|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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to
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
|
|||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
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As of
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|
|||||
September 30,
2022 |
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December 31,
2021
|
|
||||
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(unaudited)
|
|
|||||
ASSETS
|
|
|
|||||
Current assets:
|
|
|
|||||
Cash and cash equivalents
|
$
|
|
$
|
|
|||
ATM cash
|
|
|
|||||
Restricted cash
|
|
|
|||||
Settlement assets
|
|
|
|||||
Trade accounts receivable, net of credit losses of $
|
|
|
|||||
Prepaid expenses and other current assets
|
|
|
|||||
Total current assets
|
|
|
|||||
Operating right of use lease assets
|
|
|
|||||
Property and equipment, net of accumulated depreciation of $
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|
|
|||||
Goodwill
|
|
|
|||||
Acquired intangible assets, net of accumulated amortization of $
|
|
|
|||||
Other assets, net of accumulated amortization of $
|
|
|
|||||
Total assets
|
$
|
|
$
|
|
|||
LIABILITIES AND EQUITY
|
|
|
|||||
Current liabilities:
|
|
|
|||||
Settlement obligations
|
$
|
|
$
|
|
|||
Trade accounts payable
|
|
|
|||||
Accrued expenses and other current liabilities
|
|
|
|||||
Current portion of operating lease liabilities
|
|
|
|||||
Short-term debt obligations and current maturities of long-term debt obligations
|
|
|
|||||
Income taxes payable
|
|
|
|||||
Deferred revenue
|
|
|
|||||
Total current liabilities
|
|
|
|||||
Debt obligations, net of current portion
|
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|
|||||
Operating lease obligations, net of current portion
|
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|
|||||
Deferred income taxes
|
|
|
|||||
Other long-term liabilities
|
|
|
|||||
Total liabilities
|
|
|
|||||
Equity:
|
|
|
|||||
Euronet Worldwide, Inc. stockholders’ equity:
|
|
|
|||||
Preferred Stock, $
|
|
|
|||||
Common Stock, $
|
|
|
|||||
Additional paid-in-capital
|
|
|
|||||
Treasury stock, at cost, shares issued
|
(
|
) |
(
|
)
|
|||
Retained earnings
|
|
|
|||||
Accumulated other comprehensive loss
|
(
|
) |
(
|
)
|
|||
Total Euronet Worldwide, Inc. stockholders’ equity
|
|
|
|||||
Noncontrolling interests
|
(
|
) |
|
||||
Total equity
|
|
|
|||||
Total liabilities and equity
|
$
|
|
$
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|||||||||||
|
|
2022
|
|
|
|
2021
|
|
|
2022
|
|
2021
|
|
|||
Revenues
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
|
Operating expenses:
|
|||||||||||||||
Direct operating costs, exclusive of depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Salaries and benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest expense
|
|
(
|
) |
|
|
(
|
)
|
|
(
|
) |
(
|
)
|
|||
Foreign currency exchange gain (loss), net
|
|
(
|
) |
|
|
(
|
) |
|
(
|
) |
(
|
)
|
|||
Other gains, net
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense, net
|
|
(
|
) |
|
|
(
|
)
|
|
(
|
) |
(
|
)
|
|||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense
|
|
(
|
) |
|
|
(
|
)
|
|
(
|
) |
(
|
)
|
|||
Net income
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to Euronet Worldwide, Inc.
|
$
|
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Earnings per share attributable to Euronet Worldwide, Inc. stockholders:
|
|||||||||||||||
Basic
|
$
|
|
|
|
$
|
|
|
$
|
|
$
|
|
|
|||
Diluted
|
$
|
|
|
|
$
|
|
|
$
|
|
$
|
|
|
|||
Weighted average shares outstanding:
|
|||||||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|||||||||||
|
|
2022
|
|
|
|
2021
|
|
|
2022
|
|
2021
|
|
|||
Net income
|
$
|
|
|
|
$
|
|
|
$
|
|
$
|
|
||||
Translation adjustment
|
|
(
|
) |
|
|
(
|
) |
|
(
|
) |
(
|
) | |||
Comprehensive income (loss)
|
|
(
|
) |
|
|
|
(
|
) |
|
||||||
Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|||||||
Comprehensive income (loss) attributable to Euronet Worldwide, Inc.
|
$
|
(
|
) |
|
$
|
|
|
$
|
(
|
) |
$
|
|
Number of
Shares Outstanding
|
Common
Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
||||||||||||
Balance as of December 31, 2020
|
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||||
Net (loss) income
|
|||||||||||||||
Other comprehensive loss
|
|||||||||||||||
Stock issued under employee stock plans
|
|
|
|
(
|
)
|
||||||||||
Share-based compensation
|
|
||||||||||||||
Balance as of March 31, 2021
|
|
|
|
(
|
)
|
||||||||||
Net (loss) income
|
|||||||||||||||
Other comprehensive loss
|
|||||||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
||||||||||||||
Balance as of June 30, 2021
|
|
|
|
(
|
) | ||||||||||
Net income
|
|
|
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Balance as of September 30, 2021
|
|
|
|
(
|
) |
Number of
Shares Outstanding
|
Common
Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
|
|||||||||||
Balance as of December 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
) | |||||||
Net income (loss)
|
|||||||||||||||
Other comprehensive loss
|
|||||||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
||||||||||||||
Repurchase of shares
|
) | ) | |||||||||||||
Adoption of ASU 2020-06
|
(
|
) | |||||||||||||
Balance as of March 31, 2022
|
|
|
|
(
|
) | ||||||||||
Net income (loss)
|
|
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
||||||||||||
Stock issued under employee stock plans
|
|
|
|
(
|
) | ||||||||||
Share-based compensation
|
|
|
|
||||||||||||
Repurchase of shares
|
( |
) |
|
|
(
|
) | |||||||||
Balance as of June 30, 2022
|
|
|
|
(
|
) | ||||||||||
Net income
|
|
|
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Repurchase of shares
|
|
|
|
|
|||||||||||
Balance as of September 30, 2022
|
|
|
|
(
|
) |
Retained Earnings
|
|
Accumulated Other
Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
|
|
||||||||
Balance as of December 31, 2020
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||
Net income (loss)
|
(
|
) |
|
(
|
) | ||||||||||
Other comprehensive loss
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
Stock issued under employee stock plans
|
|
||||||||||||||
Share-based compensation
|
|
||||||||||||||
Balance as of March 31, 2021
|
|
(
|
)
|
|
|
||||||||||
Net income (loss)
|
|
(
|
) |
|
|||||||||||
Other comprehensive loss
|
|
|
|
||||||||||||
Stock issued under employee stock plans
|
|
||||||||||||||
Share-based compensation
|
|
||||||||||||||
Balance as of June 30, 2021
|
|
(
|
) |
|
|
||||||||||
Net income
|
|
|
(
|
) |
|
||||||||||
Other comprehensive income
|
|
(
|
) |
(
|
) |
(
|
) | ||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Balance as of September 30, 2021
|
|
(
|
) |
|
|
Retained Earnings
|
|
Accumulated Other
Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
|
|
||||||||
Balance as of December 31, 2021
|
$
|
|
$
|
(
|
) |
$
|
|
$
|
|
||||||
Net income (loss)
|
|
(
|
) |
|
|||||||||||
Other comprehensive loss
|
(
|
) |
(
|
) |
(
|
) | |||||||||
Stock issued under employee stock plans
|
|
||||||||||||||
Share-based compensation
|
|
||||||||||||||
Repurchase of shares
|
(
|
) | |||||||||||||
Adoption of ASU 2020-06
|
(
|
) | |||||||||||||
Balance as of March 31, 2022
|
|
(
|
) |
(
|
) |
|
|||||||||
Net income (loss)
|
|
|
(
|
) |
|
||||||||||
Other comprehensive loss
|
|
(
|
) |
(
|
) |
(
|
) | ||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Repurchase of shares
|
|
|
|
(
|
) | ||||||||||
Balance as of June 30, 2022
|
|
(
|
) |
(
|
) |
|
|||||||||
Net income (loss)
|
|
|
(
|
) |
|
||||||||||
Other comprehensive loss
|
|
(
|
) |
(
|
) |
(
|
) | ||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Repurchase of shares
|
|
|
|
|
|||||||||||
Balance as of September 30, 2022
|
|
(
|
) |
(
|
) |
|
|
Nine Months Ended September 30,
|
|
|||||
|
2022
|
|
2021
|
|
|||
Net income
|
$
|
|
$
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|||||||
Depreciation and amortization
|
|
|
|||||
Share-based compensation
|
|
|
|||||
Unrealized foreign exchange loss, net
|
|
|
|||||
Deferred income taxes
|
|
|
|||||
Accretion of convertible debt discount and amortization of debt issuance costs
|
|
|
|||||
Changes in working capital, net of amounts acquired:
|
|||||||
Income taxes payable, net
|
|
|
|||||
Trade accounts receivable, including amounts in settlement assets
|
|
|
|||||
Prepaid expenses and other current assets, including amounts in settlement assets
|
(
|
) |
|
||||
Trade accounts payable, including amounts in settlement obligations
|
(
|
) |
(
|
) | |||
Deferred revenue
|
(
|
) |
(
|
) | |||
Accrued expenses and other current liabilities, including amounts in settlement obligations
|
|
|
|||||
Changes in noncurrent assets and liabilities
|
|
|
|||||
Net cash provided by operating activities
|
|
|
|||||
Cash flows from investing activities:
|
|||||||
Acquisitions, net of cash acquired
|
(
|
) |
|
||||
Purchases of property and equipment
|
(
|
) |
(
|
)
|
|||
Purchases of other long-term assets
|
(
|
) |
(
|
)
|
|||
Other, net
|
|
|
|||||
Net cash used in investing activities
|
(
|
) |
(
|
)
|
|||
Cash flows from financing activities:
|
|||||||
Proceeds from issuance of shares
|
|
|
|||||
Repurchase of shares
|
(
|
) |
(
|
)
|
|||
Borrowings from revolving credit agreements
|
|
|
|||||
Repayments of revolving credit agreements
|
(
|
) |
(
|
)
|
|||
Net borrowings (repayments) from short-term debt obligations
|
|
|
|||||
Other, net
|
(
|
) |
(
|
) | |||
Net cash provided by (used in) financing activities
|
|
(
|
) | ||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
(
|
) |
(
|
) | |||
Increase (decrease) in cash and cash equivalents and restricted cash
|
(
|
) |
(
|
) | |||
Cash and cash equivalents and restricted cash at beginning of period
|
|
|
|||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
|
$
|
|
|||
Supplemental disclosure of cash flow information:
|
|||||||
Interest paid during the period
|
$
|
|
$
|
|
|||
Income taxes paid during the period
|
$
|
|
$
|
|
Euronet’s EFT Processing Segment normally experiences its heaviest demand for DCC services during the third quarter of the fiscal year, normally coinciding with the tourism season. Epay Segment is normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Also, epay sells large loyalty rewards campaigns to retailers, which could be deployed in any given quarter and will impact the activity in that quarter accordingly. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year.
7 |
(3) ACQUISITIONS
On March 15, 2022 we completed the acquisition of the Merchant Acquiring Business of Piraeus Bank ("PBMA"). The acquisition includes
The purchase price was €
The initial accounting for this acquisition is not complete as of September 30, 2022. The purchase price was preliminarily allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective provisional fair values at the date of acquisition. Additional time is needed to refine and review the results of the valuation of assets and liabilities. The acquisition has been accounted for as a business combination in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment.
8 |
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date.
(in thousands)
|
As of March 15, 2022 | ||
Other current assets |
$
|
|
|
Settlement assets |
|
|
|
Property and equipment |
|
|
|
Acquired intangible assets |
|
|
|
Total assets acquired |
$
|
|
|
Trade accounts payable |
$
|
|
|
Settlement liabilities |
|
|
|
Accrued expenses and other current liabilities |
|
|
|
Deferred revenue |
|
|
|
Other long-term liabilities |
|
|
|
Total liabilities assumed |
$
|
|
|
Goodwill |
|
|
|
Net assets acquired
|
$
|
|
|
Assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date. The fair value measurements of intangible assets were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy. Level 3 inputs include discount rates that would be used by a market participant in valuing these assets, projections of revenues and cash flows, and customer attrition rates, among others.
