UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

or

☐         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                 

Commission file number: 001-38504

EVO Payments, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	82-1304484
State or Other Jurisdiction of Incorporation or Organization	I.R.S. Employer Identification No.
Ten Glenlake Parkway South Tower, Suite 950 Atlanta, Georgia	30328
Address of Principal Executive Offices	Zip Code

(770) 336-8463

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	EVOP	Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  ⌧    No ◻

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes ◻    No ⌧ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ⌧     No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ⌧    No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

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.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.   ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐    No ☒ 

The aggregate market value of the registrant’s Class A common stock held by non-affiliates, based on the closing sale price as reported on the Nasdaq Global Market system on June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $1,104,291,965. As of February 13, 2023, there were 48,430,396 shares of the registrant’s Class A common stock, par value $0.0001 per share, and 3,741,074 shares of the registrant’s Class D common stock, par value $0.0001 per share, issued and outstanding. As of February 13, 2023, there were 32,163,538 common membership interests of EVO Investco, LLC (“Common Units”) issued and outstanding held by Blueapple, Inc., a New York corporation, which is controlled by entities affiliated with the registrant’s founder and Chairman of the board of directors, Rafik R. Sidhom, and which Common Units are subject to Blueapple, Inc.’s right to cause the registrant to use its commercially reasonable best efforts to pursue a public offering of an equivalent number of the registrant’s Class A common stock and use the net proceeds therefrom to purchase such holder’s Common Units. As a result, the registrant believes that these Common Units are most appropriately viewed as equivalent to additional shares of Class A common stock when considering the registrant’s overall capitalization.

DOCUMENTS INCORPORATED BY REFERENCE:

None.

EVO PAYMENTS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Cautionary Note Regarding Forward-Looking Statements			3
Basis of Presentation			5
PART I
	Item 1	Business	6
	Item 1A	Risk Factors	21
	Item 1B	Unresolved Staff Comments	50
	Item 2	Properties	50
	Item 3	Legal Proceedings	50
	Item 4	Mine Safety Disclosures	50
PART II
	Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	50
	Item 6	Reserved	52
	Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk	66
	Item 8	Financial Statements and Supplementary Data	68
	Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	128
	Item 9A	Controls and Procedures	128
	Item 9B	Other Information	129
PART III
	Item 10	Directors, Executive Officers and Corporate Governance	129
	Item 11	Executive Compensation	135
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	160
	Item 13	Certain Relationships and Related Transactions and Director Independence	164
	Item 14	Principal Accounting Fees and Services	173
PART IV
	Item 15	Exhibits and Financial Statement Schedules	174
	Item 16	Form 10-K Summary	179
		Signatures	180

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements about future events and expectations that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current beliefs, assumptions, estimates, and expectations, taking into account the information currently available to us, and are not guarantees of future results or performance. None of the forward-looking statements in this Annual Report on Form 10-K are statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include the following: (1) disruption to our business caused by the acquisition of us by Global Payments Inc. (“Global Payments”); (2) our ability to consummate the transaction with Global Payments within the contemplated timeframe, or at all, including risks and uncertainties related to securing the necessary regulatory approvals and the satisfaction of other closing conditions; (3) the impact on our stock price, business, financial condition and results of operations if the proposed transaction with Global Payments is not consummated; (4) costs, charges and expenses relating to the proposed transaction with Global Payments; (5) our ability to anticipate and respond to changing industry trends and the needs and preferences of our customers and consumers; (6) the impact of substantial and increasingly intense competition; (7) the impact of changes in the competitive landscape, including disintermediation from other participants in the payments chain; (8) the effects of global economic, political, market, health and other conditions, including the continuing impact of the COVID-19 pandemic; (9) our compliance with governmental regulations and other legal obligations, particularly related to privacy, data protection, information security, and consumer protection laws; (10) our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks; (11) failures in our processing systems, software defects, computer viruses, and development delays; (12) degradation of the quality of the products and services we offer, including support services; (13) our ability to recruit, retain and develop qualified personnel; (14) risks associated with our ability to successfully complete, integrate and realize the expected benefits of acquisitions; (15) continued consolidation in the banking and payment services industries, including the impact of the combination of Banco Popular and Grupo Santander and the related bank branch consolidation; (16) increased customer, referral partner, or sales partner attrition; (17) the incurrence of chargebacks; (18) failure to maintain or collect reimbursements; (19) fraud by merchants or others; (20) the failure of our third-party vendors to fulfill their obligations; (21) failure to maintain merchant and sales relationships or financial institution alliances; (22) ineffective risk management policies and procedures; (23) our inability to retain smaller-sized merchants and the impact of economic fluctuations on such merchants, (24) damage to our reputation, or the reputation of our partners; (25) seasonality and volatility; (26) geopolitical and other risks associated with our operations outside of the United States, such as the conflict between Russia and Ukraine; (27) any decline in the use of cards as a payment mechanism or other adverse developments with respect to the card industry in general; (28) increases in card network fees; (29) failure to comply with card networks requirements; (30) a requirement to purchase the equity interests of our eService subsidiary in Poland held by our JV partner; (31) changes in foreign currency exchange rates; (32) future impairment charges; (33) risks relating to our indebtedness, including our ability to raise additional capital to fund our operations on economized terms or at all and exposure to interest rate risks; (34) the phase out of LIBOR and the transition to other benchmarks; (35) restrictions imposed by our credit facilities and outstanding indebtedness; (36) participation in accelerated funding programs; (37) failure to enforce and protect our intellectual property rights; (38) failure to comply with, or changes in, laws, regulations and enforcement activities, including those relating to corruption, anti-money laundering, data privacy, and financial institutions; (39) impact of new or revised tax regulations; (40) legal proceedings, including litigation that seeks to prevent the merger with Global Payments from being consummated within the contemplated timeframe, or at all; (41) our dependence on distributions from EVO, LLC (as defined in “Basis of Presentation”) to pay our taxes and expenses, including certain payments to the Continuing LLC Owners (as defined in “Basis of Presentation”) and, in the event that any tax benefits are disallowed, our inability to be reimbursed for payments made to the Continuing LLC Owners; (42) our organizational structure, including benefits available to the Continuing LLC Owners that are not available to holders of our Class A common stock to the same extent; (43) the risk that we could be deemed an investment company under the Investment Company Act of 1940, as amended; (44) the significant influence the Continuing LLC Owners continue to have over us, including control over decisions that require the approval of stockholders; (45) certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control; (46) certain provisions in our organizational documents, including those that provide Delaware as the exclusive forum for litigation matters and that renounce the doctrine of corporate opportunity; (47) our ability to maintain effective internal control over financial reporting and disclosure controls and procedures; (48) changes in our stock price, including relating to downgrades, analyst reports, and future sales by us or by existing stockholders; and (49) the other risks and uncertainties described in Item 1A “Risk Factors” contained in Part I of this Annual Report on Form 10-K.

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Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. We qualify any forward-looking statements entirely by the cautionary factors listed above, among others. Other risks, uncertainties and factors, not listed above, could also cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

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BASIS OF PRESENTATION

As used in this Annual Report on Form 10-K, unless the context otherwise requires, references to:

● “EVO,” “we,” “us,” “our,” the “Company” and similar references refer (1) on or prior to the completion of the Reorganization Transactions, including our initial public offering, to EVO, LLC and, unless otherwise stated, all of its direct and indirect subsidiaries, and (2) following the consummation of the Reorganization Transactions, including our initial public offering, to EVO, Inc., and, unless otherwise stated, all of its direct and indirect subsidiaries, including EVO, LLC.

● “EVO, Inc.” refers to EVO Payments, Inc., a Delaware corporation, and, unless otherwise stated, all of its direct and indirect subsidiaries.

● “EVO, LLC” refers to EVO Investco, LLC, a Delaware limited liability company, and, unless otherwise stated, all of its direct and indirect subsidiaries.

● “Continuing LLC Owners” refers collectively to the remaining holders of LLC Interests (other than EVO, Inc.), which includes Blueapple, MDP, our executive officers and certain of our current and former employees.

● “EVO LLC Agreement” refers to the second amended and restated limited liability company agreement, dated as of May 22, 2018, by and between EVO, LLC and the Continuing LLC Owners, as amended.

● “LLC Interests” refers to the single class of common membership interests of EVO, LLC.

● “Blueapple” refers to Blueapple, Inc., a New York corporation, which is controlled by entities affiliated with our founder and Chairman of our board of directors, Rafik R. Sidhom.

● “MDP” refers to entities controlled by Madison Dearborn Partners, LLC.

● “markets” refers to countries and territories where we are authorized by card networks to acquire transactions. For purposes of determining our markets, territories refers to non-sovereign geographic areas that fall under the authority of another government. As an example, we consider Gibraltar (a territory of the United Kingdom) and the United Kingdom to be two distinct markets as our licensing agreements with the card networks gives us the ability to acquire transactions in both markets.

● “merchant” refers to an organization that accepts electronic payments, including for-profit, not-for-profit and governmental entities.

● “Reorganization Transactions” refers to the series of reorganization transactions described herein that were undertaken in connection with our initial public offering to implement our “Up-C” capital structure.

● “transactions processed” refers to the number of transactions we processed during any given period of time and is a meaningful indicator of our business and financial performance, as a significant portion of our revenue is driven by the number of transactions we process. In addition, transactions processed provides a valuable measure of the level of economic activity across our merchant base. In our Americas segment, transactions include acquired Visa and Mastercard credit and signature debit, American Express, Discover, UnionPay, JCB, PIN-debit, electronic benefit transactions, and gift card transactions. In our Europe segment, transactions include acquired Visa and Mastercard credit and signature debit, other card network merchant acquiring transactions, and ATM transactions.

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PART I

ITEM 1. BUSINESS

Our business

Founded in 1989, we are a global merchant acquirer and payment processor servicing more than 700,000 merchants and processing approximately 4.9 billion transactions annually. We help enable electronic commerce globally with local operations in 13 countries and the ability to serve over 50 markets around the world. We differentiate ourselves from our competitors through (1) a highly productive and scaled sales distribution network, including exclusive global financial institution and tech-enabled referral partnerships, (2) our three proprietary, in-house processing platforms that are connected by a single point of integration, and (3) a comprehensive suite of payment and commerce solutions, including integrated software, at the physical point-of-sale (“POS”), eCommerce, and business-to-business (“B2B”) solutions. We believe these points of differentiation allow us to deliver strong organic growth, increase market share, and attract additional relationships with financial institutions, technology companies, and other strategic partners.

We are focused on delivering products and services that provide the most value and convenience to our merchants and their customers. Our payment and commerce solutions consist of our core proprietary products and services, value-added solutions, as well as services that we enable through technical integrations with third-party providers. Our global footprint and ease of integration attract new partner relationships, allowing us to develop a robust integrated solutions partner network and positioning us to stay ahead of major trends in each of our markets.

We operate three proprietary, in-house processing platforms, all connected via our EVO Snap solution and each supporting a different geographic region. EVO Snap provides a technical connection to our regional processing systems and a central point of integration for all third-party product partners. Importantly, our platforms allow us to address the unique needs of specific payments markets and to control the entire customer experience. In-house processing also allows us to directly address merchant and regulatory concerns regarding the flow of cardholder data and other sensitive information. Our proprietary systems provide scale efficiencies which minimize our variable costs as merchant counts and transaction volumes increase.

Due to our broad distribution, diversified product offering, leading tech-enabled solutions, and client service, we are able to build strong relationships with our merchants and referral partners. These merchants rely on our product offerings, including our payment processing, on-boarding, underwriting, technical support, secure infrastructure, and settlement services, and our technology is often heavily embedded in our merchants’ infrastructure.

As an intermediary between merchants and card networks, we collect a series of fees primarily driven by the number, type, and value of transactions processed. These merchant service fees are then split into three components: (1) fees remitted to the financial institution that issued the card (interchange), (2) fees remitted to the card networks, and (3) fees retained by EVO. The allocation of these three components vary greatly based on a number of factors, including merchant size, merchant industry, merchant location, type of card, and type of transaction (e.g., card present and card-not-present). In addition, we generate fees for products and services provided to capture transactions, value-added services and more advanced technology solutions that we provide to our merchants.

On August 1, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Global Payments Inc. (“Global Payments”) and Falcon Merger Sub, Inc., a wholly-owned subsidiary of Global Payments (“Merger Sub”). Subject to the terms and conditions of the Merger Agreement, Global Payments has agreed to acquire EVO, Inc. in an all-cash transaction for $34.00 per share of Class A common stock. Pursuant to the Merger Agreement, Merger Sub will merge with and into EVO, Inc. (the “Merger”) with EVO, Inc. surviving the Merger as a wholly-owned subsidiary of Global Payments. Upon the consummation of the Merger, EVO, Inc. will cease to be a publicly traded company.

We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing

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costs of operations, working capital needs, or capital expenditure requirements. The Merger is expected to close in the first quarter of 2023, subject to customary closing conditions.

Our segments

We classify our business into two segments: the Americas and Europe. The alignment of our segments is designed to establish lines of business that support the various geographical markets we operate in and allow us to further globalize our solutions while working seamlessly with our teams across these markets. In both of our segments, we provide our customers with merchant acquiring solutions, including integrated solutions for retail transactions at the physical and virtual POS, as well as B2B transactions. These also represent the operating segments used by our Chief Executive Officer for evaluating our performance and allocating resources. Refer to Note 20, “Segment Information,” in the Notes to the Consolidated Financial Statements for financial data pertaining to our segments.

We believe the changing trends in payment technologies, including the increased adoption of tech-enabled payment solutions and the ongoing cash-to-card conversion, will continue to support growth across our segments.

Americas

Our Americas segment includes our operations in the United States, Canada, Mexico, and Chile. In the United States and Canada, where card penetration rates are among the highest in the world, we are focused on driving growth from the changing trends in payment technologies, including the increased adoption of software at the POS for retail and B2B transactions. In Latin America, overall card penetration is significantly lower than that of the United States and Canada. When coupled with other attributes, including a bank-centric acquiring model, terminal-centric small and medium sized enterprises (“SMEs”) markets, and centralized in-country processing shared among competitors, we see highly attractive and sustainable growth opportunities.

For the year ended December 31, 2022, we processed approximately 1.1 billion transactions in the Americas, and segment revenue represented 59.1% of total revenue.

Europe

Our Europe segment includes our operations in Poland, Germany, Ireland, the United Kingdom, Spain, and the Czech Republic, as well as our support of merchants in surrounding markets. The European merchant acquiring market has certain structural characteristics such as accelerating cash-to-card conversion, including regulatory support for digital payment acceptance, increased tech-enabled payments adoption, bank-centric acquiring models, significant penetration of local debit networks, and terminal-centric SME markets, which we believe provide us with future opportunities for growth.

For the year ended December 31, 2022, we processed approximately 3.8 billion transactions in Europe, and segment revenue represented 40.9% of total revenue.

Seasonality

We typically experience seasonal fluctuations in our revenue, which can vary by region. Historically, in both the Americas and Europe, our revenue has been strongest in the fourth quarter and weakest in the first quarter as many of our merchants experience a seasonal lift during the traditional vacation and holiday months.

Our sales and distribution network

Within each segment, we have developed a diverse network of sales distribution channels to drive growth for our merchant portfolio. Leveraging our global direct sales force, we target merchants across a wide variety of countries, industries, and sizes. Strategic investments in new products and distribution channels and the seamless introduction of these capabilities to our global markets are central components of our growth strategy. These sales distribution networks consist of our Tech-enabled division, which includes our independent software vendor (“ISV”), B2B, and eCommerce businesses, as well as our Direct and Traditional divisions.

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Tech-enabled

Our Tech-enabled division represents our relationships with merchants requiring a technical integration at the POS between us and a third party software solution whereby the third party passes information to our systems to enable payment processing. These merchant acquiring arrangements are supported by our direct sales force as well as partnerships with ISVs, integrated software dealers or resellers, and eCommerce gateway providers. In the United States, our Tech-enabled division also includes our B2B business, through which we provide integrated solutions to enterprise resource planning (“ERP”) software to enable companies utilizing this software to accept digital payment methods from their business customers. Our B2B relationships are supported by our proprietary solutions sold directly to merchants and via ERP software dealers or resellers. We have emerged as a preferred partner for these third-party referral partners because of the ease of integration through our proprietary solutions, high merchant satisfaction levels driven by the quality of our service, and the ease and speed of our boarding systems for new merchants.

Our network of over 1,500 integrated partnerships allows us to target a range of merchants, including SMEs and larger merchants such as corporations and multi-national customers, who desire an integrated software solution for their physical locations, an eCommerce gateway solution for their virtual storefronts, and sophisticated integrations to ERP systems to enable digital payment acceptance for B2B transactions. Our proprietary eCommerce capabilities and eCommerce referral partners, as well as our differentiated B2B product offerings including payment integrations to top-tier and industry-specific ERP systems, enable us to target larger merchants across our domestic and international markets.

