Currency Exchange International, Corp. (CXI:CA) Q4 2025 Earnings Call Transcript

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.

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.

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.

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.