We acquired a customer relationship intangible asset with a preliminary fair value of $
Goodwill, with a preliminary value of $
The results of PBMA operations are included in our consolidated results of operation, as part of our EFT Processing business segment, beginning on March 16, 2022. For the three and nine months ended September 30, 2022, PBMA had $
9 |
As of
|
||||||||
(in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Settlement assets:
|
||||||||
Settlement cash and cash equivalents
|
$
|
|
$
|
|
||||
Settlement restricted cash
|
|
|
||||||
Accounts receivable, net of credit losses of $
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total settlement assets
|
$
|
|
$
|
|
||||
Settlement obligations:
|
||||||||
Trade account payables
|
$
|
|
$
|
|
||||
Accrued expenses and other current liabilities
|
|
|
||||||
Total settlement obligations
|
$
|
|
$
|
|
As of
|
||||||||||||||||
(in thousands)
|
September 30,
2022
|
December 31,
2021
|
September 30,
2021
|
December 31,
2020
|
||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Restricted cash
|
|
|
|
|
||||||||||||
ATM cash
|
|
|
|
|
||||||||||||
Settlement cash and cash equivalents
|
|
|
|
|
||||||||||||
Settlement restricted cash
|
|
|
|
|
||||||||||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
(5) STOCKHOLDERS' EQUITY
Earnings (Loss) Per Share
Basic earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for the potential dilution of options to purchase our common stock, assumed vesting of restricted stock and the assumed conversion of our convertible debt, if such conversion would be dilutive.
10 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|||||
Computation of diluted earnings:
|
||||||||||||
Net income (loss)
|
$ |
|
$ |
|
$
|
|
$
|
|
||||
Add: Interest expense from assumed conversion of convertible notes, net of tax
|
|
|
|
|
|
|
|
|||||
Net income (loss) for diluted earnings per share calculation
|
$ |
|
$
|
|
$
|
|
$
|
|
||||
Computation of diluted weighted average shares outstanding:
|
||||||||||||
Basic weighted average shares outstanding
|
|
|
|
|
|
|
|
|||||
Incremental shares from assumed exercise of stock options and vesting of restricted stock
|
|
|
|
|
|
|
|
|||||
Incremental shares from assumed conversion of convertible debt
|
|
|
|
|
|
|
||||||
Diluted weighted average shares outstanding
|
|
|
|
|
|
|
|
The table includes all stock options and restricted stock that are dilutive to our weighted average common shares outstanding during the period. The calculation of diluted earnings (loss) per share excludes stock options or shares of restricted stock that are anti-dilutive to our weighted average common shares outstanding of approximately
We issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. Our Convertible Notes currently have a settlement feature requiring us upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of our common stock or a combination thereof, at our option. We have stated our intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium; however, after adopting ASU 2020-06, 2.8 million incremental shares assumed for conversion of convertible notes shall be included in the dilutive earnings per share calculation, if dilutive, regardless of whether the market price trigger has been met. Therefore, our Convertible Notes were included in the calculation of diluted earnings (loss) per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price of $
Share repurchases
On February 26, 2020, we put a repurchase program in place to repurchase up to $
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. We recorded foreign currency translation losses of $
11 |
(in thousands)
|
Acquired
Intangible
Assets
|
Goodwill
|
Total
Intangible
Assets
|
|||||||||
Balance as of December 31, 2021
|
$
|
|
$
|
|
$
|
|
||||||
Increases (decreases):
|
|
|
|
|||||||||
Acquisition
|
|
|
|
|||||||||
Amortization
|
(
|
) |
|
(
|
) | |||||||
Foreign currency exchange rate changes
|
(
|
) |
(
|
) |
(
|
) | ||||||
Balance as of September 30, 2022
|
$
|
|
$
|
|
$
|
|
Of the total goodwill balance of $
As of
|
||||||||
(in thousands)
|
September 30,
2022
|
December 31, 2021
|
||||||
Accrued expenses
|
$
|
|
$
|
|
||||
Derivative liabilities
|
|
|
||||||
Accrued payroll expenses |
|
|
||||||
Current portion of finance lease obligations
|
|
|
||||||
Total
|
$
|
|
$
|
|
12 |
As of
|
|
|||||||
(in thousands)
|
September 30,
2022
|
|
December 31, 2021
|
|
||||
Credit Facility:
|
||||||||
Revolving credit agreement
|
$
|
|
$
|
|
||||
|
|
|
|
|
||||
Uncommitted credit agreement
|
|
|
|
|
||||
Convertible Debt:
|
||||||||
|
|
|
||||||
|
|
|
||||||
Other obligations
|
|
|
||||||
Total debt obligations
|
|
|
||||||
Unamortized debt issuance costs
|
(
|
) |
(
|
)
|
||||
Carrying value of debt
|
|
|
||||||
Short-term debt obligations and current maturities of long-term debt obligations
|
(
|
) |
(
|
)
|
||||
Long-term debt obligations
|
$
|
|
$
|
|
On May 25, 2022, the Company entered into an Uncommitted Credit Agreement for $
On June 24, 2022, the Company entered into an Uncommitted Loan Agreement for $
13 |
(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. Dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) certain foreign currency denominated other asset and liability positions. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC 815, primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates are reflected concurrently in earnings for both the derivative instrument and the transaction and have an offsetting effect.
Foreign currency exchange contracts - Ria Operations and Corporate
In the United States, the Company uses short-duration foreign currency forward contracts, generally with maturities up to
In addition, the Company uses forward contracts, typically with maturities from a few days to less than one year, to offset foreign exchange rate fluctuations on certain short-term borrowings that are payable in currencies other than the U.S dollar. The Company had foreign currency forward contracts outstanding with a notional value of $
14 |
Asset Derivatives
|
Liability Derivatives
|
|||||||||||||||||||
Fair Value
|
Fair Value
|
|||||||||||||||||||
(in thousands)
|
Balance Sheet Location
|
September 30, 2022
|
December 31, 2021
|
Balance Sheet Location
|
September 30,
2022
|
December 31, 2021
|
||||||||||||||
Derivatives not designated as hedging instruments
|
||||||||||||||||||||
Foreign currency exchange contracts
|
Other current assets
|
$
|
|
|
$
|
|
|
Other current liabilities |
$
|
(
|
) |
$
|
(
|
)
|
Gross Amounts Not Offset in the Consolidated Balance Sheet
|
||||||||||||||||||||||||
As of September 30, 2022
|
Gross Amounts of Recognized Assets
|
Gross Amounts Offset in the Consolidated Balance Sheet
|
Net Amounts Presented in the Consolidated Balance Sheet
|
Financial Instruments
|
Cash Collateral Received
|
Net Amounts
|
||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
) |
$
|
(
|
) |
$
|
|
|
||||||
As of December 31, 2021
|
||||||||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|
15 |
Gross Amounts Not Offset in the Consolidated Balance Sheet
|
||||||||||||||||||||||||
As of September 30, 2022
|
Gross Amounts of Recognized Liabilities
|
Gross Amounts Offset in the Consolidated Balance Sheet
|
Net Amounts Presented in the Consolidated Balance Sheet
|
Financial Instruments
|
Cash Collateral Paid
|
Net Amounts
|
||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement
|
$
|
(
|
$
|
|
|
$
|
(
|
) |
$
|
|
|
$
|
|
|
$
|
(
|
) | |||||||
As of December 31, 2021
|
||||||||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
Amount of Gain (Loss) Recognized in Income on Derivative Contracts (a)
|
||||||||||||||||||
Location of Gain (Loss) Recognized in Income on Derivative Contracts
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30,
|
|
||||||||||||||
(in thousands)
|
2022
|
2021
|
|
|
2022
|
|
|
|
2021
|
|
||||||||
Foreign currency exchange contracts - Ria Operations
|
Foreign currency exchange gain (loss), net
|
$
|
(
|
$
|
|
$ | ( |
$ |
|
16 |
|
As of September 30, 2022
|
|||||||||||||||||
(in thousands)
|
Balance Sheet Classification
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||||
Foreign currency exchange contracts
|
Other current assets
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
Liabilities
|
||||||||||||||||||
Foreign currency exchange contracts
|
Other current liabilities
|
$
|
|
|
$
|
(
|
) |
$
|
|
|
$
|
(
|
) |
|
As of December 31, 2021
|
|||||||||||||||||
(in thousands)
|
Balance Sheet Classification
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||||
Foreign currency exchange contracts
|
Other current assets
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
Liabilities
|
||||||||||||||||||
Foreign currency exchange contracts
|
Other current liabilities
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
Our reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting ("ASC 280"). We currently operate in the following
1) Through the EFT Processing Segment, we process transactions for a network of ATMs and POS terminals across Europe, the Middle East, Africa, Asia Pacific and the United States. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit, debit and prepaid card outsourcing, dynamic currency conversion, domestic and international surcharges and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.
17 |
2) Through the epay Segment, we provide distribution, processing and collection services for electronic payment products, and prepaid mobile airtime in Europe, the Middle East, Asia Pacific, the U.S., South America and North America.
3) Through the Money Transfer Segment, we provide global money transfer services under the brand names Ria, AFEX, IME, and xe. Ria, AFEX, and IME provide global consumer-to-consumer money transfer services through a network of sending agents, Company-owned stores and Company-owned websites, disbursing money transfers through a worldwide correspondent network. xe offers account-to-account international payment services to high-income individuals and small-to-medium sized businesses. xe is also a provider of foreign currency exchange information. We also offer customers bill payment services, payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services, foreign currency exchange services and mobile top-up. Furthermore, xe provides cash management solutions and foreign currency risk management services to small-to-medium sized businesses.
In addition, we account for non-operating activity, share-based compensation expense, certain intersegment eliminations and the costs of providing corporate and other administrative services in our administrative division, "Corporate Services, Eliminations and Other." These services are not directly identifiable with our reportable operating segments.
|
For the Three Months Ended September 30, 2022
|
|||||||||||||||||||
(in thousands)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Corporate Services,
Eliminations
and Other
|
Consolidated
|
|||||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
(
|
) |
$
|
|
|||||||||
Operating expenses:
|
||||||||||||||||||||
Direct operating costs, exclusive of depreciation
|
|
|
|
(
|
) |
|
||||||||||||||
Salaries and benefits
|
|
|
|
|
|
|||||||||||||||
Selling, general and administrative
|
|
|
|
|
|
|||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|||||||||||||||
Total operating expenses
|
|
|
|
|
|
|||||||||||||||
Operating income (loss)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
) |
$
|
|
For the Three Months Ended September 30, 2021
|
||||||||||||||||||||
(in thousands)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Corporate Services,
Eliminations
and Other
|
Consolidated
|
|||||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||
Operating expenses:
|
||||||||||||||||||||
Direct operating costs, exclusive of depreciation
|
|
|
|
(
|
)
|
|
||||||||||||||
Salaries and benefits
|
|
|
|
|
|
|||||||||||||||
Selling, general and administrative
|
|
|
|
|
|
|||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|||||||||||||||
Total operating expenses
|
|
|
|
|
|
|||||||||||||||
Operating income (loss)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
18 |
For the Nine Months Ended September 30, 2022
|
||||||||||||||||||||
(in thousands)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Corporate Services,
Eliminations
and Other
|
Consolidated
|
|||||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
(
|
) |
$
|
|
|||||||||
Operating expenses:
|
||||||||||||||||||||
Direct operating costs, exclusive of depreciation
|
|
|
|
(
|
) |
|
||||||||||||||
Salaries and benefits
|
|
|
|
|
|
|||||||||||||||
Selling, general and administrative
|
|
|
|
|
|
|||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|||||||||||||||
Total operating expenses
|
|
|
|
|
|
|||||||||||||||
Operating income (loss)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
) |
$
|
|
|
For the Nine Months Ended September 30, 2021
|
|||||||||||||||||||
(in thousands)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Corporate Services,
Eliminations
and Other
|
Consolidated
|
|||||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||
Operating expenses:
|
||||||||||||||||||||
Direct operating costs
|
|
|
|
(
|
)
|
|
||||||||||||||
Salaries and benefits
|
|
|
|
|
|
|||||||||||||||
Selling, general and administrative
|
|
|
|
|
|
|||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|||||||||||||||
Total operating expenses
|
|
|
|
|
|
|||||||||||||||
Operating income (loss)
|
$
|
(
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Total Assets as of
|
|||||||
(in thousands)
|
September 30, 2022
|
December 31, 2021
|
|||||
EFT Processing
|
$
|
|
$
|
|
|||
epay
|
|
|
|||||
Money Transfer
|
|
|
|||||
Corporate Services, Eliminations and Other
|
|
|
|||||
Total
|
$
|
|
$
|
|
|
19 |
For the Three Months Ended September 30, 2022
|
For the Nine Months Ended September 30, 2022
|
|||||||||||||||||||||||||||||||
(in thousands)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Total
|
EFT
Processing
|
epay
|
Money
Transfer
|
Total
|
||||||||||||||||||||||||
Europe
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
North America
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Asia Pacific
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Eliminations
|
|
|
|
(
|
) |
|
|
|
(
|
) | ||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
For the Three Months Ended September 30, 2021
|
For the Nine Months Ended September 30, 2021
|
|||||||||||||||||||||||||||||||
(in thousands)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Total
|
EFT
Processing
|
epay
|
Money
Transfer
|
Total
|
||||||||||||||||||||||||
Europe
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
North America
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Asia Pacific
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Eliminations
|
|
|
|
(
|
) |
|
|
|
(
|
) | ||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
(14) COMMITMENTS
20 |
21 |
We enter into operating leases for ATM sites, office spaces, retail stores and equipment. Our finance leases are immaterial. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease terms.