ISV. Our integrated payments solutions are embedded into business management software solutions owned or licensed by our tech-enabled partners, which span numerous industry verticals and geographic markets. We grow our ISV business by enabling digital payments acceptance through business management software solutions for new and existing merchants, leveraging our tech-enabled referral network, and our direct sales force. We have invested and continue to invest in infrastructure that allows software providers, including dealers and resellers, to offer our proprietary integrated payment solutions to merchants across all of our markets. These investments include enhancing our current infrastructure as well as strategic acquisitions of integrated technology solutions. Our EVO Snap platform’s simple yet powerful connection point provides software developers and their partners access to our three processing platforms—thereby allowing merchants to accept various payment methods across all of our geographic markets.

In July 2021, we acquired Anderson Zaks Limited, an omni-channel payment gateway provider in the United Kingdom to expand our tech-enabled capabilities and broaden our ISV network in the U.K. and across Europe for merchants in key retail verticals, including hospitality, pharmacy, venues, ticketing, and general retail, among others.

B2B. We offer B2B solutions, which combine our payment processing capabilities and business automation software through our market-leading PayFabric gateway to simplify digital payments acceptance for our merchants’ business-to-business transactions. We believe that merchants of all sizes are increasingly looking to improve their back office operations by leveraging digital automation and workflow technology. In addition to our processing capabilities, we offer various interchange management solutions, reporting solutions and other business automation tools to merchants, particularly larger companies with complex payment needs. As a result of our strategic acquisitions and internal development, we are able to offer our solutions to Microsoft, Oracle, Sage, Acumatica, and SAP merchants leveraging our certified native integrations, as well as merchants utilizing various industry-specific business management solutions through our custom integrations. Our investments in the development of our B2B PayFabric gateway have also enabled us to offer these merchants proprietary payment solutions for retail eCommerce transactions.

In May 2022, we acquired North49 Business Solutions, Inc., a certified Sage development partner based in Canada, to provide enhanced B2B integrated payment solutions for Sage customers.

eCommerce. Our eCommerce solutions enable our merchants to securely and seamlessly accept various payment methods in any of our markets. We are able to deploy our proprietary eCommerce gateway solutions to merchants of all sizes across our global footprint through our direct sales and tech-enabled referral networks. Currently, we provide proprietary, regionally designated eCommerce gateway solutions across Europe, Latin America, and the U.S. We will continue to expand our eCommerce offering, particularly in our international markets, through strategic acquisitions and continued investments in our proprietary and related solutions that align with customer preferences and local government

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requirements. For example, in August 2022, we acquired certain technology assets that include shopping cart and website design software that expands our proprietary eCommerce capabilities in Mexico and Chile and decreases our reliance on third parties, and in December 2022, we acquired Electronic Data Processing Source S.A., a leading merchant service provider in Greece to enhance tech-enabled capabilities. Additionally, in June 2021, we acquired Pago Fácil, a leading eCommerce payment gateway in Chile that offers an array of digital payment solutions, including acquiring services, eCommerce software integrations, and value-added solutions that we will leverage across Chile and Mexico.

Our Tech-enabled division represents approximately 43.2% of our Americas revenue and approximately 23.3% of our Europe revenue for the year ended December 31, 2022.

Direct

Our Direct division primarily represents the direct solicitation of merchants through international bank relationships and certain other referral sources in the U.S. and is supported by our worldwide direct sales force. In our international markets, we have long-term, exclusive referral relationships with leading financial institutions that actively pursue new merchant relationships on our behalf. As part of these relationships, we target large merchants through a coordinated sales approach with our financial institution partners.

These financial institutions, including Deutsche Bank USA, Deutsche Bank Group, Grupo Santander, PKO Bank Polski, Bank of Ireland, Raiffeisen Bank, Moneta, Citibanamex, Sabadell, Banco de Crédito e Inversiones (“BCI”), and the National Bank of Greece S.A. (“NBG”), among others, often provide us with access to their brands, significantly enhancing our credibility and recognition in the marketplace. In several markets, we operate with more than one financial institution partner. We also have referral arrangements with a limited number of independent sales organizations (“ISO”) that refer merchants to us.

In December 2022, we commenced operations in Greece through our joint venture and exclusive referral relationship with the National Bank of Greece.

We utilize a dedicated sales team, including outbound telesales, to build and maintain relationships with our merchants, referral partners, and international bank referral network. We have a long history of operating as a direct sales organization and have succeeded by pursuing merchants through our direct sales efforts and retaining merchants by delivering high levels of customer satisfaction. We view our direct sales force as complementary to our financial institution relationships, as our direct sales force generates new merchant opportunities in addition to the referrals we receive from our various partners. As we expand, we will continue to export our direct sales expertise and capabilities into all of the markets in which we operate, using products and sales practices developed over the years in the United States.

A key component of our Direct division is our highly customized lead management, merchant boarding, and risk management software tools. These technologies allow us to quickly and efficiently accept new merchant leads from sales representatives and bank partners, digitally onboard merchants, and manage transaction risks. In both the financial institution referral model and through our direct sales team, we build and maintain a direct relationship with our merchants in order to control our sales, pricing, underwriting, boarding, and support processes.

Our Direct division is our largest division as our international markets are dominated by referrals from our financial institution partners. This division represents approximately 44.6% of our segment revenue in the Americas and 76.7% in Europe for the year ended December 31, 2022.

Traditional

Our Traditional division is our heritage United States portfolio and is comprised primarily of dormant commercial relationships with independent sales agents, ISOs, and other partners. While this division is very profitable, the independent sales groups and agents are no longer actively referring merchants to us, and as such, this business will decline over time. This division represents approximately 12.2% of our segment revenue in the Americas for the year ended December 31, 2022.

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Our competitive strengths

Global footprint enables us to serve clients around the world

We have operations in 13 countries and the ability to service merchants in more than 50 markets around the world. Our customers include large national and multi-national corporations as well as SMEs spanning across most industry verticals. Our global merchant footprint is diversified among retail, restaurants, petroleum, government, and transit industries, among others.

We have investments and partnerships in fast-growing developing and emerging markets with lower penetration rates of electronic payments, such as Mexico, Chile, and Central and Eastern Europe. In addition, we have established sales channels and relationships in large developed economies, such as the United States, Canada, and certain countries in Western Europe, where the penetration of electronic payments is relatively mature.

We believe our global footprint is a significant competitive advantage as we compete for large, multi-national clients as well as ISVs, integrated software and ERP dealers, and other partners. Large, multi-national merchants choose us because we can act as a single acquirer and processor in the markets in which they operate. Additionally, because of our global footprint, our referral partners can reach new markets by leveraging their connection with us to access our global processing services.

Strategic distribution partnerships with financial institutions and tech-enabled referral partners

Across Europe and Latin America, our exclusive financial institution distribution relationships represent thousands of bank branches, including retail and corporate banking locations. We are highly selective in identifying optimal distribution partners, and we seek to align ourselves with financial institutions that have strong networks, a high-quality client portfolio, and a trusted brand name. After forming these relationships, we introduce our sales and technology capabilities to the local market, identify new merchant recruitment opportunities, and strengthen our relationships with existing merchant clients as our bank partners exclusively refer their existing and new customers to us for acquiring and processing services. We have experienced significant success in our financial institution alliances in attracting new customers on behalf of our bank partners. By providing high quality, focused services to merchants, we enhance the goodwill between our financial institution partners and their merchants which can, in turn, curb attrition. We have demonstrated success in integrating and cross-selling our services to this expanded merchant base as well as generating new banking customers for our partners through our direct sales strategies.

We have also established deep relationships with a large network of tech-enabled referral partners including ISVs, integrated software dealers, ERP dealers and integrators, eCommerce providers, and other membership or distribution partners that wish to offer payment processing services to their merchant customers. We believe our expertise in serving tech-enabled referral partners is differentiated and enabled by our three proprietary, in-house processing platforms and service-oriented culture. Through a single, easy integration point, partners gain access to our global processing platform and solutions. Furthermore, our commitment to customer service drives high merchant satisfaction levels and has established our strong reputation as a reliable and trusted partner around the world. In the B2B market, our integrations to ERP systems enable us to sell our B2B solutions through a network of ERP system implementers, resellers, and buying groups. We believe our expertise in serving tech-enabled distribution partners is a competitive advantage and will position us for continued growth.

Comprehensive suite of payment and commerce solutions

We are focused on delivering the products and services that provide optimal value and convenience to our merchants. As such, we continuously survey the competitive landscape and our merchants and leverage our experience in markets throughout the world to develop products, services, pricing, promotions, and partnering strategies for each region that we believe best suits the current and future needs of each market. Our wide-ranging experience serving multi-national merchants in markets around the world, as well as our close relationships with large merchants and various card networks, including Visa, Mastercard, American Express, Discover, UnionPay, JCB, and other card networks, uniquely position us to stay ahead of major trends in each of our markets.

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We offer an extensive portfolio of products, services, and pricing solutions with functionality that appeals to a broad range of merchants and that are specifically designed for particular vertical markets. Our extensive product offerings enable us to provide tailored payment solutions to each of our merchants to fit their customized needs.

In addition, because we operate in markets around the world and have a global perspective, we are able to export our strategies and solutions from one market into another. Specifically, EVO Snap provides a technical connection to our proprietary processing systems and a single point of integration for technology partners and merchants across all our markets and geographies. We believe this capability differentiates us from our competitors.

Leading technology and security

As the rate of innovation has increased dramatically, providing payment and commerce solutions to merchants of all types has become increasingly dependent upon a strong foundation of secure and flexible technology. We have designed our technology infrastructure with a singular focus in mind — to provide the products and services our merchants want in the most secure, efficient, and effective manner possible. Underpinning this focus is a worldwide team of professionals from multiple disciplines, dedicated to continuously improving our service levels while expanding our offerings to merchants across the various regions in which we operate.

Our strategy is to leverage EVO-owned technology in our product and service delivery to the greatest extent possible. We believe that this approach allows us to minimize variable expenses in processing transactions and maximize reliability and speed-to-market in delivering the products and services demanded by our merchant customers throughout our global footprint. In many markets, we provide innovative solutions that merchants are unable to obtain from traditional bank acquirers. We endeavor to export products, services, platforms, and applications that enjoy success in any one of our markets to all of our markets, allowing our merchants and referral partners to benefit from our global footprint and providing a consistent experience for our multinational customers. We employ local product and technical expertise in every EVO market and then tailor our products and services from other regions to capture local market opportunities.

Our product lines consist of a collection of integrated solution offerings, which allow tech-enabled partners to connect to our systems via a simple, single integration, giving them access to our platforms. These product lines include (1) an ISV platform that offers merchants a variety of direct connections to software companies through various integrated software dealers, (2) payment integrations to ERP systems to enable card acceptance from business customers as well as complementary accounts receivable-related automation and reconciliation tools, and (3) robust eCommerce gateway solutions that provide comprehensive payment solutions, including proprietary eCommerce solutions that allow online merchants to leverage our global suite of products, including paperless reporting and boarding.

Our EVO Snap platform is fully EMV (Europay, Mastercard, Visa) compliant and provides an extensive menu of advanced features to our current and prospective integrated software partners, including tokenization, point-to-point encryption, and real-time fraud scoring. We believe this platform also allows us to deliver outsized value to our merchants by providing them with access to a broad range of industry-specific third-party business management software tools at the POS (e.g., inventory management, advanced accounting functions, and real-time promotions), even if the software vendor is located in another market.

Uninterrupted services are mission-critical to our merchants and referral partners. As such, we have invested in creating a leading technology infrastructure designed to prioritize both efficiency and security. In addition, everything we bring to market is designed and implemented with security as a primary requirement. Our technology infrastructure is supported by professionals with decades of experience in operating high-volume, real-time processing systems and has been developed around our data centers located in the U.S., Mexico, and Poland. We have also designed our environments with the ability to redirect processing to the most appropriate operating location at any given time. This flexibility enables us to continue to offer processing services during catastrophic events and disasters that would otherwise adversely affect our clients.

In addition, we have implemented a formal information security program, EVO Secure, to address threats to our infrastructure. This multi-layered program, led by a team of dedicated security professionals, ensures that we evaluate, defend, monitor, and react to potential threats in a consistent manner across our global network.

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Proven management team with strong track record of value-creating acquisitions

Our senior leadership team includes highly experienced payment technology professionals based in the Americas and Europe, allowing us to operate successfully in our current markets while also evaluating new markets. Many of our executives previously worked together in the industry and have extensive experience in developing and managing a global payments company. As we have expanded our international operations, we have invested substantial resources to attract and retain experienced talent with significant in-country experience to further develop and support our current and future markets.

Our senior leadership team has also demonstrated exceptional execution capabilities around developing new markets and sales distribution channels, consolidating and insourcing operations, and leading multi-cultural dispersed teams. They have completed numerous migrations of merchants from third party providers to our proprietary platforms. The team has also successfully formed and maintained complex alliance relationships with many large financial institutions, which provide a significant number of merchant referrals to our business.

Our growth strategies

We believe our competitive strengths will continue to generate significant growth opportunities in both existing and new markets. We plan to grow our business by executing the following strategies:

Organically growing existing markets

We believe there is considerable opportunity for growth not only in new markets, but in our existing markets as well. Since 2012, our international operations have grown considerably, accounting for approximately 65% of our revenue for the year ended December 31, 2022.

Many of our international markets are less mature than the United States with respect to the growth drivers of our business. Specifically, these markets exhibit higher overall consumer expenditure growth, provide more opportunity for cash-to-card conversion, have lower penetration of integrated software and eCommerce solutions, and present growth opportunities with new financial institution partners. Furthermore, as a result of the COVID-19 pandemic, we have seen an acceleration in the adoption of digital payments in these markets resulting in an increase in card penetration and processing volumes.

In the United States, Canada and the U.K., which are relatively more mature than our other international markets, we believe there is significant opportunity for sustained, attractive growth in both the integrated software and the B2B channels. Merchants of all sizes are increasingly migrating from standalone terminals to integrated POS solutions, as software becomes more affordable and more customized based on the industry of the merchant. B2B merchants, who have historically low rates of card acceptance compared to business-to-consumer merchants, are now enjoying significant growth because of interchange incentives from the card schemes which lowers the cost of card acceptance based on the data transmitted with each transaction, coupled with the desire to adopt business automation tools available through ERP payment integrations. We have made and continue to make investments through in-house development and acquisitions that secure market-leading technology solutions for both retail management software and ERP solutions, as the growth rates of these channels are superior to that of traditional POS merchants. We expect these growth trends to continue for the foreseeable future.

To continue growing our merchant base we focus primarily on the following strategies:

● Supporting our existing portfolio and adding new customers. Our existing distribution partners currently service customers that do not utilize our merchant services, which presents business opportunities to cross-sell our services to these existing relationships.

● Introducing our comprehensive, global set of payment and commerce solutions to our existing markets. With industry leading products and services, such as our proprietary dynamic currency conversion (“DCC”) technology, our state-of-the-art integrated platform, our suite of ERP payments integrations, and our eCommerce gateway solution, we believe we are uniquely positioned to enable our distribution partners to offer their

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merchants the broadest product offering in the market.

● Leveraging our global infrastructure to service multinational and enterprise merchants. As a result of having a proprietary integrated platform, we are able to act as a single acquirer and processor for merchants in multiple countries.

● Customizing solutions to meet in-market needs. We design our products and services to meet the needs of our local customers and partners. We also enable our systems to utilize local alternative payment methods that are present in particular markets, such as Blik in Poland, Giropay in Germany, and Codi in Mexico.

By implementing these strategies, we believe we will increase adoption of our payment and commerce solutions, continue to grow our merchant base, and offer merchants the broadest set of solutions in the market.

Expanding our global footprint

Our partnership strategy has been a source of significant growth, and we believe it will continue to facilitate growth in the future. Since 2012, we have established bank alliances with leading financial institutions around the world, many of which are exclusive and long-term. For example, we completed our previously announced transaction with the National Bank of Greece and commenced operations in Greece in December 2022 through a joint venture and exclusive referral relationship with the bank. While we have made meaningful headway in penetrating new markets, we believe considerable opportunities remain in both establishing additional bank alliances in our current markets, as well as new markets around the world.

In determining which markets to enter, we evaluate a wide range of factors, including the reputation of our potential bank partner, the size and characteristics of the bank’s existing merchant portfolio, the size and stability of the domestic economy, the stability of the government, card usage penetration, growth prospects, profitability, commerce and technology trends, regulatory and other risks, required investments, management resources, and the likely return on investment. This strategy drives us to expand into select international markets that we believe present attractive investment opportunities for long-term, sustainable merchant growth, as supported by factors such as:

● low penetration of cards-per capita among consumers;

● high volume growth supported by cash-to-card conversion;

● regulatory initiatives implemented with an aim to accelerate card acceptance among merchants;

● less differentiated competitive landscape, given the prevalence of bank-owned acquiring businesses;

● increased adoption of integrated POS, eCommerce, and integrated technologies;

● embedded distribution through partner retail and corporate branch footprint; and

● ability to launch our product suite and customer-centric services to accelerate end-market growth and acceptance penetration.

