Currency Exchange International (TSE:CXI) reported higher second-quarter revenue for fiscal 2026, supported by rapid growth in its payments business, while management said the formal wind-down of Exchange Bank of Canada is now complete.
On a conference call Wednesday, Group CFO Gerhard Barnard said revenue for the three months ended April 30 rose 13% year over year to $18 million, an increase of $2.1 million. The gain was driven primarily by a 73% increase in payments revenue, while banknotes revenue rose 1%.
Reported EBITDA fell 8% to $4.5 million, while adjusted EBITDA declined 11% to $4.7 million. Reported net income from continuing operations decreased 11% to $2.4 million. Barnard said adjusted continuing group net income was “essentially flat” at $2.4 million for the quarter and rose nearly 25% to $4.3 million for the six-month period.
Exchange Bank of Canada wind-down completed
Currency Exchange International said it completed the discontinuance of its wholly owned subsidiary, Exchange Bank of Canada, or EBC, during the quarter. The company announced on May 4 that EBC’s orderly exit from Canada had concluded, and Barnard said the entity was dissolved on April 29.
The dissolution resulted in roughly $6.4 million previously recorded in accumulated other comprehensive losses being reclassified through retained earnings as part of the loss after tax from discontinued operations. EBC also incurred roughly $110,000 in legal and consulting charges during the quarter and approximately $300,000 for the six-month period.
Barnard said losses from discontinued operations totaled $6.57 million for the quarter and $6.8 million for the six months ended April 30, with $6.49 million tied to the accumulated foreign exchange translation balance.
President and CEO Randolph Pinna said the bank is now “in our rear view mirror,” while noting that EBC had helped the company establish a broader global profile. He said CXI now has its own direct relationships with SWIFT and the Federal Reserve and has established a wholesale bank relationship with “one of the largest global banks in the world,” which he said should help support payments growth.
Payments growth offsets softer direct-to-consumer banknotes activity
Barnard said payments revenue increased by $2 million, or 73%, during the quarter, driven by a 43% increase in trading volumes. Payments trading volumes exceeded $2 billion, compared with $1.4 billion in the prior-year quarter.
Management attributed the growth to new customer onboarding, increased activity from existing financial institution and credit union clients, and investments in core banking system integrations and scalable infrastructure.
Pinna said CXI’s SWIFT connection has been fully integrated and is processing 99% of the company’s wires. He also said the company is adding SWIFT GPI service as another feature for its payments customers.
In banknotes, wholesale revenue grew 11%, supported by certain large trades and new domestic financial institution customers. Wholesale banknotes trading volumes increased 12%, and wholesale banknotes represented 47% of total revenue.
However, OnlineFX platform revenue fell 28%, and company-owned branch revenue declined 10%. Barnard said OnlineFX was affected by lower demand for exotic foreign currencies, partially offset by a slight increase in foreign travel currencies, primarily the euro. CXI added North Dakota to the states in which OnlineFX operates, bringing its coverage to 48 states plus the District of Columbia.
Company-owned branch revenue was pressured by weaker demand for exotic currencies, temporary closures tied to required relocations, and the permanent closure of the Santa Monica branch in the third quarter of 2025. Barnard said newer locations in Scottsdale, Arizona, and Woodbury, New York, opened in the second half of 2025 but have not yet fully matured enough to offset lost revenue from closed branches.
During the question-and-answer session, Pinna said the largest driver of the decline in direct-to-consumer revenue was reduced demand for exotic currencies, particularly the Iraqi dinar, due to the war in the Middle East. He said exotic currencies typically carry wider margins because they cannot be hedged.
Expenses rise on bank charges, foreign exchange swing
Operating expenses from continuing operations increased 27% year over year to $13.6 million. Barnard said the increase was largely due to a $1.2 million swing in foreign exchange gains and losses, from a $780,000 gain in the prior-year quarter to a $450,000 loss in the current period.
He said foreign exchange losses were driven primarily by depreciation in foreign currency-denominated inventory against the U.S. dollar during the first two months of the quarter, influenced by geopolitical uncertainty, safe-haven demand for the U.S. dollar, monetary policy divergence and hedging costs. The largest contributor was elevated carrying costs associated with Mexican peso positions against the U.S. dollar, combined with market volatility.
Bank service charges also increased, reflecting both higher payments volume and the transition of payment processing activity away from EBC. Barnard said the company processed almost 65,000 payment transactions during the quarter, up from 46,000 a year earlier. He said roughly $433,000 of bank charges were recorded under EBC in discontinued operations in the prior-year quarter, while 100% of those charges are now reflected in continuing operations.
Excluding the foreign exchange swing and adjusting for bank charges previously recorded under discontinued operations, Barnard said operating expenses increased 9%.
Management highlights retail, e-commerce and WireHub initiatives
Pinna said CXI continues to focus on growth across retail stores, wholesale banknotes, e-commerce and payments. He said the company has moved some stores after losing leases and has relocated a California store to Newport Beach. New markets such as Charlotte and an additional Manhattan store are also underway, he said.
In wholesale banknotes, Pinna said CXI continues to add banks and credit unions for foreign currency cash services and is also pursuing non-bank relationships, including AAA locations and other agent opportunities.
The company also hired Steve Mercinski as managing director of e-commerce, according to Barnard. Pinna said the hire is intended to help CXI grow its ability to deliver cash to 95% of the U.S. population.
On the payments side, Pinna highlighted the company’s WireHub platform and its direct connection to the Federal Reserve. He said the company is offering software-as-a-service capabilities that allow banks to connect to their accounts at the Fed through CXI’s rails without CXI processing the payment itself.
Pinna said 20 banks either have started or are about to start using that service, and the company plans to continue investing in WireHub, including future features such as FedNow.
Balance sheet and capital returns
For the six-month period, revenue increased 7% to $33.4 million, driven by a 61% increase in payments revenue and a 5% decrease in banknotes revenue. Operating expenses rose 15% to $25.8 million.
As of April 30, CXI reported net working capital of $80 million, total equity of $85.3 million and a fully unused $40 million line of credit. Cash and cash equivalents totaled $109.9 million, including a $4.5 million return of invested capital distribution from EBC received on April 29.
Barnard said CXI held almost $58 million of cash in the form of banknote inventory in transit, vaults, tills and consignment locations at quarter-end. The company also had roughly $30 million in AAA-rated money market funds.
During the six months ended April 2026, CXI repurchased and canceled 211,000 common shares under its normal course issuer bid for a total of $3.6 million.
Pinna said management remains focused on managing costs and improving returns on capital, while pursuing growth opportunities across the company’s business lines.
About Currency Exchange International (TSE:CXI)
Currency Exchange International is in the business of providing comprehensive foreign exchange technology and processing services for banks, credit unions, businesses, and consumers in the United States and select clients globally. Primary products and services include the exchange of foreign currencies, wire transfer payments, Global EFTs, and foreign cheque clearing. Wholesale customers are served through its proprietary FX software applications delivered on its web-based interface, www.cxifx.com (‘CXIFX’), its related APIs with core banking platforms, and through personal relationship managers.