The present value of lease payments is determined using the incremental borrowing rate based on information available at the lease commencement date. We recognize lease expense for these leases on a straight-line basis over the lease term.
Most leases include an option to renew, with renewal terms that can extend the lease terms. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease terms. We also have a unilateral termination right for most of the ATM site leases. Since we are not reasonably certain not to exercise termination options, payments for ATM site leases with termination options subject to the short-term lease exemption are expensed in the period incurred and corresponding leases are excluded from the right of use lease asset and lease liability balances. Certain of our lease agreements include variable rental payments based on revenues generated from the use of the leased location and certain leases include rental payments adjusted periodically for inflation. Variable lease payments are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs and are excluded from the right of use assets and lease liabilities balances. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
As of September 30, 2022
|
|||
Maturity of Lease Liabilities (in thousands)
|
Operating Leases (1)
|
||
Remainder of 2022
|
$
|
|
|
2023
|
|
||
2024
|
|
||
2025
|
|
||
2026
|
|
||
Thereafter
|
|
||
Total lease payments
|
$
|
|
|
Less: imputed interest
|
(
|
) | |
Present value of lease liabilities
|
$
|
|
(1)
22 |
Lease Expense
(in thousands)
|
Income Statement Classification
|
|||||||||||||
Operating lease expense
|
Selling, general and administrative and Direct operating costs
|
|||||||||||||
Short-term and variable lease expense
|
Selling, general and administrative and Direct operating costs
|
|||||||||||||
Total lease expense
|
Lease Term and Discount Rate of Operating Leases
|
As of September 30, 2022
|
||
Weighted- average remaining lease term (years)
|
|
||
Weighted- average discount rate
|
|
%
|
Other Information (in thousands)
|
Nine Months Ended
September 30, 2022
|
Nine months ended
September 30, 2021
|
|
|||||
Cash paid for amounts included in the measurement of lease liabilities (a)
|
$
|
|
$
|
|
|
|||
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets:
|
||||||||
ROU assets obtained in exchange for new operating lease liabilities
|
$
|
|
$
|
|
|
23 |
24 |
Euronet is a leading electronic payments provider. We offer payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Our primary product offerings include comprehensive ATM, POS, card outsourcing, card issuing and merchant acquiring services, software solutions, electronic distribution of prepaid mobile airtime, managed services and other electronic payment products, foreign currency exchange services and global money transfer services. We operate in the following three segments:
1) The EFT Processing Segment processes transactions for a network of 49,617 ATMs and approximately 590,000 POS terminals across Europe, the Middle East, Africa, Asia Pacific, and the United States. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation, outsourced ATM and POS management solutions, credit, debit and prepaid card outsourcing, DCC, and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.
2) The epay Segment, which provides distribution, processing and collection services for prepaid mobile airtime and other electronic content. We operate a network of approximately 777,000 POS terminals providing electronic processing of prepaid mobile airtime top-up services and other electronic content in Europe, the Middle East, Asia Pacific, the United States and South America. We also provide vouchers and physical gift fulfillment services in Europe.
3) The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, IME, AFEX, and xe and global account-to-account money transfer services under the brand name xe. We offer services under the brand names Ria and IME through a network of sending agents, Company-owned stores (primarily in North America, Europe and Malaysia) and our websites (riamoneytransfer.com and online.imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately 509,000 locations. xe is a provider of foreign currency exchange information and offers money transfer services on its currency data websites (xe.com and x-rates.com). In addition to money transfers, we also offer customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up. Through our xe brand, we offer cash management solutions and foreign currency risk management services to small-to-medium-sized businesses.
We have six processing centers in Europe, five in Asia Pacific and two in North America. We have 36 principal offices in Europe, 14 in Asia Pacific, 10 in North America, three in the Middle East, two in South America and one in Africa. Our executive offices are located in Leawood, Kansas, USA. With approximately 75% of our revenues denominated in currencies other than the U.S. dollar, any significant changes in foreign currency exchange rates will likely have a significant impact on our results of operations (for a further discussion, see Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021).
SOURCES OF REVENUES AND CASH FLOW
Euronet earns revenues and income primarily from ATM management fees, transaction fees, commissions and foreign currency exchange margin. Each operating segment’s sources of revenues are described below.
EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 34% and 29% of total consolidated revenues for the three and nine months ended September 30, 2022, respectively, are derived from fees charged for transactions made by cardholders on our proprietary network of ATMs, fixed management fees and transaction fees we charge to customers for operating ATMs and processing debit and credit cards under outsourcing and cross-border acquiring agreements, foreign currency exchange margin on DCC transactions, domestic and international surcharge, foreign currency dispensing and other value added services such as advertising, prepaid telecommunication recharges, bill payment, and money transfers provided over ATMs. Revenues in this segment are also derived from cardless payment, banknote recycling, tax refund services, license fees, professional services and maintenance fees for proprietary application software and sales of related hardware.
25 |
26 |
27 |
|
Revenues for the Three Months Ended September 30,
|
Year-over-Year Change
|
Revenues for the Nine Months Ended September 30,
|
Year-over-Year Change
|
|||||||||||||||||||||||||||
(dollar amounts in thousands)
|
2022
|
2021
|
Increase (Decrease)
Amount
|
Increase
(Decrease)
Percent
|
2022
|
2021
|
Increase (Decrease)
Amount
|
Increase
(Decrease)
Percent
|
|||||||||||||||||||||||
EFT Processing
|
$
|
319,466
|
$
|
227,129
|
$
|
92,337
|
41
|
%
|
$
|
714,067
|
$
|
427,687
|
$
|
286,380
|
67
|
%
|
|||||||||||||||
epay
|
248,923
|
238,319
|
10,604
|
4
|
% | 712,467 | 724,540 | (12,073 | ) | (2) | % | ||||||||||||||||||||
Money Transfer
|
364,841
|
353,451
|
11,390
|
3
|
%
|
1,072,266
|
1,037,659
|
34,607
|
3
|
%
|
|||||||||||||||||||||
Total
|
933,230
|
818,899
|
114,331
|
14
|
% | 2,498,800 | 2,189,886 | 308,914 | 14 | % | |||||||||||||||||||||
Corporate services, eliminations and other
|
(1,964
|
) |
(2,339
|
) |
375
|
(16)
|
%
|
(5,758
|
) |
(5,970
|
) |
212
|
(4)
|
%
|
|||||||||||||||||
Total
|
$
|
931,266
|
$
|
816,560
|
$
|
114,706
|
14
|
%
|
$
|
2,493,042
|
$
|
2,183,916
|
$
|
309,126
|
14
|
%
|
|
Operating Income (Loss) for the Three Months Ended September 30,
|
Year-over-Year Change
|
Operating Income (Loss) for the Nine Months Ended September 30,
|
Year-over-Year Change
|
|||||||||||||||||||||||||||
(dollar amounts in thousands)
|
2022
|
2021
|
Increase (Decrease)
Amount
|
Increase
(Decrease)
Percent
|
2022
|
2021
|
Increase (Decrease)
Amount
|
Increase
(Decrease)
Percent
|
|||||||||||||||||||||||
EFT Processing
|
$
|
116,396
|
$
|
63,202
|
$
|
53,194
|
(84)
|
%
|
$
|
164,759
|
$
|
(2,230
|
) |
$
|
166,989
|
7,488
|
%
|
||||||||||||||
epay
|
29,134
|
25,954
|
3,180
|
12
|
% | 79,725 | 82,346 | (2,621 | ) | (3) | % | ||||||||||||||||||||
Money Transfer
|
40,542
|
37,505
|
3,037
|
8
|
%
|
114,519
|
116,990
|
(2,471
|
) |
(2)
|
%
|
||||||||||||||||||||
Total
|
186,072
|
126,661
|
59,411
|
47
|
%
|
359,003
|
197,106
|
161,897
|
82
|
%
|
|||||||||||||||||||||
Corporate services, eliminations and other
|
(17,614
|
) |
(12,167
|
) |
(5,447
|
) |
45
|
%
|
(52,765
|
) |
(42,042
|
) |
(10,723
|
) |
26
|
%
|
|||||||||||||||
Total
|
$
|
168,458
|
$
|
114,494
|
$
|
53,964
|
47
|
%
|
$
|
306,238
|
$
|
155,064
|
$
|
151,174
|
97
|
%
|
28 |
Average Translation Rate
Nine Months Ended September 30,
|
||||||||||||||||||||||
Currency (dollars per foreign currency)
|
2022
|
2021
|
Decrease
Percent
|
|||||||||||||||||||
Australian dollar
|
$
|
0.7074
|
$
|
0.7589
|
(7)
|
% | ||||||||||||||||
British pounds sterling
|
$ | $ |
$
|
1.2585
|
$
|
1.3848
|
(9)
|
% | ||||||||||||||
Canadian dollar
|
$ | $ |
$
|
0.7798
|
$
|
0.7866
|
(1)
|
% | ||||||||||||||
euro
|
$ | $ |
$
|
1.0650
|
$
|
1.1962
|
(11)
|
% | ||||||||||||||
Hungarian forint
|
$ | $ |
$
|
0.0028
|
$
|
0.0034
|
(18)
|
% | ||||||||||||||
Indian rupee
|
$ | $ |
$
|
0.0129
|
$
|
0.0136
|
(5)
|
% | ||||||||||||||
Malaysian ringgit
|
$ | $ |
$
|
0.2307
|
$
|
0.2423
|
(5)
|
% | ||||||||||||||
New Zealand dollar
|
$ | $ |
$
|
0.6469
|
$
|
0.7114
|
(9)
|
% | ||||||||||||||
Polish zloty
|
$ | $ |
$
|
0.2286
|
$
|
0.2634
|
(13)
|
% |
29 |
|
Three Months Ended
September 30,
|
Year-over-Year Change
|
Three Months Ended September 30,
|
Year-over-Year Change
|
|||||||||||||||||||||||||||
(dollar amounts in thousands)
|
2022
|
2021
|
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
2022
|
2021
|
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
|||||||||||||||||||||||
Total revenues
|
$
|
319,466
|
$
|
227,129
|
$
|
92,337
|
41
|
%
|
$
|
714,067
|
$
|
427,687
|
$
|
286,380
|
67
|
%
|
|||||||||||||||
Operating expenses:
|
|
|
|||||||||||||||||||||||||||||
Direct operating costs
|
137,812
|
106,321
|
31,491
|
30
|
%
|
354,907
|
258,614
|
96,293
|
37
|
%
|
|||||||||||||||||||||
Salaries and benefits
|
30,020
|
23,665
|
6,355
|
27
|
%
|
82,957
|
71,334
|
11,623
|
16
|
%
|
|||||||||||||||||||||
Selling, general and administrative
|
12,167
|
11,301
|
866
|
8
|
%
|
40,285
|
33,062
|
7,223
|
22
|
%
|
|||||||||||||||||||||
Depreciation and amortization
|
23,071
|
22,640
|
431
|
2
|
%
|
71,159
|
66,907
|
4,252
|
6
|
%
|
|||||||||||||||||||||
Total operating expenses
|
203,070
|
163,927
|
39,143
|
24
|
%
|
549,308
|
429,917
|
119,391
|
28
|
%
|
|||||||||||||||||||||
Operating income
|
$
|
116,396
|
$
|
63,202
|
$
|
53,194
|
84
|
% | $ | 164,759 | $ | (2,230 | ) | $ | 166,989 | 7,488 | % | ||||||||||||||
Transactions processed (millions)
|
1,733
|
1,173
|
560
|
48
|
%
|
