus on stock acquisition and potential NASDAQ listing are positives. Given the market cap, a positive stock reaction is expected.
Sally Beauty Holdings, Inc. (SBH) Q4 2025 Earnings Call Transcript
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Sally Beauty Holdings, Inc. (NYSE:SBH) Q2 2025 Earnings Call Transcript
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SBH Report
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