We enter new markets by creating distribution relationships with leading, in-market financial institutions that possess a high degree of market knowledge, brand recognition, large distribution networks, and, in many instances, an existing merchant portfolio. These distribution agreements enable us to access a diverse group of merchants, expand the reach of our products and services, and form the basis for future investment in sales and infrastructure.

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Broadening our distribution network

We aim to grow our business and broaden our global reach by generating new distribution relationships that add merchants to our portfolio. We reach new merchants primarily through our direct sales force and referral relationships. Our focus is to build these relationships across all channels, including financial institutions, software vendors, POS dealers, gateway providers, and agents. In addition to developing these growth channels, we are able to leverage our infrastructure both in servicing our existing markets and in expanding to new markets. For example, we have implemented EVO Snap into our European operations, extending the ability for our merchants to access EVO Snap as a single, global integration platform. Through EVO Snap, we also have the ability to support integrated software dealers and distributors in multiple geographic markets. We plan to continue to broaden our distribution network by identifying and securing new distribution opportunities within both our existing and future markets.

Growing and enhancing our innovative payments and commerce solutions

We believe our innovative payments and commerce solutions represent one of our competitive advantages. We have made significant investments internally and through strategic acquisitions in both technology and personnel to propel our product innovation forward. In order to continue to expand, we believe we must continue to offer our customers leading products and services. Through a combination of building products organically, partnering with leading technology innovators, and selectively pursuing acquisitions, we are constantly driving innovation to enhance our products and services.

Through acquisitions and internal development, we have invested heavily in supporting a diverse network of integrated POS providers, ISVs, and integrated software and ERP dealers. These investments have strengthened our ability to support the software community in the markets where we operate, including POS, mobile, and eCommerce developers, by providing these developers with the tools necessary to develop a broader suite of multi-channel, multi-service solutions for merchants. This distribution-centric strategy has created our key global technology solution, in which software developers can integrate to our proprietary processing platforms and we can sign up tech-enabled solutions providers as strategic distribution partners.

Capitalizing on our operating leverage

Our focus on cost optimization is a key consideration of any new investment opportunity. The deep industry and operating expertise of our management team enables us to identify opportunities to improve the operating efficiencies of our technology, product, and operations infrastructure. With in-house processing solutions and proprietary internal systems in our Americas and Europe segments, we have the ability to generate significant operating leverage as we grow overall volumes and transactions. With each newly acquired business, we utilize this infrastructure to optimize costs and efficiencies. Through the support and reporting capabilities of our global systems, we eliminate redundancies and improve operating efficiencies post-acquisition.

Our products and services

We offer a comprehensive portfolio of card-present and card-not-present payment solutions for a variety of industry types and business sizes to facilitate merchants accepting credit, debit, prepaid, digital wallets, and other alternative payment methods. Our portfolio of solutions includes EMV, chip and signature enabled POS terminals, virtual POS terminals for desktops, mobile acceptance and mobile point-of-sale (“mPOS”) solutions for mobile devices and tablets, software-based POS solutions, online hosted payments, and integrated payment service provider (“PSP”) solutions for card-not-present bankcard, direct debit, and alternative payment scheme processing. We also offer value-added solutions such as gateway solutions, online hosted payments page capabilities, mobile-based short message service (“SMS”) integrated payment collection services, security tokenization and encryption solutions at the physical and virtual POS, DCC, ACH, Level 2 and Level 3 data processing, management reporting solutions, loyalty programs, and Visa Direct, among other ancillary solutions. Other industry-specific processing capabilities are also in our product suite, such as recurring billing, multi-currency authorization, and cross-border processing and settlement.

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Our solutions enable merchants of all sizes to accept digital payments, including credit and debit cards, closed loop gift cards, pre-paid cards, ACH, and other alternative payment methods. This spectrum of solutions includes:

● EMV chip, magnetic swipe readers, contactless, chip and signature, chip debit, and gift services for hardware terminals;

● our mPOS solutions and services including mobile SMS payments solutions;

● integrations to various ERP systems to provide accounts receivable departments with B2B payments options and automated reconciliations;

● a variety of eCommerce solutions including gateway and PSP products, online hosted payments pages, payment links, shopping cart-plug-ins, and virtual terminals;

● comprehensive real-time digital and signatureless merchant boarding systems (from application to merchant processing);

● market-specific business models for partners, including PSP and referral programs; and

● online reporting systems for partners, integrators, and merchants providing access to our platforms worldwide.

In addition, as a merchant acquirer, we provide in-house customer service utilizing in-market call centers, as we believe customers need to be served locally in market. We also have developed a consolidated shared services operational capability for back-office services, including credit underwriting, risk, chargebacks, and terminal deployment and repair. Our capabilities also include a regionally-based merchant boarding system, risk management, and ISV technology development centers, supporting the Americas and Europe.

Our diverse offerings are supported by our two unique underlying global products, EVO Snap and our proprietary customer relationship management (“CRM”) solutions. EVO Snap is a highly customized, EMV compliant technology platform that allows merchants to easily access our key POS-related products in all of our markets with one single integration, including core processing and value-added services (e.g., ACH, Level 3 processing, DCC). Our merchants and partners benefit from a single global certification and common interface in the Americas and Europe, a key feature for retail and eCommerce merchants and referral partners with a global customer base. This common application programming interface (“API”) allows ISVs and developers to seamlessly integrate to EVO Snap and access all of its new features.

Our global, state-of-the-art CRM solutions enable all merchants, whether they are recruited through our financial institutions, direct sales, or partner channels, to be seamlessly managed throughout the merchant lifecycle. We provide all partners and agents access to these tools to ensure effective digital customer lifecycle management by streamlining the boarding and management of merchants and supporting our digital payment product and service solutions.

Our markets

Americas

Latin America. We believe that the merchant acquiring market in Mexico represents a very attractive growth opportunity, as overall card penetration is significantly lower than that of the United States. As card penetration continues to increase, we expect to enjoy outsized benefits as the only scaled independent acquirer in the market. In July 2019, we acquired the payment technology assets of SF Systems in Mexico, enhancing our ability to offer integrated payment solutions to mid-sized and large merchants within the region. Additionally, we are introducing our tech-enabled solutions, particularly integrated payments and eCommerce, in order to develop those aspects of the market. We see significant opportunity to differentiate from our competitors, principally financial institutions who view acquiring as a tertiary product necessary to attract core banking business.

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The merchant acquiring market in Chile closely mirrors that of Mexico, with relatively low card penetration among both consumers and merchants and very little competition for acquiring services. For years the acquiring and processing markets have been serviced only by a bank-owned monopoly. Today, only two financial institutions have migrated from the historical structure to offer proprietary solutions, and our bank partner BCI is the only financial institution that has partnered with an independent acquirer. To augment our local product offerings, we acquired Pago Fácil, a payment gateway headquartered in Santiago, in 2021. We have further enhanced Pago Fácil to meet the needs of our Mexican merchants and will further leverage the platform in additional markets in the region as we enter them. In addition, in 2022, we acquired certain technology assets that include shopping cart and website design software that expands our proprietary eCommerce capabilities in Mexico and Chile and decreases our reliance on third parties. We are focused on supplementing our bank partner’s distribution network with EVO’s proprietary sales strategies and product offerings, including through new and existing ISV and eCommerce referral partnerships.

U.S. and Canada. Card penetration in the United States and Canada is among the highest in the world. The largest growth opportunity in these markets is arising from the adoption of business management software with embedded payment processing functionalities as merchants are making an effort to enhance the payments experience for their customers. The cost of these solutions has declined sufficiently to make them affordable for merchants of all sizes, which is causing these solutions to displace standalone terminals at the POS. Examples of this trend include integrated solutions at the physical POS, ERP integrations for B2B digital payment acceptance, and eCommerce platforms. Merchant acquirers are capitalizing on this trend by entering into referral arrangements with technology companies and integrating acquiring services into their software. We have been particularly active in this market, preferring to partner with technology and software providers rather than acquire them in order to leverage our partners' software development expertise and to avoid channel conflicts. Additionally, our EVO Snap platform allows us to provide our partners integrated solutions with a single connection point that is fully integrated with our front-end authorization systems across all transaction types, including card-present, card-not-present, and mobile. EVO Snap, along with other innovations in our integrated products, has been accretive to our growth in the Americas. Through the acquisition of Sterling in 2017, we gained a significant number of new integrated relationships, and we have continued to make acquisitions, as well as investments in our proprietary capabilities, to broaden our tech-enabled offering.

Europe

Across most of our European markets, we believe there is significant opportunity for growth as overall card penetration is relatively immature compared to countries such as the United States, Canada and the United Kingdom. Additionally, the trends in payment technologies are changing across our markets due to the evolving payment industry reforms in Europe, ongoing cash-to-card conversion, and increased adoption of tech-enabled payments solutions.  We believe that these trends coupled with our positioning across Europe provide significant opportunities to launch new products and services at the early stage of merchant adoption of market innovations, such as gateway integrations and integrated solutions, enhance our market share and growth in existing markets, and capitalize on future investment opportunities in adjacent countries.

Under the European Payment Services Directive of 2015 (“PSD2”), we hold Payments Institution (“PI”) licenses, which enable non-financial institutions to participate in the payments industry subject to stringent regulatory requirements. We currently hold PI licenses in three markets: Germany, Poland and Spain, which enable us to operate as a direct member of the payment card networks. In some markets outside the European Union (the “EU”), applicable regulations and the local and international networks generally require non-financial institutions similar to us to be sponsored by a bank to become an acquirer. The ability to participate in the EU payments industry with direct licenses and without the requirement for third-party sponsorship provides us with greater flexibility and control of our Europe business at a lower cost.

Our competition

We compete with a variety of merchant acquirers that have different business models, go-to-market strategies, and technical capabilities in the markets in which we operate. Our competitors range in both size and geographic reach. In the United States and Canada, we primarily compete with independent merchant acquirers including Fiserv, Inc. (“Fiserv”), Global Payments, Inc. (“Global Payments”), and Fidelity National Information Services, Inc. (“FIS”), in addition to the merchant acquiring and processing divisions of certain financial institutions, including Chase Paymentech Solutions, LLC and Elavon, Inc. (“Elavon”), a subsidiary of U.S. Bancorp. In certain instances we may also compete with smaller U.S.-

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based financial technology companies, including vertically focused organizations. In Europe, we compete primarily with Barclaycard, a subsidiary of Barclays PLC, Elavon, Global Payments, FIS, Fiserv, Nexi S.p.A. (“Nexi”), Worldline SA, and Polskie ePłatności, a subsidiary of Nexi, in addition to in-market financial institutions. In Mexico, financial institutions remain the primary providers of payment processing services to merchants.

Our broad and differentiated product offerings, service proposition, pricing, and distribution strategies in our geographically diverse markets drive our ability to compete effectively through the acceptance and use of our payment and commerce solutions by merchants. We specifically focus on the primary customer needs of speed, reliability, and reconciliation, ensuring that, at a minimum, our systems, solutions, products, and service models prioritize these and other customer expectations.

Our intellectual property

Our products and services utilize a combination of proprietary software and hardware that we own and license from third parties. Our owned intellectual property is protected by federal patent, trademark, trade secret, and copyright law, as well as state trade secret laws, as appropriate. We generally control access to, and use of, our proprietary software and other confidential information through the use of internal and external controls, including entering into non-disclosure and confidentiality agreements with both our employees and third parties.

As of December 31, 2022, we had two pending patent applications covering certain aspects of our proprietary technology, including our EVO Snap product, and new integrated product innovations. In addition, we own a portfolio of trademarks in multiple jurisdictions around the world, including for our primary mark, EVO.

Our regulatory environment

Various aspects of our service areas are subject to U.S. federal, state and local regulation, as well as regulation outside the United States. Certain of our services also are subject to rules promulgated by various card networks and banking and other authorities as more fully described below.

Financial services regulations

As a result of the implementation of the Payment Services Directive of 2007 in the EU, a number of our subsidiaries in our Europe segment hold a PI license which allows them to operate in the EU member states in which such subsidiaries and their branches do business. As a PI, we are subject to regulation and oversight in the applicable EU member states, which includes, among other obligations, a requirement to maintain specified regulatory capital and adhere to certain rules regarding the conduct of our business. In July 2013, the European Commission proposed legislation in two parts, covering a wide range of proposed regulatory reforms affecting the payments industry across the EU. The first part was an EU-wide regulation on interchange fees for card-based payment transactions (the “Interchange Fee Regulation”). The Interchange Fee Regulation (2015/751) went into effect in June 2015. The second part, PSD2, was a recasting of the Payment Services Directive of 2007. PSD2 went into effect in January 2016 and was later transposed to national law across EU member states. PSD2 contains a number of additional regulatory provisions, including provisions relating to enhanced governance requirements (including stronger focus on risk management), new consumer-centric transparency regulations and Strong Customer Authentication (“SCA”) principles, which increased the security of electronic payments by requiring multi-factor user authentication and required industry-wide systems upgrades. The EU has also enacted regulations relating to the offering of DCC services which require additional disclosures to consumers in connection with our DCC product offerings in a number of markets. Further, several of our international subsidiaries provide services that make them subject to regulation by local banking agencies and other regulatory authorities. As a result of the United Kingdom’s withdrawal from the European Union (“Brexit”), we successfully completed an application for a stand-alone PI license which was granted in early 2023. We are currently focused on finalizing license requirements with the relevant card schemes and transitioning EVO’s current U.K. operations, which is currently being conducted under the U.K.’s temporary permissions regime, to the newly licensed entity.

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Association and network rules

We are subject to the rules of Mastercard, Visa, and other credit and debit networks. In order to provide processing services, a number of our subsidiaries are registered with Visa or Mastercard as service providers for member institutions. Various subsidiaries of ours are also processor level members of numerous debit and electronic benefits transaction networks or are otherwise subject to various network rules in connection with processing services and other services we provide. As such, we are subject to applicable network rules and to a variety of fines or penalties that may be administered by the card networks. Although these rules are not government regulations, any failure to comply with the networks’ requirements or to pay the fines they impose could cause the termination of our registration and require us to stop providing payment processing services. For example, “EMV” is a credit and debit card authentication methodology that the card networks are requiring processors, issuers, and acquirers to implement. Compliance deadlines for EMV mandates vary by country and by payment network. In addition, card networks and their member financial institutions regularly update, and generally expand, security expectations and requirements related to the security of cardholder data and environments. We are also subject to network operating rules promulgated by the National Automated Clearing House (“ACH”) Association relating to payment transactions processed by us using the ACH Network and to various state federal and foreign laws regarding such operations, including laws pertaining to electronic benefits transactions.

The Dodd-Frank Act

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) was signed into law in the United States. The Dodd-Frank Act resulted in significant structural and other changes to the regulation of the financial services industry. Among other things, Title X of the Dodd-Frank Act established the Consumer Financial Protection Bureau (the “CFPB”) to regulate consumer financial products and services. The CFPB enforces prohibitions against unfair, deceptive or abusive acts or practices under the Dodd-Frank Act and may have authority over us as a provider of services to regulated financial institutions in connection with consumer financial products.

Separately, under the Dodd-Frank Act, debit interchange transaction fees are regulated by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and must be “reasonable and proportional” to the cost incurred by the card issuer in authorizing, clearing, and settling the transaction. The Dodd-Frank Act also contains provisions that ban debit card networks from entering into exclusivity arrangements, prohibit card issuers and card networks from imposing transaction routing requirements, and require card issuers to enable at least two unaffiliated networks on each debit card.

In addition, the Dodd-Frank Act permits merchants to set minimum dollar amounts for the acceptance of a credit card (while federal governmental entities and institutions of higher education may set maximum amounts for the acceptance of credit cards), and to provide discounts or incentives to consumers who pay with alternative payment methods, such as cash, checks or debit cards.

Privacy and information security regulations

We provide services that may be subject to various state, federal, and foreign privacy laws and regulations, including, among others, the Financial Services Modernization Act of 1999 (the “Gramm-Leach-Bliley Act”), PSD2, the General Data Protection Directive (“GDPR”), the California Consumer Privacy Act of 2018 (the “CCPA”), and the Personal Information Protection and Electronic Documents Act in Canada. These laws and their implementing regulations generally restrict certain collection, processing, storage, use, and disclosure of personal information, require notice to individuals of privacy practices, and provide individuals with certain rights to prevent use and disclosure of protected information. These laws also impose requirements for the safeguarding and proper destruction of personal information through the issuance of data security standards. Certain federal, state, and foreign laws and regulations impose similar privacy obligations and, in certain circumstances, obligations to notify affected individuals, state officers or other governmental authorities, the public, and consumer reporting agencies, as well as businesses and governmental agencies, of security breaches affecting personal information. In addition, there are state and foreign laws restricting the ability to collect and utilize certain types of information such as social security and driver’s license numbers. In July 2016, the European Parliament adopted an EU-wide directive on security of network and information systems (the “NIS Directive”). The NIS Directive provides legal measures intended to boost the overall level of cybersecurity in the EU and required that EU member states enact related national laws to enforce certain cybersecurity obligations.