4,634
|
3,086
|
1,548
|
50
|
%
|
|||||||||||||||||||||
Active ATMs as of September 30,
|
49,617
|
45,520
|
4,097
|
9
|
%
|
49,617
|
45,520
|
4,097
|
9
|
%
|
|||||||||||||||||||||
Average Active ATMs
|
50,411
|
45,595
|
4,816
|
11
|
%
|
47,581
|
40,913
|
6,668
|
16
|
%
|
30 |
31 |
|
Three Months Ended
September 30,
|
Year-over-Year Change
|
Nine Months Ended September 30,
|
Year-over-Year Change
|
|||||||||||||||||||||||||||
(dollar amounts in thousands)
|
2022
|
2021
|
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
2022
|
2021
|
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
|||||||||||||||||||||||
Total revenues
|
$
|
248,923
|
$
|
238,319
|
$
|
10,604
|
4
|
%
|
$
|
712,467
|
$
|
724,540
|
$
|
(12,073
|
) |
(2)
|
%
|
||||||||||||||
Operating expenses:
|
|
|
|||||||||||||||||||||||||||||
Direct operating costs
|
190,091
|
180,206
|
9,885
|
5
|
%
|
542,066
|
547,828
|
(5,762
|
) |
(1)
|
%
|
||||||||||||||||||||
Salaries and benefits
|
19,756
|
20,104
|
(348
|
) |
(2)
|
%
|
59,705
|
59,248
|
457
|
1
|
%
|
||||||||||||||||||||
Selling, general and administrative
|
8,506
|
9,802
|
(1,296
|
) |
(13)
|
%
|
26,223
|
28,594
|
(2,371
|
) |
(8)
|
%
|
|||||||||||||||||||
Depreciation and amortization
|
1,436
|
2,253
|
(817
|
) |
(36)
|
%
|
4,748
|
6,524
|
(1,776
|
) |
(27)
|
%
|
|||||||||||||||||||
Total operating expenses
|
219,789
|
212,365
|
7,424
|
3
|
%
|
632,742
|
642,194
|
(9,452
|
) |
(1)
|
%
|
||||||||||||||||||||
Operating income
|
$
|
29,134
|
$
|
25,954
|
$
|
3,180
|
12
|
% | $ | 79,725 | $ | 82,346 | $ | (2,621 | ) | (3) | % | ||||||||||||||
Transactions processed (millions)
|
915
|
811
|
104
|
13
|
%
|
2,895
|
2,266
|
629
|
28
|
%
|
32 |
33 |
|
Year-over-Year Change |
Nine Months Ended September 30,
|
Year-over-Year Change
|
|||||||||||||||||||||||||||||
(dollar amounts in thousands)
|
2021 |
2022
|
2021
|
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
|||||||||||||||||||||||||||
Total revenues
|
$
|
1,072,266
|
$
|
1,037,659
|
$
|
34,607
|
$
|
3
|
%
|
|||||||||||||||||||||||
Operating expenses:
|
|
|
||||||||||||||||||||||||||||||
Direct operating costs
|
200,171 | 200,231 | (60 | ) |
593,631
|
589,273
|
4,358
|
1
|
%
|
|||||||||||||||||||||||
Salaries and benefits
|
4,418 |
204,905
|
188,535
|
16,370
|
9
|
%
|
||||||||||||||||||||||||||
Selling, general and administrative
|
4,723 |
133,654
|
115,975
|
17,679
|
15
|
%
|
||||||||||||||||||||||||||
Depreciation and amortization
|
(728 | ) |
25,557
|
26,886
|
(1,329
|
) | (5) |
%
|
||||||||||||||||||||||||
Total operating expenses
|
8,353 |
957,747
|
920,669
|
37,078
|
4
|
%
|
||||||||||||||||||||||||||
Operating income
|
$
|
114,519
|
$
|
116,990
|
$
|
(2,471
|
) |
$
|
(2)
|
% | ||||||||||||||||||||||
Transactions processed (millions)
|
3.6 |
108.5
|
99.4
|
9.1
|
9
|
%
|
34 |
Three-Month Ended
September 30,
|
Year-over-Year Change
|
Nine Months Ended September 30,
|
Year-over-Year Change | |||||||||||||||||||||||
(dollar amounts in thousands)
|
2022 | 2021 |
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
2022 | 2021 |
Increase (Decrease) Amount
|
|
Increase
(Decrease) Percent
|
|||||||||||||||||
Salaries and benefits
|
$
|
14,992
|
$
|
10,367
|
$
|
4,625
|
45
|
% |
$
|
44,977
|
$
|
37,043
|
$
|
7,934
|
|
21
|
%
|
|||||||||
Selling, general and administrative
|
2,517
|
1,681
|
836
|
50
|
% |
7,468
|
4,587
|
2,881
|
|
63
|
%
|
|||||||||||||||
Depreciation and amortization
|
105
|
119
|
(14
|
) |
(12)
|
% |
320
|
412
|
(92
|
) |
(22)
|
%
|
||||||||||||||
Total operating expenses
|
$
|
17,614
|
$
|
12,167
|
$
|
5,447
|
45
|
% |
$
|
52,765
|
$
|
42,042
|
$
|
10,723
|
|
26
|
%
|
35 |
|
Three Month Ended September 30,
|
Year-over-Year Change
|
|
Nine Month Ended September 30,
|
Year-over-Year Change | |||||||||||||||||||||
(dollar amounts in thousands)
|
2022 | 2021 |
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
|
2022 | 2021 |
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
|||||||||||||||||
Interest income
|
$
|
600
|
$
|
153
|
$
|
447
|
292
|
% |
$
|
990
|
$
|
539
|
$
|
451
|
84
|
% | ||||||||||
Interest expense
|
(11,716
|
) |
(10,072
|
) |
(1,644
|
) |
16
|
% |
(26,712
|
) |
(28,718
|
) |
2,006
|
(7)
|
% | |||||||||||
Foreign currency exchange gain (loss), net
|
(15,798
|
) |
(8,135
|
) |
(7,663
|
) |
94
|
% |
(35,958
|
) |
(12,051
|
) |
(23,907
|
) |
198
|
% | ||||||||||
Other gains (losses)
|
10
|
—
|
10
|
100
|
% |
202
|
31
|
171
|
552
|
% | ||||||||||||||||
Other expense, net
|
$
|
(26,904
|
) |
$
|
(18,054
|
) |
$
|
(8,850
|
) |
49
|
% | $ | (61,478 | ) | $ | (40,199 | ) | $ | (21,279 | ) | 53 | % |
Interest expense
36 |
Subsidiary
|
Percent Owned
|
Segment - Country
|
||
Movilcarga
|
95%
|
epay - Spain
|
||
Euronet China
|
85%
|
EFT - China
|
||
Euronet Pakistan
|
70%
|
EFT - Pakistan
|
||
Euronet Infinitium Solutions
|
65%
|
EFT - India
|
37 |
Nine Months Ended September 30,
|
|||||||
Liquidity
|
2022
|
2021
|
|||||
Cash and cash equivalents and restricted cash provided by (used in):
|
|||||||
Operating activities
|
$
|
448,636
|
$
|
304,340
|
|||
Investing activities
|
(416,039)
|
(70,952
|
)
|
||||
Financing activities
|
173,537
|
(216,291
|
) | ||||
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash
|
(413,669)
|
(82,667
|
) | ||||
Increase (decrease) in cash and cash equivalents and restricted cash
|
$
|
(207,535)
|
$
|
(65,570
|
) |
38 |
As of September 30, 2022, we had $326.3 million of borrowings and $50.9 million of stand-by letters of credit outstanding under the Credit Facility. The remaining $652.8 million under the Credit Facility was available for borrowing.
Convertible debt - On March 18, 2019, we completed the sale of $525.0 million in principal amount of Convertible Senior Notes due 2049 (“Convertible Notes”). The Convertible Notes were issued pursuant to an indenture, dated as of March 18, 2019 (the “Indenture”), by and between us and U.S. Bank National Association, as trustee. The Convertible Notes have an interest rate of 0.75% per annum payable semi-annually in March and September, and are convertible into shares of Euronet common stock at a conversion price of approximately $188.73 per share if certain conditions are met (relating to the closing prices of Euronet common stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require us to repurchase for cash all or part of their Convertible Notes on each of March 15, 2025, 2029, 2034, 2039 and 2044 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In connection with the issuance of the Convertible Notes, we recorded $12.8 million in debt issuance costs, which are being amortized through March 1, 2025.
39 |
Other uses of capital
Capital expenditures and needs - Total capital expenditures for the nine months ended September 30, 2022 were $79.4 million. These capital expenditures were primarily for the purchase and installation of ATMs in key under-penetrated markets, the purchase of POS terminals for the epay and Money Transfer Segments, and office, data center and company store computer equipment and software. Total capital expenditures for 2022 are currently estimated to range from approximately $110 million to $120 million. At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts available under our Credit Facility and other existing and potential future financing will be sufficient to meet our debt, leasing, and capital expenditure obligations. If our capital resources are not sufficient to meet these obligations, we will seek to refinance our debt and/or issue additional equity under terms acceptable to us. However, we can offer no assurances that we will be able to obtain favorable terms for the refinancing of any of our debt or other obligations or for the issuance of additional equity.
Inflation and functional currencies
Historically, the countries in which we operate have experienced low and stable inflation. Therefore, the local currency in each of these markets is the functional currency. We have seen indications that the current inflationary period will put pressure on our results of operations and our financial position. We have seen some signs of inflation impacting discretionary spend items, such as gaming products, in our epay business as well as some pressure on send amounts in money transfer. As a consequence of this inflationary period, we expect to see increasing expenses forthcoming. We continually review inflation and the functional currency in each of the countries where we operate.
OFF BALANCE SHEET ARRANGEMENTS
On occasion, we grant guarantees of the obligations of our subsidiaries and we sometimes enter into agreements with unaffiliated third parties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. Our liability under such indemnification provisions may be subject to time and materiality limitations, monetary caps and other conditions and defenses. As of September 30, 2022, there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2021. To date, we are not aware of any significant claims made by the indemnified parties or parties to whom we have provided guarantees on behalf of our subsidiaries and, accordingly, no liabilities have been recorded as of September 30, 2022. See also Note 14, Commitments, to the unaudited consolidated financial statements included elsewhere in this report.
CONTRACTUAL OBLIGATIONS
As of September 30, 2022, there have been no material changes outside the ordinary course of business in our future contractual obligations from the amounts reported within our Annual Report on Form 10-K for the year ended December 31, 2021.
40 |
41 |
42 |
Except as otherwise described herein, there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the three months ended June 30, 2022, as filed with the SEC.
The following table provides information with respect to shares of the Company's common stock that were purchased by the Company during the three months ended September 30, 2022.
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (in thousands) (1)
|
||||||||||
July 1 - July 31, 2022
|
—
|
$
|
—
|
—
|
$
|
125,049
|
||||||||
August 1 - August 31, 2022
|
—
|
—
|
—
|
125,049
|
||||||||||
September 1 - September 30, 2022
|
—
|
—
|
—
|
$
|
125,049
|
|||||||||
Total
|
—
|
$
|
—
|
—
|
43 |
Exhibit
|
|
Description
|
31.1*
|
|
|
31.2*
|
|
|
32.1**
|
|
|
32.2**
|
|
|
101*
|
|
The following materials from Euronet Worldwide, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2022 (unaudited) and December 31, 2021, (ii) Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2022 and 2021, (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2022 and 2021, (iv) Consolidated Statements of Changes in Equity (unaudited) for the three and nine months ended September 30, 2022 and 2021 (v) Consolidated Statements of Cash Flows (unaudited) for the three and nine months ended September 30, 2022 and 2021, and (vi) Notes to the Unaudited Consolidated Financial Statements.
