Digital Wallets And Fintech Pressure Will Undermine Legacy Business Models

Key Takeaways

• Rapid digital adoption and new fintech entrants threaten International Money Express’s legacy business model, eroding pricing power and customer loyalty.
  
• Heavy reliance on specific remittance corridors exposes the company to significant geographic and regulatory risks, limiting its revenue diversification and earnings stability.
  
• Accelerating digital growth, strategic technology investments, operational efficiencies, financial flexibility, and expanding remittance markets position IMXI for sustained revenue and margin expansion.

Catalysts

Operates as an omnichannel money remittance services company in the United States, Latin America, Mexico, Central and South America, the Caribbean, Africa, and Asia.

• Adoption of digital wallets and fintech alternatives is rapidly accelerating worldwide, threatening to erode International Money Express’s legacy retail-focused market share and putting sustained downward pressure on transaction volumes and fee income, which risks contraction in revenue growth, particularly as customers migrate to more agile, low-cost players.
  
• The company remains heavily dependent on the US-to-Latin America corridor, with approximately 65% of gross margin coming from Mexico and 80% from Mexico and Guatemala combined. This geographic concentration exposes the business to significant risk from regional economic and regulatory changes, potentially destabilizing earnings and limiting top-line diversification.
  
• Intense regulatory scrutiny on cross-border money flows is set to increase ongoing compliance costs and operational expenses, while the potential for regulatory fines or restrictions could meaningfully disrupt the company’s ability to process transactions efficiently, thereby compressing net margins and future profitability.
  
• Larger, well-funded fintech and Big Tech entrants are increasing competitive pressure through innovative digital-first transfer solutions and lower fees, resulting in persistent fee compression across the industry. This commoditization makes it easier for customers to switch providers, which threatens International Money Express’s pricing power, customer loyalty, and long-term earnings stability.
  
• As central bank digital currencies and blockchain-based payment rails become more viable for cross-border remittance, the traditional agent-based and retail-heavy model risks structural obsolescence, markedly diminishing International Money Express’s relevance and placing durable downward pressure on both revenue and margins over the long-term.

International Money Express Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on International Money Express compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming International Money Express's revenue will decrease by 1.0% annually over the next 3 years.
• The bearish analysts assume that profit margins will shrink from 8.3% today to 6.9% in 3 years time.
• The bearish analysts expect earnings to reach $46.5 million (and earnings per share of $1.87) by about May 2028, down from $54.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 7.2x on those 2028 earnings, up from 6.3x today. This future PE is lower than the current PE for the US Diversified Financial industry at 15.4x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.0%, as per the Simply Wall St company report.

International Money Express Future Earnings Per Share Growth

Risks

• Sustained rapid growth in digital transactions—up 70% year-over-year in Q1 and accelerating to 80% in April—demonstrates strong momentum in IMXI’s digital business, which should increasingly support revenue growth and improve overall net margins as the digital channel becomes a larger share of the business.
  
• The company’s disciplined investment in proprietary technology, omnichannel capabilities, and wires-as-a-service partnerships is enabling IMXI to diversify revenue streams and tap into new customer segments, which is likely to bolster long-term top-line growth and earnings.
  
• Continued robust cash generation, a strong balance sheet, and low net leverage provide IMXI with ample flexibility to invest in strategic initiatives, pursue share repurchases, and weather cyclical downturns, thereby providing stability and supporting long-term value creation for shareholders.
  
• Successful integration and optimization of acquired brands and agent networks—such as the La Nacional cost synergies and Amigo Paisano digital initiatives—are increasing operating efficiency, lowering costs, and positioning IMXI for enhanced profitability and margin expansion over time.
  
• Secular tailwinds from resilient remittances to Latin America, rising smartphone penetration, and the migration of consumers from informal to formal money transfer channels suggest that IMXI’s addressable market will keep expanding, supporting steady transaction volume growth and stronger fee-based revenue in the long run.

Valuation

• The assumed bearish price target for International Money Express is $11.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of International Money Express's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $18.0, and the most bearish reporting a price target of just $11.0.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $672.2 million, earnings will come to $46.5 million, and it would be trading on a PE ratio of 7.2x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of $11.51, the bearish analyst price target of $11.0 is 4.6% lower. The relatively low difference between the current share price and the analyst bearish price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.