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The CCPA became effective on January 1, 2020 and established strict data privacy and data protection requirements for the data of California residents. The CCPA has been amended and it is likely that further amendments will be proposed to this legislation. As such, it remains unclear how certain provisions of the CCPA will be interpreted and enforced.

As a processor of personal data of EU data subjects, we are subject to regulation and oversight in the applicable EU member states with regard to data protection legislation. GDPR contains various obligations on the processing of personal data in the EU, including restrictions on transferring personal data outside of the EU. Post-Brexit, the UK has implemented GDPR into domestic law through the Data Protection Act and the UK GDPR.

GDPR contains additional obligations on data controllers and data processors operating in the EU. GDPR also provides significant enhancements with regard to the rights of data subjects (which include the right to be forgotten and the right of data portability), stricter regulation on obtaining consent to processing of personal data and sensitive personal data, stricter obligations with regard to the information in privacy notices, and significant enhanced requirements with regard to compliance, including a regime of “accountability” for processors and controllers and a requirement to adopt appropriate policies and practices. GDPR includes enhanced data security obligations (to run in parallel to those contained in NIS regulations), requiring data processors and controllers to take appropriate technical and organizational measures to protect the data they process and their systems. Organizations that process significant amounts of data may be required to appoint a data protection officer to oversee and manage compliance with GDPR. We have appointed data protection officers in several of our businesses. There are significant fines and other sanctions under GDPR for failing to comply with the core principles of the GDPR or failing to secure data.

Unfair trade practice regulations

We and our clients are subject to various federal, state, and international laws prohibiting unfair or deceptive trade practices, such as Section 5 of the Federal Trade Commission Act. Various regulatory agencies, including the Federal Trade Commission, various consumer protection agencies in Europe and other international markets, the CFPB, and state attorneys general, have authority to take action against parties that engage in unfair or deceptive trade practices or violate other laws, rules, and regulations. To the extent we are processing payments for a client that may be in violation of these regulations, we may be subject to enforcement actions by those agencies and may incur losses that impact our business.

Anti-money laundering, anti-bribery, sanctions, and counter-terrorist regulations

We are subject to anti-money laundering laws and regulations, including certain sections of the USA PATRIOT Act of 2001. We are also subject to anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other laws, that prohibit the making or offering of improper payments to foreign government officials and political figures and include anti-bribery provisions enforced by the Department of Justice and accounting provisions enforced by the Securities and Exchange Commission (the “SEC”). The FCPA has a broad reach and requires maintenance of appropriate records and adequate internal controls to prevent and detect possible FCPA violations. Many other jurisdictions where we conduct business also have similar anti-corruption laws and regulations. We have policies, procedures, systems, and controls designed to identify and address potentially impermissible transactions under such laws and regulations.

We are also subject to certain economic and trade sanctions programs that are administered by the Office of Foreign Assets Control (“OFAC”), which prohibit or restrict transactions to or from, or dealings with, specified countries, their governments and, in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations. We may be subject to additional local sanctions requirements in other relevant jurisdictions.

Similar anti-money laundering, counter terrorist financing and proceeds of crime laws apply to electronic currency transactions and to dealings with persons specified in lists maintained by the country equivalents to OFAC lists in certain other countries. These laws require specific data retention obligations to be observed by intermediaries in the payment process and our businesses in those jurisdictions are subject to such data retention obligations. For example, in the EU, our businesses are subject to requirements under the Fifth Money Laundering Directive ((EU) 2018/843) which has now been implemented in all European jurisdictions in which EVO operates.

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Our employees

As of December 31, 2022, we employed approximately 2,400 employees in 13 countries with the majority of employees in the United States, Mexico, and Poland. None of our employees in the United States are represented by a labor union or covered by a collective bargaining agreement.

We recognize that the talents and efforts of our employees are integral to our success as a company. EVO’s GET. GROW. KEEP. (“GGK”) culture represents a cornerstone of our talent strategy, which uses people-focused programs supported by human resources technology to attract (GET), develop (GROW) and retain (KEEP) the talent necessary to drive our growth and success.  For our existing employees, we utilize our global People Development Portal (“Global PDP”) to implement our talent management programs, including (i) our annual performance evaluation process and goal setting, and (ii) mandatory training and development curriculum for our employees.

Our global onboarding and recruiting technology platform allows us to attract and reach more candidates through multiple recruiting avenues and to improve our overall recruitment process. This platform engages new employees at onboarding and introduces them to our GGK culture including our five core values of integrity, service, teamwork, ownership and diversity. We believe that our culture creates a diverse, collaborative, respectful and safe workplace. To strengthen this culture, we recognize our colleagues whose behaviors and actions demonstrate the GGK culture and our values through multiple recognition programs.

Our executive management team and Human Resources department regularly review and update our talent strategy, monitoring a variety of data, including turnover, compensation and benefits benchmarking, diversity, and employee engagement, to design and implement effective reward/recognition, training, development, succession, and benefit programs to meet the needs of our businesses and our employees.

Available information

We maintain a website with the address www.evopayments.com. We are not including the information contained in our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available, free of charge through our website, our filings with the SEC, including our annual proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

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ITEM 1A. RISK FACTORS

The risks summarized and detailed below are not the only risks facing us. Please be aware that additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also materially and adversely affect our business, results of operations, financial condition, cash flows, or prospects. You should also refer to the other information contained in our periodic reports, including the Cautionary Note Regarding Forward-Looking Statements, our consolidated financial statements and the related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations for a further discussion of the risks, uncertainties, and assumptions relating to our business.

Risk Factors Summary

Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to:

Risks related to our business and industry

● Our ability to anticipate and respond to changing industry trends, changes in the competitive landscape, and the needs and preferences of our merchants and consumers;

● The effect of global economic, political, market, health and other conditions, including the impact of the COVID-19 pandemic, on our merchants and on consumer, business, and government spending;

● Our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks;

● Failures in our processing systems due to software defects, undetected errors, computer viruses, and development delays;

● Degradation of the quality of the products and services we offer, including support services;

● Our ability to recruit, retain, and develop qualified personnel;

● Risks created by acquisitions;

● Continued consolidation and other transactions in the banking industry;

● Increased customer, referral partner, or sales partner attrition;

● Any increase in chargebacks not paid by our merchants;

● Failure to maintain or collect reimbursements from our financial institution referral partners;

● Fraud by merchants or other counterparties or partners;

● Failures by third-party vendors that we rely on to provide products and services;

● Our ability to maintain our merchant relationships and strategic relationships with various financial institutions and referral partners;

● Seasonality and volatility resulting in fluctuations in our quarterly revenues and operating results;

● Geopolitical and other risks associated with operations outside of the United States;

● A decline in the use of cards as a payment mechanism for consumers or other adverse developments with respect to the card industry in general;

● Increases in card network fees and other changes to fee arrangements;

● Failure by us, our merchants or our sales partners to comply with the applicable requirements of card networks resulting in fines or penalties;

Risks related to the Merger

● Disruption to our business caused by the pending acquisition of us by Global Payments;

● Our ability to consummate the transaction with Global Payments within the contemplated timeframe, or at all;

● Any failure to consummate the Merger will adversely affect the market price of our common stock and could adversely affect our business, results of operations and financial condition;

● The impact on our stock price, business, financial condition and results of operations if the proposed transaction with Global Payments is not consummated;

● Costs, charges and expenses relating to the proposed transaction with Global Payments;

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Risks related to our financial results and indebtedness

● The effect of foreign currency exchange rates;

● The possibility of impairment of a significant portion of the goodwill and intangible assets on our balance sheet;

● The impact on our results of operations if we were required to establish a valuation allowance against our deferred tax assets;

● The effect of our indebtedness on our ability to raise capital, react to changes in the economy or our industry, or meet our debt obligations;

● The risk that we could be required to purchase the remainder of our eService subsidiary in Poland;

● Restrictions imposed by our Senior Secured Credit Facilities and our other outstanding indebtedness;

● Accelerated funding programs, which increase our working capital requirements and expose us to incremental credit risk;

Risks related to legal and regulatory requirements

● Failure to comply with, or changes in, laws and regulations, including those specific to the payments industry and those relating to anti-corruption, anti-money laundering, privacy, data protection, financial reporting, and information security, and consumer protection;

● Failure to enforce and defend our intellectual property rights;

● Risks associated with new or revised tax regulations or their interpretations, or becoming subject to additional foreign or U.S. federal, state, or local taxes;

● Various legal proceedings in the course of our business;

Risks related to our organizational structure

● The fact that our principal asset is our interest in EVO, LLC;

● Risks related to the TRA (as defined below), including substantial cash payments to the Continuing LLC Owners;

● Benefits conferred upon the Continuing LLC Owners as a result of our organizational structure that do not benefit holders of our Class A common stock to the same extent that they benefit the Continuing LLC Owners;

Risks related to our Series A Convertible Preferred Stock and the ownership interest of our Continuing LLC Owners

● Our Series A Preferred Stock could adversely affect our liquidity and financial condition, and could in the future substantially dilute the ownership interest of holders of our common stock;

● Continuing LLC Owners and holders of the Series A Preferred Stock may exercise influence over us;

General risks

● The long-term macroeconomic effects of the global COVID-19 pandemic;

● Certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control.

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Risks related to our business and industry

Our ability to anticipate and respond to changing industry trends, changes in the competitive landscape, and the needs and preferences of our merchants and consumers may adversely affect our competitiveness or the demand for our products and services.

The financial services and payment technology industries are highly competitive and subject to rapid technological advancements, resulting in new products and services, including mobile payment applications and customized integrated software payment solutions, and an evolving competitive landscape, as well as changing industry standards and merchant and consumer needs and preferences. Our payment services and solutions compete against various financial services and payment systems, including cash and checks, and electronic, mobile, eCommerce, integrated, and B2B payment platforms. If we are unable to differentiate ourselves from our competitors and drive value for our merchants, we may not be able to compete effectively.

Furthermore, we are facing increasing competition from nontraditional competitors, including new entrant technology companies who offer certain innovations in payment methods. Some of these competitors utilize proprietary software and service solutions. Some of these nontraditional competitors have significant financial resources and robust networks and are highly regarded by consumers. These competitors may compete in ways that minimize or remove the role of traditional card networks, acquirers, issuers and processors in the electronic payments process. If these nontraditional competitors gain a greater share of total electronic payments transactions, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We expect that new services and technologies applicable to the financial services and payment technology industries will continue to emerge and that our merchants and consumers will continue to adopt new technology for business and personal uses. Our competitive landscape will continue to undergo changes that could adversely impact our current competitive position and prospects for growth, including:

● rapid and significant changes in technology, resulting in new and innovative payment methods and programs, that could place us at a competitive disadvantage and reduce the use of our products and services if competitors are able to offer and provide services that we do not;

● competitors, merchants and other industry participants may develop products and services that compete with or replace our products and services, including alternative payment systems that enable card networks and banks to transact with consumers directly, eCommerce payment systems, payment systems for mobile devices, peer to peer payment services, real-time and faster payment initiatives, delayed payment offerings such as BNPL or installment solutions, cryptocurrency payments initiatives, and customized integrated software and B2B payment solutions;

● increased competition in certain of our markets in which we process “on-us” transactions, whereby we receive fees as a merchant acquirer and for processing services for the issuing bank, may cause the number of transactions in which we receive fees for both of these roles to decrease, which could reduce our revenue and margins in these jurisdictions; and

● participants in the financial services and payment technology industries may merge, create joint ventures or form other business combinations that may improve their existing business services, or create new payment services that compete with our services.

In order to remain competitive within our markets, we must anticipate and respond to these changes, which may limit the competitiveness of and demand for our services. It is possible that these changes could ultimately reduce our role in payment transaction processing. Additionally, and in many cases as a result of significant consolidation in the payments industry over recent years, some of our competitors are larger and have greater financial resources than we do, enabling them to maintain a wider range of product offerings, mount extensive promotional campaigns, and be more aggressive in offering products and services at lower rates. Failure to compete effectively against any of these or other competitive threats or to develop value-added services that meet the needs and preferences of our merchants could adversely affect our ability to compete for merchants and financial partners and adversely affect our business, financial condition, or results of

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operations. Furthermore, potential negative reactions to our products and services by merchants or consumers can spread quickly and damage our reputation before we have the opportunity to respond. If we are unable to anticipate or respond to technological or industry changes on a timely basis, our ability to remain competitive and the demand for our products and services could be adversely affected.

Global economic, political, and other conditions may adversely affect trends in consumer, business, and government spending, which may adversely impact the demand for our services, revenue, and profitability.

The financial services and payment technology industries depend heavily upon the overall level of consumer, business, and government spending. A sustained deterioration in general economic conditions, including those caused by inflation, high interest rates, supply chain disruptions, and COVID-19, particularly in the Americas or Europe, may adversely affect our financial performance by reducing the number or average purchase amount of transactions we process. A reduction in consumer or business spending could result in a decrease of our revenue and profits.

Adverse economic trends may accelerate the timing, or increase the impact of, risks to our financial performance. These trends could include the following:

● declining economies, foreign currency fluctuations, and the pace of economic recovery can change consumer spending behaviors, such as cross-border travel patterns, on which a portion of our revenue and growth is dependent;

● low levels of consumer and business confidence typically associated with recessionary environments may result in decreased spending by cardholders;

● high unemployment may result in decreased spending by cardholders;

● budgetary concerns in the United States and other countries could affect sovereign credit ratings, and impact consumer confidence and spending;

● supply chain disruptions may result in decreased spending by cardholders with our merchants whose ability to provide goods and services is materially impacted;

● supply chain disruptions could impact our ability to purchase terminals for existing or prospective customers;

● current and potential future inflationary pressures may adversely impact spending by cardholders;

● emerging market economies tend to be more sensitive to adverse economic trends than the more established markets we serve;

● financial institutions may restrict credit lines to cardholders or limit the issuance of new cards to mitigate cardholder credit concerns;

● uncertainty and volatility in the performance of our merchants’ businesses;

● cardholders may decrease spending for services our merchants market and sell; and

● government intervention, including the effect of laws, regulations and government investments in our merchants, may have potential negative effects on our business and our relationships with our merchants or otherwise alter their strategic direction away from our products and services.

Our inability to protect our systems and data from continually evolving cybersecurity risks or other technological risks could affect our reputation among merchants, card issuers, financial institutions, card networks, partners, and cardholders and may expose us to penalties, fines, liabilities, and legal claims.

In order to provide our services, we process, transmit, and store sensitive business information and personal information about our merchants, merchants’ customers, vendors, partners, and other parties. This information may include credit and debit card numbers, bank account numbers, personal identification numbers, names and addresses, and other types of personal information or sensitive business information. Some of this information is also processed and stored by our

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merchants’ third-party service providers to whom we outsource certain functions and other agents (which we refer to collectively as our “associated third parties”).

We have certain responsibilities to the card networks and their member financial institutions for any failure by us or by any of our associated third parties to protect this information. We have been, and expect to continue to be, a potential target of malicious third party attempts to identify and exploit system vulnerabilities and penetrate or bypass our security measures. While plans and procedures are in place to protect this sensitive data, we cannot be certain that these measures will be successful and will be sufficient to counter all current and emerging technology threats that are designed to breach our systems in order to gain access to confidential information.

The techniques used to obtain unauthorized access, disable, or degrade service or sabotage systems change frequently, have become increasingly complex and sophisticated, and are often difficult to detect. Threats to our systems and our associated third parties’ systems can derive from human error, fraud, or malice on the part of employees or third parties, or may result from accidental technological failure. Computer viruses and other malware can be distributed and could infiltrate our systems or those of our associated third parties. In addition, denial of service or other attacks could be launched against us for a variety of purposes, including to interfere with our services or create a diversion for other malicious activities. Our defensive data protection measures may not prevent unauthorized access or use of sensitive data. While we maintain insurance coverage that may cover certain aspects of cyber risks and incidents, our insurance coverage may be insufficient to cover all losses, and we may not be able to renew the insurance on commercially reasonable terms or at all. Further, we do not control the actions of any of the third parties that facilitate our business activities, including vendors, suppliers, customers, service providers, counterparties or financial intermediaries, or their systems. These third parties have experienced security breaches in the past, and any future problems experienced by these third parties, including those resulting from cyberattacks or other breakdowns or disruptions in services, could adversely affect our ability to conduct our business or expose us to liability.

In addition, following an acquisition, we take steps to ensure our data and system security protection measures cover the acquired business as part of our integration process. As such, there may be a period of increased cybersecurity risk during the period between closing an acquisition and the completion of our data and system security integration.