|
104*
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
44 |
November 4, 2022
By:
|
/s/ MICHAEL J. BROWN
|
|
|
Michael J. Brown
|
|
|
Chief Executive Officer
|
|
|
||
|
||
By:
|
/s/ RICK L. WELLER
|
|
|
Rick L. Weller
|
|
|
Chief Financial Officer
|
45 |
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Michael J. Brown, certify that:
1) I have reviewed this Quarterly Report on Form 10-Q of Euronet Worldwide, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 4, 2022
|
|
|
|
/s/ Michael J. Brown |
|
Michael J. Brown |
|
Chief Executive Officer |
|
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Rick L. Weller, certify that:
1) I have reviewed this Quarterly Report on Form 10-Q of Euronet Worldwide, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 4, 2022
|
|
|
|
/s/ Rick L. Weller |
|
Rick L. Weller |
|
Chief Financial Officer |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Euronet Worldwide, Inc. (the “Company”) for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
/s/ Michael J. Brown |
|
Michael J. Brown |
|
Chief Executive Officer |
|
November 4, 2022
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Euronet Worldwide, Inc. (the “Company”) for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
/s/ Rick L. Weller |
|
Rick L. Weller |
|
Chief Financial Officer |
|
November 4, 2022
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 4,059 | $ 4,469 |
Accumulated depreciation of property and equipment | 516,239 | 532,631 |
Accumulated amortization of intangible assets | 180,280 | 185,054 |
Accumulated amortization of other assets | $ 64,542 | $ 62,349 |
Preferred stock, par value per share | $ 0.02 | $ 0.02 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value per share | $ 0.02 | $ 0.02 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 63,863,162 | 63,779,009 |
Treasury stock, shares | 14,270,009 | 12,631,125 |
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Statement [Abstract] | ||||
Revenues | $ 931,266 | $ 816,560 | $ 2,493,042 | $ 2,183,916 |
Operating expenses: | ||||
Direct operating costs, exclusive of depreciation | 526,048 | 484,438 | 1,484,863 | 1,389,770 |
Salaries and benefits | 134,471 | 119,421 | 392,544 | 356,160 |
Selling, general and administrative | 69,508 | 64,298 | 207,613 | 182,193 |
Depreciation and amortization | 32,781 | 33,909 | 101,784 | 100,729 |
Total operating expenses | 762,808 | 702,066 | 2,186,804 | 2,028,852 |
Operating income | 168,458 | 114,494 | 306,238 | 155,064 |
Other income (expense): | ||||
Interest income | 600 | 153 | 990 | 539 |
Interest expense | (11,716) | (10,072) | (26,712) | (28,718) |
Foreign currency exchange gain (loss), net | (15,798) | (8,135) | (35,958) | (12,051) |
Other gains, net | 10 | 202 | 31 | |
Other expense, net | (26,904) | (18,054) | (61,478) | (40,199) |
Income before income taxes | 141,554 | 96,440 | 244,760 | 114,865 |
Income tax expense | (44,002) | (22,726) | (81,884) | (41,140) |
Net income | 97,552 | 73,714 | 162,876 | 73,725 |
Net income attributable to noncontrolling interests | 170 | 168 | 361 | 127 |
Net income attributable to Euronet Worldwide, Inc. | $ 97,722 | $ 73,882 | $ 163,237 | $ 73,852 |
Earnings per share attributable to Euronet Worldwide, Inc. stockholders: | ||||
Basic | $ 1.97 | $ 1.4 | $ 3.24 | $ 1.4 |
Diluted | $ 1.87 | $ 1.37 | $ 3.1 | $ 1.37 |
Weighted average shares outstanding: | ||||
Basic | 49,583,317 | 52,829,386 | 50,345,293 | 52,799,199 |
Diluted | 52,751,304 | 53,853,675 | 53,688,800 | 53,933,226 |
Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Statement [Abstract] | ||||
Net income | $ 97,552 | $ 73,714 | $ 162,876 | $ 73,725 |
Translation adjustment | (100,458) | (29,692) | (209,850) | (59,907) |
Comprehensive income (loss) | (2,906) | 44,022 | (46,974) | 13,818 |
Comprehensive income (loss) attributable to noncontrolling interests | 262 | 196 | 569 | 200 |
Comprehensive income (loss) attributable to Euronet Worldwide, Inc. | $ (2,644) | $ 44,218 | $ (46,405) | $ 14,018 |
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Noncontrolling Interest |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2020 | $ 1,445,903 | $ 1,267 | $ 1,228,446 | $ (703,032) | $ 1,013,155 | $ (94,214) | $ 281 |
Balance, shares at Dec. 31, 2020 | 52,734,049 | ||||||
Net income (loss) | (8,621) | (8,665) | 44 | ||||
Other comprehensive loss | (42,901) | (42,845) | (56) | ||||
Stock issued under employee stock plans | 2,854 | $ 1 | 3,335 | (482) | |||
Stock issued under employee stock plans, shares | 62,436 | ||||||
Share-based compensation | 8,492 | 8,492 | |||||
Balance at Mar. 31, 2021 | 1,405,727 | $ 1,268 | 1,240,273 | (703,514) | 1,004,490 | (137,059) | 269 |
Balance, shares at Mar. 31, 2021 | 52,796,485 | ||||||
Balance at Dec. 31, 2020 | 1,445,903 | $ 1,267 | 1,228,446 | (703,032) | 1,013,155 | (94,214) | 281 |
Balance, shares at Dec. 31, 2020 | 52,734,049 | ||||||
Share-based compensation | 10,984 | ||||||
Balance at Jun. 30, 2021 | 1,439,496 | $ 1,269 | 1,252,456 | (703,247) | 1,013,125 | (124,384) | 277 |
Balance, shares at Jun. 30, 2021 | 52,822,254 | ||||||
Balance at Dec. 31, 2020 | 1,445,903 | $ 1,267 | 1,228,446 | (703,032) | 1,013,155 | (94,214) | 281 |
Balance, shares at Dec. 31, 2020 | 52,734,049 | ||||||
Net income (loss) | 73,725 | ||||||
Other comprehensive loss | (59,907) | ||||||
Balance at Sep. 30, 2021 | 1,491,457 | $ 1,270 | 1,260,283 | (703,136) | 1,087,007 | (154,048) | 81 |
Balance, shares at Sep. 30, 2021 | 52,855,471 | ||||||
Balance at Mar. 31, 2021 | 1,405,727 | $ 1,268 | 1,240,273 | (703,514) | 1,004,490 | (137,059) | 269 |
Balance, shares at Mar. 31, 2021 | 52,796,485 | ||||||
Net income (loss) | 8,632 | 8,635 | (3) | ||||
Other comprehensive loss | 12,686 | 12,675 | 11 | ||||
Stock issued under employee stock plans | 1,467 | $ 1 | 1,199 | 267 | |||
Stock issued under employee stock plans, shares | 25,769 | ||||||
Balance at Jun. 30, 2021 | 1,439,496 | $ 1,269 | 1,252,456 | (703,247) | 1,013,125 | (124,384) | 277 |
Balance, shares at Jun. 30, 2021 | 52,822,254 | ||||||
Balance at Mar. 31, 2021 | 1,405,727 | $ 1,268 | 1,240,273 | (703,514) | 1,004,490 | (137,059) | 269 |
Balance, shares at Mar. 31, 2021 | 52,796,485 | ||||||
Share-based compensation | 10,984 | ||||||
Balance at Jun. 30, 2022 | 1,019,142 | $ 1,277 | 1,223,294 | (1,106,094) | 1,182,787 | (281,858) | (264) |
Balance, shares at Jun. 30, 2022 | 49,579,755 | ||||||
Balance at Jun. 30, 2021 | 1,439,496 | $ 1,269 | 1,252,456 | (703,247) | 1,013,125 | (124,384) | 277 |
Balance, shares at Jun. 30, 2021 | 52,822,254 | ||||||
Net income (loss) | 73,714 | $ 73,882 | (168) | ||||
Other comprehensive loss | (29,692) | (29,664) | (28) | ||||
Stock issued under employee stock plans | 1,134 | $ 1 | 1,022 | 111 | |||
Stock issued under employee stock plans, shares | 33,217 | ||||||
Share-based compensation | 6,805 | 6,805 | |||||
Balance at Sep. 30, 2021 | 1,491,457 | $ 1,270 | 1,260,283 | (703,136) | 1,087,007 | (154,048) | 81 |
Balance, shares at Sep. 30, 2021 | 52,855,471 | ||||||
Balance at Dec. 31, 2021 | 1,255,524 | $ 1,275 | 1,274,118 | (931,212) | 1,083,882 | (172,582) | 43 |
Balance, shares at Dec. 31, 2021 | 51,147,884 | ||||||
Net income (loss) | 8,290 | 8,297 | (7) | ||||
Other comprehensive loss | (21,114) | (21,077) | (37) | ||||
Stock issued under employee stock plans | 2,132 | $ 1 | 1,989 | 142 | |||
Stock issued under employee stock plans, shares | 40,173 | ||||||
Share-based compensation | 9,803 | 9,803 | |||||
Repurchase of shares | (70,351) | (70,351) | |||||
Repurchase of shares, shares | (639,535) | ||||||
Adoption of ASU 2020-06 | (74,080) | ||||||
Adoption of ASU 2020-06 | ASU 2020-06 [Member] | 40,690 | 33,390 | |||||
Balance at Mar. 31, 2022 | 1,143,594 | $ 1,276 | 1,211,830 | (1,001,421) | 1,125,569 | (193,659) | (1) |
Balance, shares at Mar. 31, 2022 | 50,548,522 | ||||||
Balance at Dec. 31, 2021 | 1,255,524 | $ 1,275 | 1,274,118 | (931,212) | 1,083,882 | (172,582) | 43 |
Balance, shares at Dec. 31, 2021 | 51,147,884 | ||||||
Net income (loss) | 162,876 | ||||||
Other comprehensive loss | (209,850) | ||||||
Repurchase of shares | $ (104,600) | ||||||
Repurchase of shares, shares | (1,000,000) | ||||||
Balance at Sep. 30, 2022 | $ 1,027,243 | $ 1,277 | 1,234,090 | (1,105,883) | 1,280,509 | (382,224) | (526) |
Balance, shares at Sep. 30, 2022 | 49,593,153 | ||||||
Balance at Mar. 31, 2022 | 1,143,594 | $ 1,276 | 1,211,830 | (1,001,421) | 1,125,569 | (193,659) | (1) |
Balance, shares at Mar. 31, 2022 | 50,548,522 | ||||||
Net income (loss) | 57,034 | 57,218 | (184) | ||||
Other comprehensive loss | (88,278) | (88,199) | (79) | ||||
Stock issued under employee stock plans | 1,250 | $ 1 | 1,322 | (73) | |||
Stock issued under employee stock plans, shares | 31,233 | ||||||
Share-based compensation | 10,142 | 10,142 | |||||
Repurchase of shares | (104,600) | ||||||
Balance at Jun. 30, 2022 | 1,019,142 | $ 1,277 | 1,223,294 | (1,106,094) | 1,182,787 | (281,858) | (264) |
Balance, shares at Jun. 30, 2022 | 49,579,755 | ||||||
Net income (loss) | 97,552 | 97,722 | (170) | ||||
Other comprehensive loss | (100,458) | (100,366) | (92) | ||||
Stock issued under employee stock plans | 671 | 460 | 211 | ||||
Stock issued under employee stock plans, shares | 13,398 | ||||||
Share-based compensation | 10,336 | 10,336 | |||||
Repurchase of shares | |||||||
Repurchase of shares, shares | |||||||
Balance at Sep. 30, 2022 | $ 1,027,243 | $ 1,277 | $ 1,234,090 | $ (1,105,883) | $ 1,280,509 | $ (382,224) | $ (526) |
Balance, shares at Sep. 30, 2022 | 49,593,153 |
General |
9 Months Ended |
---|---|
Sep. 30, 2022 | |
GENERAL | |
GENERAL |
(1) GENERAL
Organization
Euronet Worldwide, Inc. (the "Company", "Euronet", "we" and "us") was established as a Delaware corporation on December 13, 1996 and succeeded Euronet Holding N.V. as the group holding company, which was founded and established in 1994. Euronet is a leading electronic payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive ATM, POS, card outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment products, and international payment services.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the consolidated financial position and the results of operations, comprehensive income, changes in equity and cash flows for the interim periods. The unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2021, including the notes thereto, set forth in our 2021 Annual Report on Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include computing income taxes, estimating the useful lives and potential impairment of long-lived assets and goodwill, as well as allocating the purchase price to assets acquired and liabilities assumed in acquisitions and revenue recognition. Actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.
Seasonality
Euronet’s EFT Processing Segment normally experiences its heaviest demand for DCC services during the third quarter of the fiscal year, normally coinciding with the tourism season. Epay Segment is normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Also, epay sells large loyalty rewards campaigns to retailers, which could be deployed in any given quarter and will impact the activity in that quarter accordingly. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year. |
Recently Issued and Adopted Accounting Pronouncements |
9 Months Ended |
---|---|
Sep. 30, 2022 | |
RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS | |
RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS |
(2) RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS
In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital. Under this ASU, certain debt instruments with embedded conversion features will be accounted for as a single liability measured at its amortized cost. Additionally, this ASU eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments. We adopted this standard on January 1, 2022 using the modified retrospective approach, which resulted in our Convertible Senior Notes Due 2049 being recognized as a single liability. As a result of the adoption of this standard, we recorded a $99.7 million decrease to additional paid-in capital, a $56.8 million decrease in debt discounts and a $42.9 million increase in retained earnings. The adoption of this standard also impacted our deferred tax liability by decreasing our deferred tax liability by $15.0 million, decreasing retained earnings by $10.6 million, and increasing additional paid-in capital by $25.6 million. Additionally, the elimination of the treasury stock method will increase the number of dilutive shares used in the diluted earnings per share calculation, if dilutive, by 2.8 million shares.