We may also be subject to liability for claims relating to misuse of personal information, such as unauthorized marketing and violation of data privacy laws. We cannot provide assurance that the contractual requirements related to security and privacy that we impose on our service providers who have access to merchant and customer data will be followed or will be adequate to prevent the unauthorized use or disclosure of data. In addition, we have agreed in certain agreements to take certain protective measures to ensure the confidentiality of merchant and consumer data. The costs of systems and procedures associated with such protective measures may increase and could adversely affect our ability to compete effectively. Any failure to adequately enforce or provide these protective measures could result in litigation, governmental and card network intervention, and fines, lost revenue, and other liabilities and reputational harm.

Any type of security breach, attack, or misuse of data described above or otherwise, could harm our reputation and deter existing and prospective merchants and partners from using our services, deter customers from making electronic payments generally, increase our operating expenses in order to contain and remediate the incident, expose us to unexpected or uninsured liability, disrupt our operations (including potential service interruptions), distract our management, increase our risk of regulatory scrutiny, result in the imposition of regulatory or card network fines and other penalties, and adversely affect our continued card network registration and financial institution sponsorship. For example, if we were to be removed from the card networks’ lists of Payment Card Industry Data Security Standard (“PCI DSS”) compliant service providers, our existing merchants, sales, and financial institution partners, or other third parties may terminate their relationship with us or cease using or referring our services. Also, prospective merchants, sales partners, financial institution partners or other third parties may delay or choose not to consider us for their processing needs. In addition, card networks could refuse to allow us to process through their networks. Any of the foregoing could adversely impact our business, financial condition, or results of operations.

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We may experience failures in our processing systems due to software defects, undetected errors, computer viruses, and development delays, which could damage customer relations and expose us to liability.

Our core business depends on the reliability of our processing systems. A system outage or other failure could adversely affect our business, financial condition, or results of operations, including by damaging our reputation or exposing us to third-party liability. Certain laws, regulations, and card network rules allow for penalties if our systems do not meet certain operating standards and may require us to report issues to regulators or the card networks within a specified time period. To successfully operate our business, we must be able to protect our systems from interruption, including from events that may be beyond our control. Events that could cause system interruptions include fire, natural disaster, unauthorized entry, power loss, telecommunications failure, computer viruses, terrorist acts, and war. Although we have taken steps to protect against data loss and system failures, there is still risk that we may lose critical data or experience system failures. In addition, we utilize select third parties for certain disaster recovery operations, particularly outside of the United States. To the extent we outsource any disaster recovery functions, we could be adversely impacted in the event of the vendor’s unresponsiveness or other failures. In addition, our insurance may not be adequate to compensate us for all losses or failures that may occur.

Our products and services are based on sophisticated software and computing systems that are constantly evolving. We often encounter delays and cost overruns in developing and implementing changes to our systems. In addition, the underlying software may contain undetected errors, viruses, or defects. We may experience processing delays on our systems due to system capacity or configuration issues as well as due to service interruptions or delays by our service providers. Defects in our software products and errors or delays in our processing of electronic transactions could result in additional development costs, diversion of technical and other resources from our other development efforts, loss of credibility with current or potential merchants, harm to our reputation, or other liabilities. In addition, we rely on technologies supplied to us by third parties that may contain undetected errors, viruses, or defects that could adversely affect our business, financial condition, or results of operations. Although we attempt to limit our potential liability through disclaimers in our software documentation and limitation of liability provisions in our licenses and other agreements with our merchants and partners, we cannot assure that these measures will be successful in limiting our liability.

Degradation of the quality of the products and services we offer, including support services, could adversely impact our ability to attract and retain merchants and partners.

Our merchants and partners expect a consistent level of quality in the provision of our products and services. If the reliability or functionality of our products and services is compromised or the quality or support of such products and services is otherwise degraded, we could lose existing merchants and partners and find it harder to attract new merchants and partners. If we are unable to scale our support functions to address the growth of our merchant portfolio and partner network, the quality of our support may decrease, which could also adversely affect our ability to attract and retain merchants and partners.

Our ability to recruit, retain, and develop qualified personnel is critical to our success and growth.

For us to successfully compete and grow, we must recruit, retain, and develop personnel who can provide the necessary expertise across a broad spectrum of intellectual capital needs in a rapidly changing technological, social, economic, and regulatory environment. The market for qualified personnel is competitive, and we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications, and we may not be able to fill positions in desired geographic areas or at all and may fail to effectively replace current personnel who depart with qualified or effective successors. Our efforts to retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability. As the economic uncertainty related to the COVID-19 pandemic eases, we have faced, and may continue to face, additional challenges in recruiting and retaining qualified personnel as other companies increase the pace of hiring. We must also continue to retain and motivate existing employees through our compensation practices, company culture, and career development opportunities. We cannot assure that we will be able to attract and retain qualified personnel in the future or that key personnel, including our executive officers, will continue to be employed or that our succession planning will adequately mitigate the risk associated with key personnel transitions. If

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we fail to attract new personnel or to retain our current personnel, our business and future growth prospects could be adversely affected.

Acquisitions create certain risks and may adversely affect our business, financial condition, or results of operations.

We have actively acquired businesses and expect to continue to make acquisitions of businesses and assets in the future. The acquisition and integration of businesses and assets involve a number of risks. These risks include valuation (determining a fair price for the business and assets), integration (managing the process of integrating the acquired business’ people, products, technology, and other assets to realize the projected value and synergies), regulation (obtaining any applicable regulatory or other government approvals), and due diligence (identifying risks to the prospects of the business, including undisclosed or unknown liabilities or restrictions).

In addition, acquisitions outside of the United States often involve additional or increased risks including:

● managing geographically separated organizations, systems and facilities;

● integrating personnel with diverse business backgrounds and organizational cultures;

● complying with non-U.S. legal, tax, and regulatory requirements;

● addressing financial and other impacts to our business resulting from fluctuations in currency exchange rates;

● enforcing intellectual property rights in non-U.S. countries;

● difficulty entering new markets due to, among other things, consumer acceptance and business knowledge of these markets; and

● general economic and political conditions.

The failure to avoid or mitigate the risks described above or other risks associated with acquisitions could have a material adverse effect on our business, results of operations, and financial condition.

In addition, we may not be able to successfully integrate businesses that we acquire or do so within the intended timeframe. We could face significant challenges in managing and integrating our acquisitions, including diversion of management’s attention, migrating services from third-parties to our own systems and infrastructure, and integrating operations and personnel. In addition, the expected cost synergies or new revenue associated with our acquisitions may not be fully realized in the anticipated amount or within the contemplated timeframe or cost expectations, which could result in increased costs and have an adverse effect on our business, results of operations, and financial condition.

Further, there may be material risks we are unable to identify or quantify through due diligence. If significant liabilities, including those relating to violations of applicable law, arise at one of our joint ventures or acquired subsidiaries, we may be exposed to material liabilities or our business may be materially and adversely affected.

Additional acquisitions may require us to incur additional debt through new or existing credit agreements or issue additional equity securities to fund the purchase price. The purchase price of a pending foreign acquisition will further be impacted by foreign exchange rate; however, we cannot predict whether future foreign currency exchange fluctuations will have a positive or negative impact on the final purchase price. If we are unable to obtain the required funding on acceptable terms, or at all, we may not be able to complete acquisitions, which could have an adverse impact on our growth.

Finally, future acquisition opportunities may not be available on acceptable terms, or at all, and we may not be able to obtain necessary financing or regulatory approvals to complete potential acquisitions. If we are unable to continue to complete successful acquisitions, our growth prospects could be adversely impacted.

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Continued consolidation and other transactions in the banking industry could adversely affect our growth and financial results.

The banking industry continues to experience consolidation regardless of overall economic conditions. In addition, in times of economic distress, various regulators in the markets we serve have acquired, and in the future may acquire, financial institutions, including banks with which we partner. If a current financial institution referral partner of ours is acquired by another bank, the acquiring bank may seek to terminate our agreement and impose its own merchant services program on the acquired bank. If a financial institution referral partner acquires another bank, our financial institution referral partner may take the opportunity to conduct a competitive bidding process to determine whether to maintain our merchant acquiring services or switch to another provider. In either situation, we may be unable to retain the relationship post-acquisition, or may have to offer financial concessions to do so, which could adversely affect our results of operations or growth. In addition, if a current financial institution referral partner of ours is acquired or becomes subject to a consent decree or similar oversight by a regulator, the regulator may seek to alter the terms or terminate our existing agreement with the acquired financial institution. For example, in October of 2018, BNP Paribas Group acquired one of our financial institutional referral partners, Raiffeisen Bank Polska, in Poland. Under the terms of our contract, BNP Paribas Group elected not to continue the relationship with us in Poland and refunded certain fees to us that we had previously paid to the bank. In addition, our financial institution referral partners may sell certain of their business assets, restructure their business, or rebrand. Any such actions could negatively impact our commercial alliance with such financial institution partner.

One of our financial institution referral partners, Grupo Banco Popular, was acquired by Grupo Santander (“Santander”) in June 2017, which has adversely impacted our business in Spain. Revenues from this channel have declined significantly primarily due to reduced merchant referrals following Santander’s consolidation of Grupo Banco Popular branches and the bank’s lack of performance of certain of its obligations under our agreements. See Note 19, “Commitments and Contingencies,” in the notes to the accompanying consolidated financial statements for additional information.

Increased customer attrition could cause our financial results to decline.

We experience attrition in merchant transaction processing volume due to several factors, including business closures, transfers of merchants’ accounts to our competitors, unsuccessful contract renewal negotiations, and account closures that we initiate for various reasons, such as heightened credit risks or contract breaches by merchants. We cannot predict the level of attrition that may occur in the future and it could increase. Higher than expected attrition could adversely affect our business, financial condition, or results of operations.

We incur a chargeback liability when our merchants refuse to or cannot reimburse chargebacks resolved in favor of their customers. Any increase in chargebacks not paid by our merchants may adversely affect our business, financial condition, or results of operations.

In the event that a dispute between a cardholder and a merchant is not resolved in favor of the merchant, the transaction is normally charged back to the merchant and the purchase price is credited or otherwise refunded to the cardholder. If we are unable to collect such amounts from the merchant’s account or reserve account (if applicable), or if the merchant refuses or is unable, due to closure, bankruptcy, or other reasons, to reimburse us for a chargeback, we are responsible for the amount of the refund paid to the cardholder. The risk of chargebacks is typically greater with those merchants that promise future delivery of goods and services, rather than delivering goods or rendering services at the time of payment, as well as “card not present” transactions in which consumers are not physically present, such as eCommerce, telephonic, and mobile transactions. We may experience significant losses from chargebacks in the future. Any increase in chargebacks not paid by our merchants could have a material adverse effect on our business, financial condition, or results of operations. Notwithstanding our policies and procedures for managing credit risk, such as requiring merchant cash reserve accounts and monitoring transaction activity, it is possible that a default on such obligations by one or more of our merchants could adversely affect our business, financial condition, or results of operations.

In addition, in certain cases, governmental authorities may seek to freeze or take possession of merchant cash reserves as part of an investigation or regulatory proceeding. In that event, we may be unable to satisfy chargeback losses from the

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merchant cash reserves and may experience significant losses if we are required to satisfy chargeback losses from our own funds.

Failure to maintain or collect reimbursements from our financial institution referral partners could adversely affect our business.

Certain of our long-term referral arrangements with financial institutions permit our partners to offer their merchant customers lower rates for processing services than we typically provide to the general market. If one of our bank partners elects to offer these lower rates, they are contractually required to reimburse us for the full amount of the discount provided to their merchant customers; however, there can be no assurance that these contractual provisions will fully protect us from potential losses should a bank partner default on its obligations to reimburse us or seek to discontinue such reimbursement obligations in the future. If we are unable to collect the full amount of any such reimbursements for any reason, we may incur losses. In addition, any discount provided by our financial institution partner may cause merchants in these markets to demand lower rates for our services in the future, which could further reduce our margins or cause us to lose merchants, either of which could adversely affect our business, financial condition, or results of operations.

Fraud by merchants or others could adversely affect our business, financial condition, or results of operations.

We may be liable for certain fraudulent transactions and credits initiated by merchants or others. For example, if we were to process payments for a merchant that engaged in unfair or deceptive trade practices, we may be subject to enforcement actions by the Federal Trade Commission, other consumer protection agencies, state attorneys general, regulators or other governmental agencies. Examples of merchant fraud include merchants or other parties knowingly using a stolen or counterfeit credit or debit card, card number, or other credentials to record a false sales or credit transaction, processing an invalid card, or intentionally failing to deliver goods or services sold in an otherwise valid transaction. Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud, especially through eCommerce transactions. Failure to effectively manage risk and prevent fraud could increase our chargeback liability or cause us to incur other liabilities, including if we are subject to enforcement action by a regulatory authority. It is possible that incidents of fraud could increase in the future. Increases in chargebacks or other liabilities could adversely affect our business, financial condition, or results of operations.

Because we rely on third-party vendors to provide products and services, we could be adversely impacted if they fail to fulfill their obligations.

We depend on third-party vendors and partners to provide us with certain products and services, including components of our computer systems, software, data centers, and telecommunications networks, to conduct our business. For example, we rely on third parties for services such as organizing and accumulating certain daily transaction data from each merchant and card issuer and forwarding the data to the relevant card network. We also rely on third parties for specific software and hardware used in providing our products and services. Some of these organizations and service providers are our competitors or provide similar services and technology to our competitors, and we do not have long-term or exclusive contracts with them. In addition, we rely on various financial institutions to provide clearing services in connection with our settlement activities. If these financial institutions stop providing clearing services, we would need to find other financial institutions to provide those services. If we were unable to do so we would no longer be able to provide processing services to certain merchants, which could adversely affect our business, financial condition, or results of operations.

The systems and operations of our third-party vendors and partners, including our terminal manufacturers, could be exposed to damage or interruption from, among other things, fire, natural disaster, power loss, telecommunications failure, unauthorized access, computer viruses, denial-of-service attacks, acts of terrorism, human error, vandalism or sabotage, financial insolvency, bankruptcy, and similar events.

In addition, we may be unable to renew our existing contracts with our most significant vendors and partners or our vendors and partners may stop providing or otherwise supporting the products and services we obtain from them, and we may not be able to obtain these or similar products or services on the same or similar terms as our existing arrangements, if at all. The failure of our vendors and partners to perform their obligations and provide the products and services we obtain from

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them in a timely manner for any reason could adversely affect our operations and profitability due to, among other consequences: (i) loss of revenues; (ii) loss of merchants and partners; (iii) loss of merchant and cardholder data; (iv) fines imposed by card networks; (v) reputational harm; (vi) exposure to fraud losses or other liabilities; (vii) additional operating and development costs; or (viii) diversion of management, technical and other resources.

We depend, in part, on our merchant and strategic relationships with various financial institutions and referral partners to grow our business. If we are unable to maintain these relationships, our business may be adversely affected.

We depend, in part, on our merchant relationships to grow our business. Our merchant processing agreements are our main source of revenue. Our failure to maintain or grow these relationships could adversely affect our business and result in a reduction of our revenue and profit.

We also rely on our various financial institution relationships, including our partnerships with Deutsche Bank USA, Deutsche Bank Group, Grupo Santander, PKO Bank Polski, Bank of Ireland, Raiffeisen Bank, Moneta, Citibanamex, Sabadell, Banco de Crédito e Inversiones, and the National Bank of Greece, among others, to grow our business. These relationships are structured in various ways, such as commercial alliance relationships, equity method investments, and joint ventures. We enter into long-term relationships with our bank partners where these partners typically provide exclusive referrals and credit facilities to fund our daily settlement obligations. These facilities are generally short term and at market interest rates. In some cases, our bank partners provide us with card network sponsorship, which enables us to route transactions under the bank’s control and identification numbers to clear card transactions through the card networks. Under the rules of the card networks, we are required to be a member of the network or sponsored through a member financial institution.

In addition, we rely on our various referral partners to grow our business. Our sales divisions work with a diverse mix of referral partners including ISVs, software dealers, and independent sales agents. These relationships generally consist of non-exclusive referral arrangements pursuant to which we pay our partners a referral fee based on profit generated by the merchants attributable to their referral. If an existing sales partner switches to another payment processor, terminates our services, internalizes payment processing functions that we perform, merges with or is acquired by one of our competitors, seeks alternative product or integration capabilities, or shuts down or becomes insolvent, we may no longer receive new merchant referrals from the sales partner and we risk losing existing merchants that were originally enrolled by the sales partner. In some jurisdictions, we are reliant on a small concentration of sales partners for a substantial portion of our merchant referrals.

We rely on the growth of our financial institution and referral partner relationships, and our ability to maintain these relationships, to support and grow our business. In addition, in certain of the markets in which we conduct our business, a substantial portion of our revenue is derived from long-term contracts. If we fail to maintain or renew these relationships, or our financial institution partners fail to maintain their brands or decrease the size of their branded networks, or our referral partners fail to penetrate their target markets or fail to remain competitive in such markets, our business, financial condition or results of operations may be adversely affected. Furthermore, failure to maintain our financial institution relationships may prevent us from obtaining settlement facilities, and we may be forced to secure alternative arrangements on less favorable terms. The loss of financial institution relationships or referral partners could adversely affect our business and result in a reduction of our revenue and profit.