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Acquisitions |
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ACQUISITIONS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS |
(3) ACQUISITIONS
On March 15, 2022 we completed the acquisition of the Merchant Acquiring Business of Piraeus Bank ("PBMA"). The acquisition includes 205,000 POS terminals at 170,000 merchants throughout Greece, as well as Piraeus Bank’s online merchant acquiring business and expands our omnichannel payments strategy where we use our proprietary technology to provide cash, card-based acquiring solutions, alternative payment acquiring, online acquiring, tokenized payment services and other payment products. Additionally, the acquisition includes a long-term commercial framework agreement between Piraeus Bank and Euronet which includes collaborative product distribution, processing and customer referrals.
The purchase price was €313.8 million, or approximately $346.2 million, which includes $331 million cash paid at closing plus $15.2 million of estimated contingent consideration for a -year earnout contingent on performance targets outlined in the commercial framework agreement. The contingent consideration is related to a percentage of the net fee income received during the -year period of the commercial framework agreement and there is no contractual maximum amount of consideration under this agreement.
The initial accounting for this acquisition is not complete as of September 30, 2022. The purchase price was preliminarily allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective provisional fair values at the date of acquisition. Additional time is needed to refine and review the results of the valuation of assets and liabilities. The acquisition has been accounted for as a business combination in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date.
Assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date. The fair value measurements of intangible assets were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy. Level 3 inputs include discount rates that would be used by a market participant in valuing these assets, projections of revenues and cash flows, and customer attrition rates, among others.
We acquired a customer relationship intangible asset with a preliminary fair value of $112.2 million that is being amortized on a straight-line basis over 15 years and a contract related intangible asset of $10.3 million that is being amortized on a straight-line basis over 10 years.
Goodwill, with a preliminary value of $212.2 million, arising from the acquisition was included in the EFT Processing Segment. The factors that make up goodwill include synergies from combining PBMA operations and intangible assets that do not qualify for separate recognition. Goodwill and intangible assets associated with this acquisition are deductible for tax purposes.
The results of PBMA operations are included in our consolidated results of operation, as part of our EFT Processing business segment, beginning on March 16, 2022. For the three and nine months ended September 30, 2022, PBMA had $32.6 million and $63.8 million in revenue. The PBMA business is impacted by higher transaction volumes during the tourism season in the second and third quarters. |
Settlement Assets and Obligations |
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SETTLEMENT ASSETS AND OBLIGATIONS |
(4) SETTLEMENT ASSETS AND OBLIGATIONS
Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled prepaid transactions. We record corresponding settlement obligations relating to accounts payable. Settlement assets consist of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. The settlement cash held at the Company is primarily generated from the monies remitted by consumers through Company agents and financial institutions in payment of the face value of the payment service or foreign currency purchased and the related fees charged to purchase the currency. We use our cash and cash equivalents to pay the face value of the payment service product upon presentation by the recipient. Cash received by Company agents and merchants generally becomes available to us within two weeks after initial receipt by the business partner. Receivables from business partners represent funds collected by such business partners that are in transit to us.
Settlement obligations consist of accrued expenses for money transfers, content providers, and EFT customer deposits and accounts payable to agents and content providers. Money transfer accrued expenses represent amounts to be paid to transferees when they request funds. Most agents typically settle with transferees first then obtain reimbursement from us. Money order accrued expenses represent amounts not yet presented for payment. Due to the agent funding and settlement process, accrued expenses to agents represent amounts due to agents for money transfers that have not been settled with transferees.
The table below reconciles cash and cash equivalents, restricted cash, ATM cash, settlement cash and cash equivalents, and settlement restricted cash as presented within "Cash and cash equivalents and restricted cash" in the Consolidated Statement of Cash Flows.
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Stockholders' Equity |
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STOCKHOLDERS' EQUITY |
(5) STOCKHOLDERS' EQUITY
Earnings (Loss) Per Share
Basic earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for the potential dilution of options to purchase our common stock, assumed vesting of restricted stock and the assumed conversion of our convertible debt, if such conversion would be dilutive.
The following table provides the computation of diluted earnings and diluted weighted average number of common shares outstanding:
The table includes all stock options and restricted stock that are dilutive to our weighted average common shares outstanding during the period. The calculation of diluted earnings (loss) per share excludes stock options or shares of restricted stock that are anti-dilutive to our weighted average common shares outstanding of approximately 3,308,000 and 2,849,000 for the three and nine months ended September 30, 2022 and 770,000 and 751,000 for the three and nine months ended September 30, 2021, respectively. We issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. Our Convertible Notes currently have a settlement feature requiring us upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of our common stock or a combination thereof, at our option. We have stated our intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium; however, after adopting ASU 2020-06, 2.8 million incremental shares assumed for conversion of convertible notes shall be included in the dilutive earnings per share calculation, if dilutive, regardless of whether the market price trigger has been met. Therefore, our Convertible Notes were included in the calculation of diluted earnings (loss) per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price of $188.73 per share. See Note 9, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes. Share repurchases On February 26, 2020, we put a repurchase program in place to repurchase up to $250 million in value, but not more than 5.0 million shares of common stock through February 28, 2022. On December 8, 2021, we put a repurchase program in place to repurchase up to $300 million in value, but not more than 5.0 million shares of common stock through December 8, 2023. Under the repurchase programs we repurchased $0 million and $175.0 million of stock, for the three and nine months ended September 30, 2022, respectively. Repurchases under the current program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. We recorded foreign currency translation losses of $100.5 million and $209.9 million for the three and nine months ended September 30, 2022, respectively, and losses of $29.7 million and $59.9 million for the three and nine months ended September 30, 2021. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three and nine months ended September 30, 2022 and 2021. |
Goodwill and Acquired Intangible Assets, Net |
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GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET |
(6) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET
A summary of acquired intangible assets and goodwill activity for the nine months ended September 30, 2022 is presented below:
Of the total goodwill balance of $764.8 million as of September 30, 2022, $351.3 million relates to the Money Transfer Segment, $298.6 million relates to the EFT Processing Segment and the remaining $114.9 million relates to the epay Segment. Estimated amortization expense on acquired intangible assets with finite lives as of September 30, 2022, is expected to total $6.6 million for the remainder of 2022, $22.3 million for 2023, $16.6 million for 2024, $13.6 million for 2025, $13.3 million for 2026 and $12.1 million for 2027. |
Accrued Expenses and Other Current Liabilities |
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
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Deferred Revenues |
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DEFERRED REVENUES |
(8) DEFERRED REVENUES
We record deferred revenues when cash payments are received or due in advance of our performance. The decrease in the deferred revenue balance for the nine months ended September 30, 2022 is the result of $26.0 million of cash payments received in the current year for which we have not yet satisfied the performance obligations, offset by $43.9 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2021.
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Debt Obligations |
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DEBT OBLIGATIONS |
(9) DEBT OBLIGATIONS
Debt obligations consist of the following:
Credit Facility
On October 24, 2022, the Company amended its revolving credit agreement (the “Credit Facility”) to increase the facility from $1.0 billion to $1.25 billion and to extend the expiration to October 24, 2027.
The revolving credit facility contains a sublimit of up to $250 million, with $150 million committed, for the issuance of letters of credit and a $75 million sublimit for U.S. dollar swingline loans and a $75 million sublimit for swingline loans in euros or British pounds sterling. The Credit Facility allows for borrowings in British pounds sterling, euro and U.S. dollars. Subject to certain conditions, the Company has the option to increase the credit facility by up to an additional $500 million by requesting additional commitments from existing or new lenders. Fees and interest on borrowings vary based upon the Company's corporate credit rating and will be based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over a secured overnight financing rate, as defined in the agreement, with a margin, including the facility fee, ranging from 1.00% to 1.625% or the base rate, as selected by the Company. The applicable margin for borrowings under the credit facility, based on the Company's current credit rating is initially 1.25% including the facility fee.
The Agreement contains customary affirmative and negative covenants, events of default and financial covenants, including (all as defined in the Credit Facility): (i) a Consolidated Total Leverage Ratio, depending on certain circumstances defined in the Credit Facility, not to exceed a range between 3.5 to 1.0 and 4.5 to 1.0; and (ii) a Consolidated Interest Coverage Ratio of not less than 3.0 to 1.0. Subject to meeting certain customary covenants (as defined in the Credit Facility), the Company is permitted to repurchase common stock and debt. The Company was in compliance with all debt covenants as of September 30, 2022.
Uncommitted Credit Agreements
On May 25, 2022, the Company entered into an Uncommitted Credit Agreement for $300 million, fully drawn and outstanding at September 30, 2022, for the sole purpose of providing vault cash for ATMs, that expires no later than November 30, 2022. Each loan bears interest at the rate per annum equal to the secured overnight financing rate (“SOFR”) plus 1.00%. The weighted-average interest rate from the loan inception date to September 30, 2022 was 2.70%.
On June 24, 2022, the Company entered into an Uncommitted Loan Agreement for $150 million, for the sole purpose of providing vault cash for ATMs, that expires no later than June 23, 2023. The loan had no balance at September 30, 2022. Each loan was either a Prime rate loan, a Bloomberg Short-term Bank Yield ("BSBY") rate loan or bears interest at the rate agreed to by the bank and the Company at the time such loan is made. The weighted-average interest rate from the loan inception date to September 30, 2022 was 2.76%.
Convertible Debt
On March 18, 2019, the Company completed the sale of $525.0 million of Convertible Senior Notes ("Convertible Notes"). The Convertible Notes mature in March 2049 unless redeemed or converted prior to such date, and are convertible into shares of Euronet common stock at a conversion price of approximately $188.73 per share if certain conditions are met (relating to the closing price of Euronet common stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require the Company to purchase their notes on each of March 15, 2025, March 15, 2029, March 15, 2034, March 15, 2039 and March 15, 2044 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date.
Prior to the adoption of ASU 2020-06 as of January 1, 2022, in accordance with ASC 470-20-30-27, proceeds from the issuance of convertible debt was allocated between debt and equity components so that debt was discounted to reflect our nonconvertible debt borrowing rate. ASC 470-20-35-13 required the debt discount to be amortized over the period the convertible debt was expected to be outstanding as additional non-cash interest expense. The allocation resulted in an increase to additional paid-in capital of $99.7 million for the Convertible Notes. Contractual interest expense for the Convertible Notes was $4.0 million and $9.0 million for the three and nine months ended September 30, 2022, respectively. Accretion expense for the Convertible Notes was $4.0 million and $11.9 million for the three and nine months ended September 30, 2021. See Footnote 2, Recently Issued and Adopted Accounting Pronouncements, for more information regarding this adoption.
1.375% Senior Notes due 2026
On May 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of Senior Notes that are due in May 2026 (the “Senior Notes”). The Senior Notes accrue interest at a rate of 1.375% per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of September 30, 2022, the Company has outstanding €600 million ($588.4 million) principal amount of the Senior Notes. In addition, the Company may redeem some or all of these notes on or after February 22, 2026 at their principal amount plus any accrued and unpaid interest.
Other obligations
Certain of the Company's subsidiaries have available lines of credit and overdraft credit facilities that generally provide for short-term borrowings that are used from time to time for working capital purposes. As of September 30, 2022 and December 31, 2021, borrowings under these arrangements were $3.6 million and $0.9 million, respectively.
Debt Issuance Costs
As of September 30, 2022, we had unamortized debt issuance costs of $1.5 million for the Credit Facility, $5.3 million for the Convertible Notes and $4.4 million for the Senior Notes that will be amortized through October 2023, March 2025 and May 2026, respectively.
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. Dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) certain foreign currency denominated other asset and liability positions. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC 815, primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates are reflected concurrently in earnings for both the derivative instrument and the transaction and have an offsetting effect. Foreign currency exchange contracts - Ria Operations and Corporate In the United States, the Company uses short-duration foreign currency forward contracts, generally with maturities up to 14 days, to offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction and its settlement. Due to the short duration of these contracts and the Company’s credit profile, the Company is generally not required to post collateral with respect to these foreign currency forward contracts. Most derivative contracts executed with counterparties in the U.S. are governed by an International Swaps and Derivatives Association agreement that includes standard netting arrangements; therefore, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity. The Company had foreign currency forward contracts outstanding in the U.S. with a notional value of $415.8 million and $222.1 million as of September 30, 2022 and December 31, 2021, respectively. The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds sterling, euro and Mexican pesos. In addition, the Company uses forward contracts, typically with maturities from a few days to less than one year, to offset foreign exchange rate fluctuations on certain short-term borrowings that are payable in currencies other than the U.S dollar. The Company had foreign currency forward contracts outstanding with a notional value of $7.4 million and $216.1 million as of September 30, 2022 and December 31, 2021, respectively, primarily in euro.
Foreign currency exchange contracts - xe Operations
xe writes derivative instruments, primarily foreign currency forward contracts and cross-currency swaps, mostly with counterparties comprised of individuals and small-to-medium size businesses and derives a currency margin from this activity as part of its operations. xe aggregates its foreign currency exposures arising from customer contracts and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from xe's total portfolio of positions were $22.3 million and $66.5 million for the three and nine months ended September 30, 2022, respectively, compared to $20.1 million and $58.5 million for the same periods in 2021, respectively. All of the derivative contracts used in the Company's xe operations are economic hedges and are not designated as hedges under ASC 815. The duration of these derivative contracts is generally less than one year.
The fair value of xe's total portfolio of positions can change significantly from period to period based on, among other factors, market movements and changes in customer contract positions. xe manages counterparty credit risk (the risk that counterparties will default and not make payments according to the terms of the agreements) on an individual counterparty basis. It mitigates this risk by entering into contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. xe does not expect any significant losses from counterparty defaults.
The aggregate equivalent U.S. dollar notional amount of foreign currency derivative customer contracts held by the Company in its xe operations was approximately $1.0 billion as of September 30, 2022 and December 31, 2021. The significant majority of customer contracts are written in major currencies such as the euro, U.S. dollar, British pounds sterling, Australian dollar and New Zealand dollar.
Balance Sheet Presentation
The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the dates below:
The following tables summarize the gross and net fair value of derivative assets and liabilities as of September 30, 2022 and December 31, 2021 (in thousands):
Offsetting of Derivative Assets
Offsetting of Derivative Liabilities
See Note 11, Fair Value Measurements, for the determination of the fair values of derivatives. Income Statement Presentation
The following table summarizes the location and amount of losses on derivatives in the Consolidated Statements of Income for the three and nine months ended September 30, 2022 and 2021:
(a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its xe operations. These derivative contracts are excluded from this table as they are part of the broader disclosure of foreign currency exchange revenues for this business discussed above.
See Note 11, Fair Value Measurements, for the determination of the fair values of derivatives.
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Fair Value Measurements |
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(11) FAIR VALUE MEASUREMENTS
Fair value measurements used in the unaudited consolidated financial statements are based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis:
Other Fair Value Disclosures
The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term debt obligations approximate fair values due to their short maturities. The carrying values of the Company’s revolving credit agreements approximate fair values because interest as of September 30, 2022 was based on LIBOR that reset at various intervals of less than one year. The Company estimates the fair value of the Convertible Notes and Senior Notes using quoted prices in inactive markets for identical liabilities (Level 2). As of September 30, 2022, the fair values of the Convertible Notes and Senior Notes were $503.9 million and $503.7 million, respectively, with carrying values of $525.0 million and $588.4 million, respectively.
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Segment Information |
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SEGMENT INFORMATION |
(12) SEGMENT INFORMATION
Our reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting ("ASC 280"). We currently operate in the following three reportable operating segments: 1) Through the EFT Processing Segment, we process transactions for a network of ATMs and POS terminals across Europe, the Middle East, Africa, Asia Pacific and the United States. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit, debit and prepaid card outsourcing, dynamic currency conversion, domestic and international surcharges and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.
2) Through the epay Segment, we provide distribution, processing and collection services for electronic payment products, and prepaid mobile airtime in Europe, the Middle East, Asia Pacific, the U.S., South America and North America. 3) Through the Money Transfer Segment, we provide global money transfer services under the brand names Ria, AFEX, IME, and xe. Ria, AFEX, and IME provide global consumer-to-consumer money transfer services through a network of sending agents, Company-owned stores and Company-owned websites, disbursing money transfers through a worldwide correspondent network. xe offers account-to-account international payment services to high-income individuals and small-to-medium sized businesses. xe is also a provider of foreign currency exchange information. We also offer customers bill payment services, payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services, foreign currency exchange services and mobile top-up. Furthermore, xe provides cash management solutions and foreign currency risk management services to small-to-medium sized businesses.
In addition, we account for non-operating activity, share-based compensation expense, certain intersegment eliminations and the costs of providing corporate and other administrative services in our administrative division, "Corporate Services, Eliminations and Other." These services are not directly identifiable with our reportable operating segments. The following tables present our reportable segment results for the three and nine months ended September 30, 2022 and 2021:
The following table presents our total assets by reportable segment:
The following table presents our revenues disaggregated by segment and region. Sales and usage-based taxes are excluded from revenues. We believe disaggregation by segment and region best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The disaggregation of revenues by segment and region is based on management's assessment of segment performance together with allocation of financial resources, both capital and operating support costs, on a segment and regional level. Both segments and regions benefit from synergies achieved through concentration of operations and are influenced by macro-economic, regulatory and political factors in the respective segment and region.
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Income Taxes |
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Sep. 30, 2022 | |
INCOME TAXES | |
INCOME TAXES |
(13) INCOME TAXES
The Company's effective income tax rate was 31.1% and 33.5% for the three and nine months ended September 30, 2022, respectively, compared to 23.6% and 35.8% for the three and nine months ended September 30, 2021, respectively. The Company's effective income tax rate for the three and nine months ended September 30, 2022 was higher than the applicable statutory income tax rate of 21% as a result of certain foreign earnings being subject to higher local statutory tax rates and the Company's U.S. deferred tax activity on foreign exchange positions.
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Commitments |
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Sep. 30, 2022 | |
COMMITMENTS | |
COMMITMENTS |
(14) COMMITMENTS As of September 30, 2022, we had $78.6 million of stand-by letters of credit/bank guarantees issued on our behalf, of which $50.9 million are outstanding under the Credit Facility. The remaining stand-by letters of credit/bank guarantees are collateralized by $3.0 million of cash deposits held by the respective issuing banks.
Under certain circumstances, we grant guarantees in support of obligations of subsidiaries. As of September 30, 2022, we had granted off balance sheet guarantees for cash in various ATM networks amounting to $9.9 million over the terms of the cash supply agreements and performance guarantees amounting to approximately $41.6 million over the terms of agreements with our customers.
From time to time, we enter into agreements with commercial counterparties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. The amount of such potential obligations is generally not stated in the agreements. Our liability under such indemnification provisions may be mitigated by relevant insurance coverage and may be subject to time and materiality limitations, monetary caps and other conditions and defenses. Such indemnification obligations include the following:
We are also required to meet minimum capitalization and cash requirements of various regulatory authorities in the jurisdictions in which we have operations. We have obtained surety bonds in compliance with money transfer licensing requirements of the applicable governmental authorities.
To date, we are not aware of any significant claims made by the indemnified parties or third parties to guarantee agreements with us and, accordingly, no liabilities were recorded as of September 30, 2022 or December 31, 2021.
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Litigation and Contingencies |
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LITIGATION AND CONTINGENCIES | |
LITIGATION AND CONTINGENCIES |
(15) LITIGATION AND CONTINGENCIES
From time to time, we are a party to legal or regulatory proceedings arising in the ordinary course of our business. Currently, there are no legal proceedings or regulatory findings that management believes, either individually or in the aggregate, would have a material adverse effect on our consolidated financial condition or results of operations. In accordance with U.S. GAAP, we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case.
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Leases |
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LEASES |
(16) LEASES
We enter into operating leases for ATM sites, office spaces, retail stores and equipment. Our finance leases are immaterial. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease terms. The present value of lease payments is determined using the incremental borrowing rate based on information available at the lease commencement date. We recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include an option to renew, with renewal terms that can extend the lease terms. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease terms. We also have a unilateral termination right for most of the ATM site leases. Since we are not reasonably certain not to exercise termination options, payments for ATM site leases with termination options subject to the short-term lease exemption are expensed in the period incurred and corresponding leases are excluded from the right of use lease asset and lease liability balances. Certain of our lease agreements include variable rental payments based on revenues generated from the use of the leased location and certain leases include rental payments adjusted periodically for inflation. Variable lease payments are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs and are excluded from the right of use assets and lease liabilities balances. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Future minimum lease payments
Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) as of September 30, 2022 are:
(1) Operating lease payments reflect our current fixed obligations under the operating lease agreements. Lease expense recognized in the Consolidated Statements of Income is summarized as follows:
Other information about lease amounts recognized in the consolidated financial statements is summarized as follows:
The following table presents supplemental cash flow and non-cash information related to leases.
(a) Included in Net cash provided by operating activities on our Consolidated Statements of Cash Flows. |
Recently Issued And Adopted Accounting Pronouncements (Policies) |
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Recently issued and adopted accounting pronouncements |
In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital. Under this ASU, certain debt instruments with embedded conversion features will be accounted for as a single liability measured at its amortized cost. Additionally, this ASU eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments. We adopted this standard on January 1, 2022 using the modified retrospective approach, which resulted in our Convertible Senior Notes Due 2049 being recognized as a single liability. As a result of the adoption of this standard, we recorded a $99.7 million decrease to additional paid-in capital, a $56.8 million decrease in debt discounts and a $42.9 million increase in retained earnings. The adoption of this standard also impacted our deferred tax liability by decreasing our deferred tax liability by $15.0 million, decreasing retained earnings by $10.6 million, and increasing additional paid-in capital by $25.6 million. Additionally, the elimination of the treasury stock method will increase the number of dilutive shares used in the diluted earnings per share calculation, if dilutive, by 2.8 million shares.
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Acquisitions (Tables) |
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Summary of the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date |
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date.
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Settlement Assets and Obligations (Tables) |
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Schedule of settlement assets and liabilities |
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Schedule of cash and cash equivalents and restricted cash |
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Stocholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of diluted weighted average number of common shares outstanding |
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Goodwill and Acquired Intangible Assets, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of acquired intangible assets and goodwill activity |
A summary of acquired intangible assets and goodwill activity for the nine months ended September 30, 2022 is presented below:
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Accrued Expenses and Other Current Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued expenses and other current liabilities |
Accrued expenses and other current liabilities consist of the following:
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Debt Obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT OBLIGATIONS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt obligations |
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Derivative Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of the derivative instruments as recorded in the Consolidated Balance Sheets |
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Schedule of offsetting assets and liabilities |
Offsetting of Derivative Assets
Offsetting of Derivative Liabilities
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Schedule of amount of gains and losses on derivatives in the Consolidated Statements of Income |
(a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its xe operations. These derivative contracts are excluded from this table as they are part of the broader disclosure of foreign currency exchange revenues for this business discussed above.
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial assets and liabilities measured and recorded at fair value on a recurring basis |
The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reportable segment results |
The following tables present our reportable segment results for the three and nine months ended September 30, 2022 and 2021:
The following table presents our total assets by reportable segment:
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Schedule of Company's revenues disaggregated by segment and region |
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum lease payments under non-cancelable operating leases |
Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) as of September 30, 2022 are:
(1) Operating lease payments reflect our current fixed obligations under the operating lease agreements. |
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Schedule of lease expense recognized in the Consolidated Statements of Income |
Lease expense recognized in the Consolidated Statements of Income is summarized as follows:
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Schedule of Lease Term and Discount Rate of Operating Leases |
Other information about lease amounts recognized in the consolidated financial statements is summarized as follows:
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Schedule of supplemental cash flow and non-cash information related to leases |
The following table presents supplemental cash flow and non-cash information related to leases.