Finally, we intend to grow our business by partnering with new financial institutions and tech-enabled partners in our existing markets, as well as new markets. The inability to partner with new financial organizations or tech-enabled partners may inhibit our growth prospects.

A significant number of our merchants are small- and medium-sized businesses or small affiliates of large companies, which can be more difficult and costly to retain than larger enterprises and may increase the impact of economic fluctuations on our business.

We market and sell our products and services to, among others, SMEs and small affiliates of large companies. To continue to grow our revenue, we must add merchants, sell additional services to existing merchants, and encourage existing

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merchants to continue doing business with us. However, retaining SMEs can be more difficult than retaining large enterprises because SME merchants often have higher rates of business failures and more limited resources; are typically less sophisticated in their ability to make technology-related decisions based on factors other than price; may have decisions related to the choice of payment processor dictated by their affiliated parent entity; and are more able to change their payment processors than larger organizations dependent on our services.

SMEs are typically more susceptible to the adverse effects of economic fluctuations and have been disproportionately affected by the adverse effects of the COVID-19 pandemic and resulting government regulations. Adverse changes in the economic environment or business failures of our SME merchants may have a greater impact on us than on our competitors who do not focus on SMEs to the extent that we do. As a result, we may need to attract and retain new merchants at an accelerated rate or decrease our expenses to mitigate negative impacts in the event our SME merchants experience business declines due to economic trends or otherwise, failure of which may negatively impact our business, financial condition, or results operations.

Our operating results and operating metrics are subject to seasonality and volatility, which could result in fluctuations in our quarterly revenues and operating results or in perceptions of our business prospects.

We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our revenue, which can vary by region. Our revenue has typically been strongest in our fourth quarter and weakest in our first quarter. Some variability results from seasonal retail events and the number of business days in a month or quarter. Our typical seasonality patterns have been disrupted by the ongoing COVID-19 pandemic and related government actions. We also experience volatility in certain other metrics, such as number of transactions processed and payment processing volumes. Volatility in our key operating metrics or their rates of growth could result in fluctuations in financial condition or results of operations and may lead to adverse inferences about our business prospects, which could result in declines in our stock price.

Our business may be adversely affected by geopolitical and other risks associated with operations outside of the United States and, as we continue to expand internationally, we may become more susceptible to these risks.

We offer merchant acquiring and processing services in many geographies outside of the United States, including in Canada, the Czech Republic, Germany, Ireland, Mexico, Chile, Poland, Spain, and the United Kingdom. We are subject to risks associated with operations in international markets, including changes in foreign governmental policies and requirements applicable to our business. In particular, some countries where we operate lack well-developed legal systems or have not adopted clear regulatory frameworks for the payment services industry. This lack of legal certainty exposes our operations to increased risks, including difficulty enforcing our agreements in those jurisdictions and increased risks of adverse actions by local government authorities, such as expropriations. As we continue to expand internationally, we may face challenges due to the presence of more established competitors and our lack of experience in new markets.

In addition, our current and future financial institution partners in foreign jurisdictions, particularly in Europe, may be acquired, reorganized, or otherwise disposed of in the event of further market turmoil or losses in their loan portfolio that result in such financial institutions becoming less than adequately capitalized. Our revenue derived from these and other non-U.S. operations is subject to additional risks, including those resulting from social and geopolitical instability and unfavorable political or diplomatic developments, all of which could adversely affect our business, financial condition, or results of operations. A possible slowdown in global trade caused by increasing tariffs or other restrictions could decrease consumer or corporate confidence and reduce consumer, government, and corporate spending in countries outside the United States, which could adversely affect our foreign operations. Certain of our partners in foreign jurisdictions are also state-controlled entities, which may adversely affect our ability to seek redress for any contractual breach to the extent these partners can successfully claim sovereign immunity. In addition, in the event ongoing or future sovereign debt concerns in a particular country impact any such partner, our business could be negatively impacted.

We have significant operations in the United Kingdom and throughout Europe more generally. The United Kingdom’s withdrawal from the European Union and the continuing negotiations to determine the terms of the United Kingdom’s relationship with the EU has created significant uncertainty, including the nature of the transition, implementation, or

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successor arrangements, and future trading arrangements between the United Kingdom and the EU, and may in the future have a material adverse effect on global economic conditions and the stability of the global financial markets. We continue to closely monitor the impact of Brexit on our operations as further details emerge regarding the post-Brexit regulatory landscape. However, lack of clarity about applicable future laws, regulations, or treaties between the United Kingdom and the European Union could increase our costs and depress market activity. If we are unable to successfully manage the foregoing risks relating to our business outside the United States, our business, financial condition, or results of operations could be adversely impacted.

A decline in the use of cards as a payment mechanism for consumers or other adverse developments with respect to the card industry in general may adversely impact us.

In order to consistently increase and maintain our profitability, consumers and businesses must continue to use electronic payment methods that we process, including credit and debit cards, and various factors may impact levels of use. For example, consumer credit risk may make it more difficult or expensive for consumers to gain access to credit facilities such as credit cards. Financial institutions may seek to charge their customers additional fees for use of credit or debit cards which could result in decreased use of credit or debit cards. In addition, various technology alternatives to credit and debit cards, such as digital wallets, have been introduced to the market and we expect that additional alternatives will be developed. Any other development that impacts the cost, convenience, or quality of services of electronic payments could result in a decline in the use of credit and debit cards or other electronic payments. Any such decline may adversely impact our business, financial condition, or results of operations.

Increases in card network fees and other changes to fee arrangements may result in the loss of merchants or a reduction in our earnings.

From time to time, card networks, including Visa and Mastercard, increase the fees that they charge processors. We could attempt to pass these increases along to our merchants but this strategy might result in the loss of merchants to our competitors who do not pass along the increases. If competitive practices prevent us from passing along the higher fees to our merchants in the future, we may have to absorb all or a portion of such increases, which may increase our operating costs and reduce our earnings.

In addition, in certain of our markets, card issuers pay merchant acquirers fees based on debit card usage in an effort to encourage debit card use. If this practice were discontinued, our revenue and margins in jurisdictions where we receive these fees would be adversely affected.

Further, governments in the markets in which we operate have and may continue to implement new laws or regulations that effectively limit our ability to provide DCC or set fees or foreign currency exchange spreads. In March 2018, the EU proposed additional regulations on cross-border transactions within the EU, including specific regulations on DCC. In December 2018, the European Commission, European Council, and European Parliament agreed to legislation that requires disclosure of foreign exchange margins applicable to DCC transactions and eventual comparability between foreign exchange rates offered by DCC providers and bank card issuers. The new legislation went into effect in April 2020. Such regulation could materially and adversely impact our financial results, by reducing the number of DCC transactions we process and the level of profit we generate from such transactions.

In addition to government regulation and card network rules, it is possible that merchants alter their business practices to avoid payment of certain fees to payment processors, such as inactive fees, paper statements, and PCI non-compliance fees.  A significant decrease in these fees paid by merchants could have a material adverse effect on our business, financial condition, or results of operations.

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If we fail to comply with the applicable requirements of card networks, they could seek to fine us, suspend us or terminate our registrations. If our merchants or sales partners incur fines or penalties that we cannot collect from them, we may have to bear the cost of such fines or penalties.

In order to provide our transaction processing services, several of our subsidiaries are registered with Visa and Mastercard and other card networks as members or service providers for member institutions. Visa, Mastercard and other card networks set rules and standards with which we must comply. Any failure to comply with the networks’ requirements or to pay the fines they impose could cause the termination of our registration or status as a certified service provider and require us to stop providing payment processing services.

The card network rules subject us and our merchants to a variety of fines or penalties for certain acts or omissions by us or our merchants. The rules of card networks are set by their boards, which include members that are card issuers that directly or indirectly sell processing services to merchants in competition with us. There is a risk that these members could use their influence to enact changes to the card network rules or policies that are detrimental to us. Any changes in network rules or standards that increase the cost of doing business or limit our ability to provide processing services to our merchants will adversely affect the operation of our business. In addition, card networks and their member financial institutions regularly update, and generally expand, security expectations and requirements related to the security of cardholder data and environment. Under certain circumstances, we are required to report incidents to the card networks within a specified time frame.

In addition, if a merchant or sales partner fails to comply with the applicable requirements of card networks, it could be subject to a variety of fines or penalties that may be levied by card networks. We may have to bear the cost of such fines or penalties if we are unable to collect them from the applicable merchant or sales partner. The termination of our member registration, any change in our status as a service provider or merchant processor, or any changes in network rules or standards could prevent us from providing processing services relating to the affected card network and could adversely affect our business, financial condition, or results of operations.

Risks related to the Merger

The pendency of the Merger may result in disruptions to our business.

On August 1, 2022, we entered into the Merger Agreement with Global Payments and Merger Sub, pursuant to which we will be acquired by Global Payments in an all-cash transaction. The Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the Merger and prohibits us, without Global Payments’ consent, from taking certain specified actions until the Merger has been consummated. These prohibitions may affect our ability to execute our business strategies and attain financial and other goals and may impact our financial condition, results of operations and cash flows.

Further, in connection with the proposed transaction with Global Payments, our current and prospective employees may experience uncertainty about their future roles with us following the Merger, which may adversely affect our ability to attract and retain key personnel. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with us following the Merger, and may depart prior to the consummation of the Merger. Accordingly, no assurance can be given that we will be able to attract and retain key employees to the same extent that we have been able to in the past.

The proposed transaction with Global Payments could cause disruptions to our business or business relationships, which could have an adverse impact on our results of operations. Parties with which we have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.

The proposed transaction with Global Payments may place a significant burden on management and internal resources. It may also divert management’s time and attention from the day-to-day operation of our businesses and the execution of our

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other strategic initiatives. This could adversely affect our financial results. In addition, we have incurred and will continue to incur other significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed transaction with Global Payments, and many of these fees and costs are payable regardless of whether or not such transaction is consummated.

Any of the foregoing could materially and adversely affect our business, our financial condition and our results of operations and prospects.

The Merger may not be consummated within the intended timeframe, or at all, and the failure to consummate the Merger will adversely affect the market price of our common stock and could adversely affect our business, results of operations and financial condition.

There can be no assurance that the Merger will be consummated within the intended timeframe, or at all. The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the Merger.

Assuming the satisfaction or, to the extent permitted by law, waiver of customary closing conditions, the Company expects the Merger to be completed by March 31, 2023. There can be no assurance that the remaining closing conditions will be satisfied (or waived, if applicable), and if all closing conditions are satisfied (or waived, if applicable), we can provide no assurance that the Merger will be consummated promptly or at all.

If the Merger is not consummated within the intended timeframe or at all, we may be subject to a number of material risks. The price of our common stock will significantly decline if the proposed transaction with Global Payments is not consummated within the intended timeframe or at all. In addition, some costs related to the Merger must be paid whether or not the Merger is consummated, as we have already incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed transaction with Global Payments. If the proposed transaction with Global Payments is not consummated within the intended timeframe or at all, we may also experience negative reactions from our investors, customers, partners, suppliers, and employees. Along with transaction costs and fees, the proposed transaction with Global Payments has required and will continue to require the attention and resources of our management team. If the proposed transaction with Global Payments is not consummated within the intended timeframe or at all, our management team’s attention and resources will have been diverted from other uses with little to no additional benefit to EVO, Inc.

Risks related to our financial results and indebtedness

Our results of operations may be adversely affected by changes in foreign currency exchange rates.

We present our financial statements in U.S. dollars and have a significant proportion of net assets and earnings in non-U.S. dollar currencies. Accordingly, we are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business.

Revenue and profit generated by our non-U.S. operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates and the impact may be significant. For example, revenue generated by our non-U.S. operations represented approximately 65% of our total revenue for the year ended December 31, 2022, and a hypothetical uniform 10% strengthening in the value of the U.S. dollar relative to the local currencies of our non-U.S. operations would result in a decrease of approximately $8.0 million in pretax income for the year ended December 31, 2022. In addition, currency variations can adversely affect the margins on our DCC product offerings. A greater portion of our revenue is generated outside the United States as compared to certain of our competitors and, as such, foreign currency exchange rates may have a more significant impact on our results.

In addition, we may become subject to exchange control regulations that restrict or prohibit the conversion of our other revenue currencies into U.S. dollars. Any of these factors could decrease the value of revenues and earnings we derive from our non-U.S. operations and adversely affect our business.

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While we currently have some degree of diversification in foreign currency, we may seek to reduce our exposure to fluctuations in foreign currency exchange rates in the future through the use of hedging arrangements. To the extent that we hedge our foreign currency exchange rate exposure in the future, we will forgo the benefits we would otherwise experience if foreign currency exchange rates changed in our favor. No strategy can completely insulate us from risks associated with such fluctuations and our currency exchange rate risk management activities could expose us to substantial losses if such rates move materially differently from our expectations.

Our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets would negatively affect our business, financial condition, or results of operations.

As a result of our prior acquisitions, a significant portion of our total assets consists of intangible assets (including goodwill). To the extent we engage in additional acquisitions, we may recognize additional intangible assets and goodwill. We evaluate on a regular basis whether all or a portion of our goodwill and other intangible assets may be impaired. Under current accounting rules, any determination that impairment has occurred would require us to record an impairment charge. An impairment of a significant portion of goodwill or intangible assets would adversely affect our business, financial condition, or results of operations.

If our business does not perform well, we may be required to establish a valuation allowance against the deferred tax assets, which would negatively impact the results of our operations.

We have substantial amounts of deferred tax assets on our balance sheet. The evaluation of realizability of these assets requires us to analyze historical taxable income and make significant assumptions related to forecasted revenues and taxable income in the appropriate tax jurisdiction. Estimated future taxable income can be sensitive to changes in the assumed revenue growth rate and expected operating margin, which are affected by expectations about future market conditions and are inherently uncertain due to their forward-looking nature. Future events could cause us to conclude that impairment indicators exist and may require us to record a valuation allowance. Any significant impairment loss would have an adverse impact on our reported earnings in the period in which the charge is recognized.

Our indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk, and prevent us from meeting our debt obligations.

Upon the consummation of the Merger, our Senior Secured Credit Facilities will be paid off in full. However, there can be no assurance that the Merger will be consummated within the anticipated timeline or at all. For additional discussion regarding our risks related to the Merger, see the risks described under the caption “Risks related to the Merger” in this Annual Report. In the event our indebtedness is not repaid in connection with the consummation of the Merger our indebtedness exposes us to certain risks, including those set forth below.

Our indebtedness could have adverse consequences, including:

● increasing our vulnerability to adverse economic, industry, or competitive developments;

● requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use cash flow to fund our operations, capital expenditures, and future business opportunities;

● making it more difficult for us to satisfy our obligations with respect to our indebtedness, including restrictive covenants and borrowing conditions, which could result in an event of default under the agreements governing such indebtedness;

● restricting us from making strategic acquisitions, making it more difficult to structure new partnerships or joint ventures, or causing us to make non-strategic divestitures;

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● making it more difficult for us to obtain card network sponsorship and clearing services from financial institutions or to obtain or retain other business with financial institutions; or

● limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes;

Successful execution of our business strategy is dependent in part upon our ability to manage our capital structure to reduce interest expense, have access to sufficient liquidity, and enhance free cash flow generation. We are party to a senior secured credit facility pursuant to a credit agreement dated November 1, 2021 (our “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities consists of a revolver (the “Revolver”) and a term loan (the “Term Loan”). As of December 31, 2022, our Senior Secured Credit Facilities include revolver commitments of $200.0 million and a term loan of $588.0 million that are scheduled to mature in November 2026. We may not be able to refinance our Senior Secured Credit Facilities or our other existing indebtedness at or prior to their maturity at attractive rates of interest because of our high levels of debt, debt incurrence restrictions under our debt agreements, or because of adverse conditions in credit markets generally. We also have the ability to further increase our indebtedness by borrowing additional amounts on the Senior Secured Credit Facilities.

In addition, certain of our borrowings, including borrowings under our Senior Secured Credit Facilities, are at variable rates of interest. If interest rates increase, the interest payment obligations under our variable rate indebtedness will increase even if the amount borrowed remains the same. The condition of the financial and credit markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future. In addition, developments in our business and operations could lead to a ratings downgrade for us. In 2020, we entered into an interest rate swap with a notional amount of $500.0 million that matured on December 31, 2022 to reduce a portion of exposure to fluctuations in LIBOR interest rates associated with our variable-rate debt. As of December 31, 2022, we had $641.5 million aggregate principal amount of variable rate indebtedness. The impact of a 100 basis point increase in interest rates would have increased our annual interest expense by approximately $6.4 million upon the expiration of the interest rate swap as of December 31, 2022. Effective January 2023, interest rate payments of our entire outstanding term loan will be based on variable interest rates.

Any such fluctuation in the financial and credit markets, or in the credit rating of us or our subsidiaries, may impact our ability to access debt markets in the future or increase our cost of current or future debt, which could adversely affect our business, financial condition, or results of operations.

We may be required to purchase the remainder of our eService subsidiary in Poland.

In December 2013, we acquired a 66% ownership interest in Centrum Elektronicznych Uslug Platniczych eService Sp. z o.o., or eService, from PKO Bank Polski. In connection with the purchase, we granted a put option to PKO Bank Polski that, if exercised, could force us to buy the remainder of the business at the then-current market price. The option expires on January 1, 2024. If we are forced to purchase the remainder of our eService subsidiary at a time in which it is not otherwise in our best interest to do so, our business, including our liquidity, could be adversely affected.

The phase-out, replacement or unavailability of the London Interbank Offered Rate (“LIBOR”) may adversely affect our results of operations.

In July 2017, the United Kingdom’s Financial Conduct Authority (“FCA”) publicly announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. In the United States, the Alternative Reference Rates Committee, which was convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has identified the Secured Overnight Financing Rate (“SOFR”), a new index calculated by reference to short-term repurchase agreements for U.S. Treasury securities, as its preferred alternative rate for U.S. dollar LIBOR. Financial regulators in the United Kingdom, the European Union, Japan, and Switzerland also have formed working groups with the aim of recommending alternatives to LIBOR denominated in their local currencies.

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In March 2021, the FCA announced that LIBOR will no longer be provided for the one-week and two-month U.S. dollar settings after December 31, 2021 and that publication of the U.S. dollar settings for the overnight, one-month, three-month, six-month and 12-month LIBOR rates will cease after June 30, 2023.

There is currently no definitive successor reference rate to LIBOR and various industry organizations are still working to develop transition mechanisms. SOFR is calculated based on overnight transactions under repurchase agreements, backed by Treasury securities. SOFR is observed on a daily basis and backward looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate for specified tenors and relies, to some degree, on the expert judgment of submitting panel members. Given that SOFR is a secured rate backed by government securities, it is a rate that does not take into account bank credit risk (as is the case with LIBOR). Because of these and other differences, there is no assurance that SOFR will perform in the same way as LIBOR would have performed at any time, and there is no guarantee that it will be a comparable substitute for LIBOR. As of December 31, 2022, approximately $641.5 million of our outstanding indebtedness had interest rate payments determined directly or indirectly based on LIBOR, EURIBOR, or the U.S. prime rate. The terms of our Senior Secured Credit Facilities include provisions that provide for the eventual replacement of LIBOR as a reference rate with SOFR or otherwise an alternate benchmark rate. However, uncertainty regarding the continued use and reliability of LIBOR as a benchmark interest rate could adversely affect the performance of LIBOR relative to its historic values prior to the replacement of LIBOR. Additionally, in 2020, the Company entered into an interest rate swap with a notional amount of $500.0 million to reduce a portion of the exposure to fluctuations in LIBOR interest rates associated with our variable-rate term loan. The interest rate swap had a fixed rate of 0.2025% and matured on December 31, 2022. We may incur expenses to amend and adjust our indebtedness to eliminate any differences between any alternative benchmark rate used by our interest rate hedge and our outstanding indebtedness. Any alternative benchmark rate may be calculated differently than LIBOR, may increase the interest expense associated with our existing or future indebtedness and may not align for our assets, liabilities, and hedging instruments. Any of these occurrences could adversely affect our borrowing costs, financial condition, or results of operations.

Restrictions imposed by our Senior Secured Credit Facilities and our other outstanding indebtedness may materially limit our ability to operate our business and finance our future operations or capital needs.

The terms of our Senior Secured Credit Facilities restrict us and our subsidiaries from engaging in specified types of transactions. These covenants impose certain limitations, subject to certain exceptions, on our ability, and that of our subsidiaries, to, among other things:

● incur indebtedness;

● create liens;

● engage in mergers or consolidations;

● make investments, loans and advances;

● pay dividends and distributions and repurchase capital stock;

● sell assets;

● engage in certain transactions with affiliates;

● enter into sale and leaseback transactions;

● make certain accounting changes; and

● make prepayments on junior indebtedness.

In addition, the credit agreement governing our Senior Secured Credit Facilities contain a financial covenant that requires us to remain under a maximum consolidated leverage ratio determined on a quarterly basis with step-downs over time. We may elect to increase the maximum consolidated leverage level with which we must comply by 0.5x up to two times during the term upon the consummation of a “material acquisition.” See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” A breach of any of these covenants (or any other covenant in the documents governing our Senior Secured Credit Facilities) could result in a default or event of default under our Senior Secured Credit Facilities. If an event of default under our Senior Secured Credit Facilities occurred, the applicable lenders or agents could elect to terminate borrowing commitments and declare all borrowings and loans outstanding thereunder, together with accrued and unpaid interest and any fees and other obligations, to be immediately due and payable. In

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addition, or in the alternative, the applicable lenders or agents could exercise their rights under the security documents entered into in connection with our Senior Secured Credit Facilities. Subject to certain exceptions specified in our Senior Secured Credit Facilities, we have pledged substantially all of our U.S. assets as collateral securing our Senior Secured Credit Facilities and any such exercise of remedies on any material portion of such collateral would materially and adversely affect our financial condition and our ability to continue operations.

If we were unable to repay or otherwise refinance these borrowings and loans when due, and the applicable lenders proceeded against the collateral granted to them to secure that indebtedness, we may be forced into bankruptcy or liquidation. In the event the applicable lenders accelerate the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness. Any acceleration of amounts due under our Senior Secured Credit Facilities would likely have a material adverse effect our business.

Accelerated funding programs increase our working capital requirements and expose us to incremental credit risk, and if we are unable to access or raise sufficient liquidity to address these funding programs we may be exposed to additional competitive risk.

In response to demand from our merchants and competitive offerings, we offer certain of our merchants various accelerated funding programs which are designed to enable qualified participating merchants to receive their deposits from credit card transactions in an expedited manner. These programs increase our working capital requirements and expose us to incremental credit risk related to our merchants, which could constrain our ability to raise additional capital to fund our operations and adversely affect our business, financial condition, or results of operations. Our inability to access or raise sufficient liquidity to address our needs in connection with the anticipated expansion of such advance funding programs could put us at a competitive disadvantage by restricting our ability to offer programs to all of our merchants similar to those made available by our various competitors.

Risks related to legal and regulatory requirements

Failure to comply with anti-corruption, anti-money laundering, economic and trade sanctions regulations, and similar laws and regulations could subject us to penalties and other adverse consequences.

We operate our business in various countries where certain business practices are prohibited by U.S., foreign, and other laws and regulations applicable to us. We are subject to anti-corruption laws and regulations, including the FCPA, the U.K. Bribery Act, and other laws that prohibit the making or offering of improper payments, including payments to foreign governments, officials, and business entities for the purpose of obtaining or retaining business. We have implemented policies, procedures, systems, and controls designed to identify and address potentially impermissible transactions under such laws and regulations; however, there can be no assurance that our employees, consultants, and agents, including those that may be based in or from countries where practices that violate U.S. or other laws may be customary, will not take actions in violation of our policies for which we may be ultimately responsible.

In addition, we are subject to certain anti-money laundering laws and regulations. In some jurisdictions, we are directly subject to these regulations. In other cases, we are contractually required to comply with certain regulations to which our bank partners are subject. These regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, and the EU Anti-Money Laundering Directive typically require businesses to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity, and maintain transaction records.

We are also subject to certain economic and trade sanctions programs administered by OFAC and similar foreign governmental agencies, which prohibit or restrict transactions with specified countries, governments, and, in certain circumstances, nationals, as well as narcotics traffickers and terrorists or terrorist organizations. Other group entities may be subject to additional foreign or local sanctions requirements in other relevant jurisdictions.

Similar anti-money laundering and counter terrorist financing and proceeds of crime laws apply to movements of currency and payments through electronic transactions and to dealings with persons specified in lists maintained by the country

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equivalents to OFAC lists in several other countries and require specific data retention obligations to be observed by intermediaries in the payment process. Our businesses in those jurisdictions are subject to those data retention obligations.

Failure to comply with any of these laws or regulations or changes in this legal or regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government, may result in significant financial penalties or reputational harm, or change the manner in which we currently conduct some aspects of our business, which could adversely affect our business, financial condition, or results of operations.

We are subject to governmental regulation and other legal obligations, particularly related to privacy, data protection, and information security, as well as consumer protection laws across different markets where we conduct our business. Our actual or perceived failure to comply with such obligations could harm our business.

Privacy and data security have become significant issues in North America, Europe, and in many other jurisdictions where we may conduct our operations in the future. As we receive, collect, process, use, and store personal and confidential data, we are subject to diverse laws and regulations relating to data privacy and security, including, in the United States, local state laws such as the CCPA which took effect on January 1, 2020, and the forthcoming California Privacy Rights and Enforcement Act of 2020 (the “CPRA”), which expands upon the CCPA and became operative in January 2023 (with a lookback to January 1, 2022), and, in the EU, the GDPR.

The CCPA requires companies (regardless of their location) that collect personal information of California residents to notify consumers about their data collection, use, and sharing practices and grants consumers specific rights to access and delete their data and to opt out of certain types of data sharing. The California Attorney General is currently responsible for the enforcement of the CCPA and can impose statutory fines for violations. Consumers also have a limited private right of action for unauthorized access to certain categories of information. The CPRA expands the CCPA to create additional consumer privacy rights, such as the right of correction and the right to limit the use and disclosure of sensitive personal information, and establishes a new privacy enforcement agency. Additionally, other U.S. states continue to propose, and in certain cases adopt, data privacy legislation such as Colorado, Virginia, Utah, and Connecticut. The privacy laws emulate the CCPA and the CPRA in many respects, but despite similarities each law includes its own unique compliance requirements. Aspects of the interpretation and enforcement of these laws remain uncertain. Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. The effects of such laws and other laws and regulations that may be enacted, or new interpretations of existing laws and regulations, may require us to modify our data processing practices and policies and incur compliance-related costs and expense.

GDPR is directly applicable in each EU member state and applies to companies established in the EU that process personal data as well as companies outside of the EU that collect and use personal data to offer goods or services to, or monitor the behavior of, individuals in the EU. GDPR applies stringent data protection obligations for processors and controllers of personal data. Data Protection Authorities in each European jurisdiction are responsible for the enforcement of GDPR and can impose significant penalties and fines for failure to comply with GDPR, including fines of up to €20 million, or 4% of total worldwide annual turnover (revenue), whichever is higher, as well as orders to curtail operations, such as orders to cease certain processing activities or data transfers. Additionally, post-Brexit, the United Kingdom has implemented the GDPR into domestic law through the Data Protection Act and UK GDPR. As of January 2021, we are required to comply with the GDPR and also analogous UK laws, exposing us to two parallel regimes which may diverge in the future, each of which potentially authorizes similar fines and enforcement actions for certain violations.

Compliance with these privacy and data security requirements is rigorous and time-intensive and may increase our cost of doing business. Failure to comply with these requirements, or any other laws or regulations applicable to our business, may expose us to fines and other penalties, litigation, or reputational harm, any of which could materially and adversely affect our business, financial condition, or results of operations.  

The regulatory framework for the receipt, collection, processing, use, safeguarding, and sharing and transfer of personal and confidential data is rapidly evolving and is likely to remain uncertain for the foreseeable future as new global privacy rules are enacted and existing ones are updated and strengthened. New or evolving regulations could require us to modify

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our systems, products, or processes, possibly in a material manner, and could limit our ability to develop new services and features.

Failure to enforce and defend our intellectual property rights may diminish our competitive advantages or interfere with our ability to market and promote our products and services.

Our trademarks, trade names, trade secrets, know-how, proprietary technology, and other intellectual property are important to our future success, including the rights associated with our EVO and certain of our operating subsidiaries’ trademarks and trade names, among others. We believe our trademarks and trade names are widely recognized and associated with quality and reliable service. While it is our policy to vigorously defend our intellectual property, there can be no assurance that the steps we have taken to protect our intellectual property will be adequate to prevent infringement, misappropriation, or other violations. We also cannot guarantee that others will not independently develop technology with the same or similar functions as the proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors. Furthermore, we may face claims of infringement of third-party intellectual property that could interfere with our ability to market and promote our products and services. Any litigation to enforce our intellectual property rights or defend ourselves against claims of infringement of third-party intellectual property rights could be costly, divert attention of management, and may not ultimately be resolved in our favor. Moreover, if we are unable to successfully defend against claims that we have infringed the intellectual property rights of others, we may be prevented from using certain intellectual property and may be liable for damages, which in turn could have a material adverse effect on our business, financial condition, or results of operations. In addition, the laws of certain non-U.S. countries where we do business or may do business in the future may not recognize intellectual property rights or protect them to the same extent as do the laws of the United States.

We may be adversely impacted by new or revised tax regulations or their interpretations, or by becoming subject to additional foreign or U.S. federal, state, or local taxes that cannot be passed through to our merchants or partners.

We are subject to tax laws in each jurisdiction where we do business. Changes in tax laws or their interpretation could decrease the amount of revenues we receive, the value of any tax loss carry-forwards and tax credits recorded on our balance sheet, and the amount of our cash flow or net income, and adversely affect our business, financial condition, or results of operations. In addition, our financial results could be adversely impacted if we become subject to new or additional taxes that cannot be passed through to our merchants or partners.

In addition to changes in tax regulations or interpretations, our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

● allocation of expenses to and among different jurisdictions;

● changes in the valuation of our deferred tax assets and liabilities;

● expected timing and amount of the release of any tax valuation allowances;

● tax effects of stock-based compensation; and

● mix of future earnings and tax liabilities recognized in foreign jurisdictions at varying rates versus U.S. federal, state, and local income taxes.

In addition, we may be subject to audits of our income, sales, and other taxes by U.S. federal, state, and local, as well as foreign taxing authorities. Outcomes from these audits could have an adverse effect on our business, financial condition, or results of operations.

Failure to comply with, or changes in, laws, regulations, and enforcement activities may adversely affect our products, services, and the markets in which we operate.

We and our merchants are subject to laws and regulations that affect the electronic payments industry in the many countries in which our services are used. Our merchants are subject to numerous laws and regulations applicable to banks, financial institutions, and card issuers in the United States and abroad, and, consequently, we are at times affected by these foreign, federal, state, and local laws and regulations. A number of our subsidiaries in our European segment hold a PI license,

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allowing them to operate in the EU member states in which such subsidiaries do business. As a PI, we are subject to regulation and oversight in the applicable EU member states, which includes, among other obligations, a requirement to maintain specific regulatory capital and adhere to certain rules regarding the conduct of our business, including PSD2. PSD2 contains a number of additional regulatory provisions, such as provisions relating to SCA, which required industry wide systems upgrades, and DCC, which requires additional disclosures to our customers. Failure to comply with SCA requirements may result in fines from card networks as well as declined payments from card issuers which could adversely impact our business.

See “Item 1. Business—Regulatory” for more information on certain laws and regulations to which we are subject. In addition, the U.S. government has increased its scrutiny of a number of credit card practices from which some of our merchants derive significant revenue. Regulation of the payments industry, including regulations applicable to us and our merchants, has also increased significantly in recent years.

We are also subject to U.S. and international financial services regulations, a myriad of consumer protection laws, including economic sanctions, laws and regulations, anticorruption laws, escheat regulations, and privacy and information security regulations. In addition, certain of our financial institution partners are subject to regulation by federal and state authorities and, as a result, could pass through some of those compliance obligations to us, which could adversely affect our business, financial condition, or results of operations.

Failure to comply with laws and regulations could damage our reputation, result in the suspension or revocation of licenses and registrations (including our PI licenses), and subject us to enforcement or criminal actions or penalties, including fines. Post-Brexit, we are operating within the United Kingdom pursuant to the temporary permissions regime and have applied to the FCA for a stand alone PI license to operate long-term in the United Kingdom market.

A loss of our PI licenses would prevent us from operating our business in the EU. In addition, we are subject to the rules of Mastercard, Visa, and other credit and debit networks. Any failure to comply with the networks’ requirements or to pay the fines they impose could cause the termination of our registrations and require us to stop providing payment processing services. Violations of law by our merchants and partners could impact our ability to operate our business and could threaten our licenses and registrations. Any of the foregoing could adversely affect our business, financial condition, or results of operations.

Changes to regulations that are applicable to us, our merchants, our partners, or the card networks could require us to make capital investments to modify our processes or services and could reduce the fees we are able to charge our merchants. Regulations could also result in greater pricing transparency and increased price-based competition leading to lower margins and higher rates of merchant attrition. Furthermore, any regulatory change that results in modifications to our merchants’ business practices could change the demand for our services and alter the type or volume of transactions that we process on behalf of our merchants. Any of the foregoing could adversely impact our business, financial condition, or results of operations.

From time to time we are subject to various legal proceedings which could adversely affect our business, financial condition, or results of operations.