(a) Included in Net cash provided by operating activities on our Consolidated Statements of Cash Flows. |
Aquisitions (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Mar. 15, 2022 |
Dec. 31, 2021 |
---|---|---|---|
Acquisitions | |||
Goodwill | $ 764,780 | $ 641,605 | |
Piraeus Bank Merchant Acquiring [Member] | |||
Acquisitions | |||
Other current assets | $ 1,707 | ||
Settlement assets | 78,718 | ||
Property and equipment | 6,095 | ||
Acquired intangible assets | 122,455 | ||
Total assets acquired | 208,975 | ||
Trade accounts payable | 1,499 | ||
Settlement liabilities | 66,925 | ||
Accrued expenses and other current liabilities | 5,929 | ||
Deferred revenue | 500 | ||
Other long-term liabilities | 99 | ||
Total liabilities assumed | 74,952 | ||
Goodwill | $ 212,200 | 212,183 | |
Net assets acquired | $ 346,206 |
Settlement Assets and Obligations (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
SETTLEMENT ASSETS AND OBLIGATIONS | ||||
Settlement cash and cash equivalents | $ 210,802 | $ 203,624 | $ 259,727 | $ 188,191 |
Settlement restricted cash | 46,148 | 74,897 | $ 52,433 | $ 76,674 |
Accounts receivable | 569,517 | 619,738 | ||
Prepaid expenses and other current assets | 208,431 | 204,130 | ||
Total settlement assets | 1,034,898 | 1,102,389 | ||
Settlement obligations: | ||||
Trade account payables | 378,452 | 461,135 | ||
Accrued expenses and other current liabilities | 656,446 | 641,254 | ||
Total settlement obligations | $ 1,034,898 | $ 1,102,389 |
Settlement Assets and Obligations (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
SETTLEMENT ASSETS AND OBLIGATIONS | ||||
Cash and cash equivalents | $ 967,100 | $ 1,260,466 | $ 1,048,466 | $ 1,420,255 |
Restricted cash | 8,396 | 3,693 | 3,626 | 3,334 |
ATM cash | 646,121 | 543,422 | 669,686 | 411,054 |
Settlement cash and cash equivalents | 210,802 | 203,624 | 259,727 | 188,191 |
Settlement restricted cash | 46,148 | 74,897 | 52,433 | 76,674 |
Cash and cash equivalents and restricted cash at end of period | $ 1,878,567 | $ 2,086,102 | $ 2,033,938 | $ 2,099,508 |
Settlement Assets and Obligations (Details Textual) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
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SETTLEMENT ASSETS AND OBLIGATIONS | ||
Allowance for doubtful other receivables, current | $ 30,622 | $ 27,341 |
Stockholders' Equity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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Computation of diluted earnings: | ||||
Net income (loss) | $ 97,722 | $ 73,882 | $ 163,237 | $ 73,852 |
Add: Interest expense from assumed conversion of convertible notes, net of tax | 1,148 | 3,253 | ||
Net income (loss) for diluted earnings per share calculation | $ 98,870 | $ 73,882 | $ 166,490 | $ 73,852 |
Computation of diluted weighted average shares outstanding: | ||||
Basic weighted average shares outstanding | 49,583,317 | 52,829,386 | 50,345,293 | 52,799,199 |
Incremental shares from assumed exercise of stock options and vesting of restricted stock | 386,169 | 1,024,289 | 561,689 | 1,134,027 |
Incremental shares from assumed conversion of convertible debt | 2,781,818 | 2,781,818 | ||
Diluted weighted average shares outstanding | 52,751,304 | 53,853,675 | 53,688,800 | 53,933,226 |
Stockholders' Equity (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 08, 2021 |
Feb. 26, 2020 |
Mar. 18, 2019 |
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Equity, Class of Treasury Stock [Line Items] | |||||||
Weighted average common shares outstanding | 3,308,000 | 770,000 | 2,849,000 | 751,000 | |||
Incremental shares from assumed conversion of convertible debt | 2,781,818 | 2,781,818 | |||||
Conversion price | $ 188.73 | $ 188.73 | $ 188.73 | ||||
Foreign currency translation gain | $ 100,500,000 | $ 29,700 | $ 209,900,000 | $ 59,900 | |||
Share Repurchase Plan [Member] | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Stock repurchase program, authorized amount | $ 300,000,000 | $ 250,000,000 | |||||
Stock repurchase program, number of shares authorized | 5,000,000 | 5,000,000 | |||||
Stock repurchased | $ 175,000,000 |
Goodwill and Acquired Intangible Assets, Net (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2022
USD ($)
| |
Acquired Intangible Assets | |
Acquired Intangible Assets, Balance | $ 97,793 |
Increases (decreases): | |
Acquisition | 122,455 |
Amortization | (20,164) |
Foreign currency exchange rate changes | (19,827) |
Acquired Intangible Assets, Balance | 180,257 |
Goodwill | |
Goodwill, Balance | 641,605 |
Increases (decreases): | |
Acquisition | 212,183 |
Amortization | |
Foreign currency exchange rate changes | (89,008) |
Goodwill, Balance | 764,780 |
Total Intangible Assets | |
Total Intangible Assets, Balance | 739,398 |
Increases (decreases): | |
Acquisition | 334,638 |
Amortization | (20,164) |
Foreign currency exchange rate changes | (108,835) |
Total Intangible Assets, Balance | $ 945,037 |
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued expenses | $ 348,219 | $ 285,098 |
Derivative liabilities | 85,799 | 23,285 |
Accrued payroll expenses | 57,827 | 55,162 |
Current portion of finance lease obligations | 2,900 | 4,147 |
Total | $ 494,745 | $ 367,692 |
Deferred Revenues (Details) |
9 Months Ended |
---|---|
Sep. 30, 2022
USD ($)
| |
DEFERRED REVENUES | |
Decrease in deferred revenue | $ 26,000 |
Deferred revenue, revenue recognized | $ 43,900 |
Debt Obligations (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Instrument [Line Items] | ||
Revolving credit agreement | $ 326,300 | $ 283,400 |
Uncommitted credit agreements | 300,000 | |
Senior notes (in USD) | 588,400 | |
Other obligations | 3,616 | 920 |
Total debt obligations | 1,743,276 | 1,434,635 |
Unamortized debt issuance costs | (11,256) | (13,729) |
Carrying value of debt | 1,732,020 | 1,420,906 |
Short-term debt obligations and current maturities of long-term debt obligations | (303,549) | (821) |
Long-term debt obligations | 1,428,471 | 1,420,085 |
Due 2049 [Member] | ||
Debt Instrument [Line Items] | ||
Convertible Debt | 525,000 | 468,235 |
Due 2026 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes (in USD) | $ 588,360 | $ 682,080 |
Derivative Instruments and Hedging Activities (Details) - Foreign Exchange Contracts [Member] - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Foreign currency exchange contracts | $ 92,079 | $ 27,582 |
Accrued expenses and other current liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Foreign currency derivative instruments, liability at fair value | $ (85,799) | $ (23,285) |
Derivative Instruments and Hedging Activities (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | ||
Derivative Assets, Gross Amounts of Recognized Assets | $ 92,079 | $ 27,582 |
Derivative Assets, Gross Amounts Offset in the Consolidated Balance Sheet | ||
Derivative Assets, Net Amounts Presented in the Consolidated Balance Sheet | 92,079 | 27,582 |
Derivative Assets, Financial Instruments | (57,129) | (14,875) |
Derivative Assets, Cash Collateral Received | (6,938) | (2,284) |
Derivative Assets, Net Amounts | 28,012 | 10,423 |
Derivative Liabilities, Gross Amounts of Recognized Liabilities | (85,799) | (23,285) |
Derivative Liabilities, Gross Amounts Offset in the Consolidated Balance Sheet | ||
Derivative Liabilities, Net Amounts Presented in the Consolidated Balance Sheet | (85,799) | (23,285) |
Derivative Liabilities, Financial Instruments | 57,129 | 14,875 |
Derivative Liabilities, Cash Collateral Paid | 4,495 | 640 |
Derivative Liabilities, Net Amounts | $ (24,175) | $ (7,770) |
Derivative Instruments and Hedging Activities (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|||
Ria Operations [Member] | Foreign Exchange Contract [Member] | ||||||
Derivative Instruments, Loss [Line Items] | ||||||
Gain (loss) on foreign currency derivative instruments not designated as hedging instruments | [1] | $ (7,402) | $ 3,915 | $ (689) | $ 1,447 | |
|
Segment Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 931,266 | $ 816,560 | $ 2,493,042 | $ 2,183,916 |
Operating expenses: | ||||
Direct operating costs | 526,048 | 484,438 | 1,484,863 | 1,389,770 |
Salaries and benefits | 134,471 | 119,421 | 392,544 | 356,160 |
Selling, general and administrative | 69,508 | 64,298 | 207,613 | 182,193 |
Depreciation and amortization | 32,781 | 33,909 | 101,784 | 100,729 |
Total operating expenses | 762,808 | 702,066 | 2,186,804 | 2,028,852 |
Operating income | 168,458 | 114,494 | 306,238 | 155,064 |
EFT Processing Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 319,466 | 227,129 | 714,067 | 427,687 |
Operating expenses: | ||||
Direct operating costs | 137,812 | 106,321 | 354,907 | 258,614 |
Salaries and benefits | 30,020 | 23,665 | 82,957 | 71,334 |
Selling, general and administrative | 12,167 | 11,301 | 40,285 | 33,062 |
Depreciation and amortization | 23,071 | 22,640 | 71,159 | 66,907 |
Total operating expenses | 203,070 | 163,927 | 549,308 | 429,917 |
Operating income | 116,396 | 63,202 | 164,759 | (2,230) |
Epay Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 248,923 | 238,319 | 712,467 | 724,540 |
Operating expenses: | ||||
Direct operating costs | 190,091 | 180,206 | 542,066 | 547,828 |
Salaries and benefits | 19,756 | 20,104 | 59,705 | 59,248 |
Selling, general and administrative | 8,506 | 9,802 | 26,223 | 28,594 |
Depreciation and amortization | 1,436 | 2,253 | 4,748 | 6,524 |
Total operating expenses | 219,789 | 212,365 | 632,742 | 642,194 |
Operating income | 29,134 | 25,954 | 79,725 | 82,346 |
Money Transfer Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 364,841 | 353,451 | 1,072,266 | 1,037,659 |
Operating expenses: | ||||
Direct operating costs | 200,171 | 200,231 | 593,631 | 589,273 |
Salaries and benefits | 69,703 | 65,285 | 204,905 | 188,535 |
Selling, general and administrative | 46,256 | 41,533 | 133,654 | 115,975 |
Depreciation and amortization | 8,169 | 8,897 | 25,557 | 26,886 |
Total operating expenses | 324,299 | 315,946 | 957,747 | 920,669 |
Operating income | 40,542 | 37,505 | 114,519 | 116,990 |
Corporate Services, Eliminations and Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | (1,964) | (2,339) | (5,758) | (5,970) |
Operating expenses: | ||||
Direct operating costs | (2,026) | (2,320) | (5,741) | (5,945) |
Salaries and benefits | 14,992 | 10,367 | 44,977 | 37,043 |
Selling, general and administrative | 2,579 | 1,662 | 7,451 | 4,562 |
Depreciation and amortization | 105 | 119 | 320 | 412 |
Total operating expenses | 15,650 | 9,828 | 47,007 | 36,072 |
Operating income | $ (17,614) | $ (12,167) | $ (52,765) | $ (42,042) |
Segment Information (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total | $ 4,827,827 | $ 4,744,276 |
EFT Processing Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Total | 2,101,595 | 1,682,680 |
Epay Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Total | 760,088 | 1,234,074 |
Money Transfer Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Total | 1,660,050 | 1,621,726 |
Corporate Services, Eliminations and Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Total | $ 306,094 | $ 205,796 |
Segment Information (Details Textual) |
9 Months Ended |
---|---|
Sep. 30, 2022
segment
| |
SEGMENT INFORMATION | |
Number of reportable segments | 3 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
INCOME TAXES | ||||
Effective income tax rate | 31.10% | 23.60% | 33.50% | 35.80% |
Federal statutory income tax rate | 21.00% | 21.00% |
Leases (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
[1] | ||
---|---|---|---|---|
LEASES | ||||
Remainder of 2022 | $ 11,323 | |||
2023 | 39,786 | |||
2024 | 30,591 | |||
2025 | 22,111 | |||
2026 | 15,611 | |||
Thereafter | 24,865 | |||
Total lease payments | 144,287 | |||
Less: imputed interest | (3,668) | |||
Present value of lease liabilities | $ 140,619 | |||
|
Leases (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
LEASES | ||||
Operating lease expense | $ 12,222 | $ 13,880 | $ 38,766 | $ 41,884 |
Short-term and variable lease expense | 40,304 | 34,808 | 107,333 | 84,279 |
Total lease expense | $ 52,526 | $ 48,688 | $ 146,099 | $ 126,163 |
Leases (Details 2) |
Sep. 30, 2022 |
---|---|
LEASES | |
Weighted- average remaining lease term (years) | 4 years 9 months 18 days |
Weighted- average discount rate | 2.30% |
Leases (Details 3) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|||
LEASES | ||||
Cash paid for amounts included in the measurement of lease liabilities | [1] | $ 37,908 | $ 38,763 | |
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets: | ||||
ROU assets obtained in exchange for new operating lease liabilities | $ 26,487 | $ 57,580 | ||
|
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