We are involved in various litigation matters. We are also involved in, or are the subject of, governmental or regulatory agency inquiries or investigations and make voluntary self-disclosures to government or regulatory agencies from time to time. Our insurance or indemnities may not cover all claims that may be asserted against us and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. If we are unsuccessful in our defense in these litigation matters, or any other legal proceeding, we may be forced to pay damages or fines, enter into consent decrees or change our business practices, any of which could adversely affect our business, financial condition, or results of operations.

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Risks related to our organizational structure

Our principal asset is our interest in EVO, LLC, and, as a result, we depend on distributions from EVO, LLC to pay our taxes and expenses, including payments under the tax receivable agreement with the Continuing LLC Owners (the “TRA”). EVO, LLC’s ability to make such distributions may be subject to various limitations and restrictions.

We are a holding company and have no material assets other than our ownership of LLC Interests. As such, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses or declare and pay dividends in the future, if any, will be dependent upon the financial results and cash flows of EVO, LLC and its subsidiaries and distributions we receive from EVO, LLC. There can be no assurance that our subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in our debt instruments, will permit such distributions. Although EVO, LLC is not currently subject to any debt instruments or other agreements that would restrict its ability to make distributions to EVO, Inc., the terms of our Senior Secured Credit Facilities restrict the ability of our subsidiary, EVO Payments International, LLC, and certain of its subsidiaries to pay dividends to EVO, LLC.

EVO, LLC will continue to report as a partnership for U.S. federal income tax purposes and, as such, will not be subject to any entity-level U.S. federal income tax. Instead, any taxable income of EVO, LLC will be allocated to holders of LLC Interests, including us. Accordingly, we will incur income taxes on our allocable share of any net taxable income of EVO, LLC. Under the terms of its limited liability company agreement, EVO, LLC will be obligated to make tax distributions to holders of LLC Interests, including us. In addition to tax expenses, we may also incur expenses related to our operations. We intend, as its managing member, to cause EVO, LLC to make cash distributions to the owners of LLC Interests in an amount sufficient to (1) fund all or part of their tax obligations in respect of taxable income allocated to them, including as applicable, payments under the TRA, which could be significant, and (2) cover our operating expenses. However, EVO, LLC’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would violate applicable law or any agreement to which EVO, LLC is then a party, including debt agreements, or that would have the effect of rendering EVO, LLC insolvent. Payments required under the TRA are generally funded by taxable income and represent the tax benefit from the step-up in tax basis that is passed on to the TRA holders. If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially and adversely affect our liquidity and financial condition and subject us to various restrictions imposed by lenders. To the extent we are unable to make timely payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach that would accelerate payments due under the TRA. In addition, if EVO, LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired. See “General Risks” and “Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend policy.”

The TRA requires us to make cash payments to the Continuing LLC Owners in respect of certain tax benefits to which we may become entitled, and we expect that those payments will be substantial.

Under the TRA, we are required to make cash payments to the Continuing LLC Owners equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (1) the increases in our share of the tax basis of assets of EVO, LLC resulting from any purchases or redemptions of LLC Interests from the Continuing LLC Owners or exchanges by the Continuing LLC Owners of LLC Interests (and paired Class D common stock) for Class A common stock, and (2) certain other tax benefits related to our making payments under the TRA. In general, we are obligated to fund these payments over time on a pro rata basis to the extent we have realized or are deemed to realize tax benefits. We expect that the amount of the cash payments required under the TRA will be significant, but only to the extent we have taxable income. Any payments made by us to the Continuing LLC Owners under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us. Furthermore, our future obligation to make payments under the TRA could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the TRA.

The actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of LLC Interests, the amount of gain recognized by such holders of

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LLC Interests, the amount and timing of the taxable income allocated to us or otherwise generated by us in the future, and the federal tax rates then applicable.

In connection with the execution and delivery of the Merger Agreement, EVO, Inc., EVO, LLC, and certain other parties to the TRA entered into Amendment No. 1 to the Tax Receivable Agreement (the “TRA Amendment”), pursuant to which such parties agreed to certain terms with respect to the treatment of the TRA upon the consummation of the Merger. In the event the Merger Agreement is terminated, the TRA Amendment will no longer be of any force and effect.

Our organizational structure, including the TRA, confers certain benefits upon the Continuing LLC Owners that do not benefit holders of our Class A common stock to the same extent that they benefit the Continuing LLC Owners.

Our organizational structure, including the TRA, confers certain benefits upon the Continuing LLC Owners that do not benefit the holders of our Class A common stock to the same extent, such as the payment by EVO, Inc. to the Continuing LLC Owners of 85% of the amount of certain tax benefits, discussed above. Although EVO, Inc. retains 15% of the amount of such tax benefits, this and other aspects of our organizational structure that benefit the Continuing LLC Owners may adversely impact the future trading market for the Class A common stock.

In certain cases, payments under the TRA to the Continuing LLC Owners may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the TRA.

The TRA provides that, upon certain mergers, asset sales, business combinations, or changes of control transactions, or the early termination of the TRA at our election, payments to the Continuing LLC Owners under the TRA are based on certain assumptions, including an assumption that we will have sufficient taxable income to fully utilize the potential future tax benefits that are subject to the TRA.

As a result, (1) we could be required to make payments under the TRA that are greater than the specified percentage of any actual tax benefits we ultimately realize and (2) if we elect to terminate the TRA early, we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the TRA, based on certain assumptions, which payment may occur significantly in advance of the actual realization of such future tax benefits, if any. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring, or preventing certain mergers, asset sales, other forms of business combinations, or other changes of control. There can be no assurance that we will be able to fund or finance our obligations under the TRA.

We will not be reimbursed for any payments made to the Continuing LLC Owners under the TRA in the event that any tax benefits are disallowed.

Payments under the TRA will be based on the tax reporting positions that we determine. The IRS or another tax authority may challenge all or part of the tax basis increases or other tax benefits we claim, as well as other related tax positions we take, and a court could sustain such challenge. If the outcome of any such challenge would reasonably be expected to materially affect a recipient’s payments under the TRA, then we will not be permitted to settle or fail to contest such challenge without the consent (not to be unreasonably withheld or delayed) of each Continuing LLC Owner that owns at least 10% of the outstanding LLC Interests. The interests of the Continuing LLC Owners in any such challenge may differ from or conflict with our interests or the interests of holders of our Class A common stock and therefore the exercise of their consent rights may be adverse to our interests and the interests of holders of our Class A common stock. We will not be reimbursed for any cash payments previously made to the Continuing LLC Owners under the TRA in the event that any tax benefits initially claimed by us and for which payment has been made to a Continuing LLC Owner are subsequently challenged by a taxing authority and are ultimately disallowed. Instead, any excess cash payments made by us to a Continuing LLC Owner will be netted against any future cash payments that we might otherwise be required to make to such Continuing LLC Owner under the terms of the TRA. However, we may not determine that we have effectively made an excess cash payment to a Continuing LLC Owner for a number of years following the initial time of such payment and, if any of our tax reporting positions are challenged by a taxing authority, we will not be permitted to reduce any future cash payments under the TRA until any such challenge is finally settled or determined. Moreover, the excess cash payments we previously made under the TRA could be greater than the amount of future cash payments against which we would

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otherwise be permitted to net such excess. As a result, payments could be made under the TRA significantly in excess of any tax savings that we realize in respect of the tax attributes with respect to a Continuing LLC Owner that are the subject of the TRA.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), as a result of our ownership of EVO, LLC, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if it (1) is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities or (2) engages, or proposes to engage, in the business of investing, reinvesting, owning, holding, or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined under the 1940 Act.

As the sole managing member of EVO, LLC, we control and operate EVO, LLC. On that basis, we believe that our interest in EVO, LLC is not an “investment security” as that term is used in the 1940 Act. However, if we were to cease participation in the management of EVO, LLC, our interest in EVO, LLC could be deemed an “investment security” for purposes of the 1940 Act.

We and EVO, LLC intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Risks related to our Series A Convertible Preferred Stock and the ownership interest of our Continuing LLC Owners

Our Series A convertible preferred stock has rights, preferences, and privileges that are not held by, and are preferential to, the rights of holders of our Class A common stock, which could adversely affect our liquidity and financial condition, and could in the future substantially dilute the ownership interest of holders of our Class A common stock.

In April 2020, the Company issued 152,250 shares of Series A convertible preferred stock (the “Preferred Stock”), all of which were purchased by an affiliate of MDP.

The Preferred Stock ranks senior to the Company’s Class A common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. Holders of Preferred Stock are entitled to cumulative, paid-in-kind (“PIK”) dividends, which will be payable semi-annually in arrears by increasing the liquidation preference for each outstanding share of Preferred Stock. These PIK dividends accrue at an annual rate of (i) 6.00% per annum for the first ten years and (ii) 8.00% per annum thereafter. Holders of Preferred Stock are also entitled to participate in and receive any dividends declared or paid on the Class A common stock on an as-converted basis, and no dividends may be paid to holders of Class A common stock unless full participating dividends are concurrently paid to holders of Series A Preferred Stock. See Note 16, “Redeemable Preferred Stock,” in the notes to the accompanying consolidated financial statements for additional information.

Under various circumstances defined in the Certificate of Designations, (a) holders of shares of our Preferred Stock may be entitled to convert such shares into shares of our Class A common stock, or (b) we may require all holders of such shares to convert such shares to shares of our Class A common stock. Additionally, if the Company undergoes a change of control (as defined in the Certificate of Designations), each holder of Preferred Stock may require the Company to repurchase all or a portion of the Preferred Stock for cash consideration equal to up to 150% of the then-current liquidation preference per share plus accumulated and unpaid dividends, if any. In connection with the execution of the Merger Agreement, the holders of Preferred Stock agreed to convert the Preferred Stock into Class A common stock effective immediately prior to the closing of the Merger.

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The share repurchase obligations could adversely affect our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes. Our obligations to the holders of Preferred Stock could also limit our ability to obtain additional financing and increase our borrowing costs, which could have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the holders of Preferred Stock and holders of shares of our Class A common stock.

As holders of our Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our Class A common stock, the issuance of the Preferred Stock effectively reduces the relative voting power of the holders of our Class A common stock. Any conversion of Preferred Stock into Class A common stock would dilute the ownership interest of existing holders of our Class A common stock, and any sales in the public market of the Class A common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

Holders of the Preferred Stock may exercise influence over us, including through their ability to designate a member of our board of directors.

As of December 31, 2022, the outstanding shares of our Preferred Stock represented approximately 18.9% of our outstanding Class A common stock, on an as-converted basis. Holders of Preferred Stock generally will be entitled to vote with the holders of the shares of Class A common stock on all matters submitted for a vote of holders of shares of Class A common stock (voting together with the holders of shares of Class A common stock as one class) on an as-converted basis. The terms of the Preferred Stock grant holders of the Preferred Stock consent rights with respect to certain actions by us, including (1) the authorization, creation, increase in the authorized amount of, or issuance of any class or series of senior or parity equity securities or any security convertible into, or exchangeable or exercisable for, shares of senior or parity equity securities, (2) amendments, modifications or repeal of any provision of the Company’s charter or of the Certificate of Designations that would adversely affect the rights, preferences or voting powers of the Preferred Stock, and (3) certain business combinations and binding or statutory share exchanges or reclassification involving the Preferred Stock unless such events do not adversely affect the rights, preferences or voting powers of the Preferred Stock. As a result, holders of Preferred Stock have the ability to influence the outcome of certain matters affecting our governance and capitalization.

In addition, under the terms of our director nomination agreement with MDP, which was amended and restated in connection with the issuance of the Preferred Stock, MDP has the right to designate for nomination up to two of our directors until MDP no longer holds at least 15% of the voting power of our outstanding voting stock. Thereafter, MDP will have the right to designate one director for nomination until such time as MDP no longer holds at least 5% of the voting power of our outstanding voting stock. Any director designated by MDP is entitled to serve on committees of our board of directors, subject to applicable law and stock exchange rules. Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the director designated by MDP may differ from the interests of other stockholders.

The Continuing LLC Owners have significant influence over us.

The Continuing LLC Owners control a significant portion of the aggregate voting power represented by all our outstanding classes of stock. As a result, the Continuing LLC Owners exercise significant influence over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation, and approval of significant corporate transactions, and will continue to have significant control over our management and policies. Four members of our board of directors are Continuing LLC Owners or are affiliated with our Continuing LLC Owners. The Continuing LLC Owners can take actions that have the effect of delaying or preventing a change of control of us or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them. In addition, the concentration of voting power with the Continuing LLC Owners may have an adverse effect on the price of our Class A common stock and the interests of the Continuing LLC Owners may not be consistent with the interests of our Class A stockholders.

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General Risks

The global COVID-19 pandemic has disrupted, and may continue to disrupt, our business.

The ongoing effects of the global COVID-19 pandemic and measures taken in response have had a significant impact on global economic conditions and may negatively impact certain aspects of our business and results of operations in the future.  While many of the direct impacts of the COVID-19 pandemic have eased, the longer-term macroeconomic effects on global supply chains, inflation, labor shortages and wage increases continue to impact many industries and we, and our merchants, may continue to experience disruption in our business, including volatility in transaction volume and the number of transactions processed.  

The pandemic continues to evolve, with the potential for new strains of existing viruses to emerge, or other pandemics or epidemics, and certain of the impacts of the pandemic may continue to affect our results in the future, including due to: inflationary pressures arising from supply chain disruptions, depressed transaction activity, and reimpositions of travel restrictions which may reduce cross-border transactions. Continued or future shutdowns, partial reopenings, or the re-imposition of previously lifted restrictions could directly or indirectly impact transaction volumes and negatively impact our operating results.  A prolonged disruption in economic activity could adversely impact our business and financial performance, including the potential impairment of certain assets.

The full extent of the impact and effects of COVID-19, and any future pandemics or epidemics, on our business will depend on future developments, including, among other factors, the duration and spread of the outbreak (including whether there are additional periods of increases in the number of COVID-19 cases in future periods), its severity, the evolution of new variants of the virus, the effectiveness of government actions to contain the virus or treat its impact, the length of government restrictions, the distribution and effectiveness of the vaccines, and how quickly and to what extent normal economic and operating conditions resume. COVID-19, or any future pandemics or epidemics, and resulting impacts on the global economy and consumer spending and future developments in these and other areas present uncertainty and risk with respect to our future performance and results of operations.

Certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws may have an antitakeover effect and may delay, defer, or prevent a merger, acquisition, tender offer, takeover attempt, or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. These provisions provide for, among other things:

● a multi-class common stock structure;

● a classified board of directors with staggered three-year terms;

● the ability of our board of directors to issue one or more series of preferred stock;

● advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

● certain limitations on convening special stockholder meetings;

● a prohibition on cumulative voting in the election of directors;

● the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the voting power represented by our then-outstanding common stock; and

● amendment of certain provisions of our certificate of incorporation only by the affirmative vote of at least 66 2/3% of the voting power represented by our then-outstanding common stock.

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These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer was considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.

In addition, we have opted out of Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”), but our amended and restated certificate of incorporation provides that engaging in any of a broad range of business combinations with any “interested” stockholder (any stockholder with 15% or more of our voting stock) for a period of three years following the date on which the stockholder became an “interested” stockholder is prohibited, subject to certain exceptions.

Because we have no current plans to pay regular cash dividends on our Class A common stock, you may not receive any return on investment unless you sell your Class A common stock for a price greater than that which you paid for it.

We do not anticipate paying any regular cash dividends on our Class A common stock. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions, and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends is, and may be, limited by covenants of existing and any future outstanding indebtedness we or our subsidiaries incur, including under our existing Senior Secured Credit Facilities. Therefore, any return on investment in our Class A common stock is solely dependent upon the appreciation of the price of our Class A common stock on the open market, which may not occur. Pursuant to the terms of the Merger Agreement, the Company has agreed to suspend any regular cash dividends during the term of the Merger Agreement.

Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or stockholders.

Our amended and restated certificate of incorporation provides, subject to limited exceptions, that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf of our Company, (2) claim of breach of a fiduciary duty owed by any director, officer, employee, or stockholder to the Company or the Company’s stockholders, (3) claim against the Company or any director or officer of the Company arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws or (4) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in another jurisdiction, which could adversely affect our business, financial condition, or results of operations.

We have renounced the doctrine of corporate opportunity to the fullest extent permitted by applicable law.

Our amended and restated certificate of incorporation provides that the corporate opportunity doctrine will not apply, to the extent permitted by applicable law, against any of our officers, directors, or stockholders or their respective affiliates (other than those officers, directors, stockholders, or affiliates acting in their capacity as our employee or director) in a manner that would prohibit them from investing or participating in competing businesses. To the extent any of our officers, directors or stockholders or their respective affiliates invest in such other businesses, they may have differing interests than our other stockholders. For example, subject to any contractual limitations, our officers, directors or stockholders or

47

their respective affiliates’ funds may currently invest, and may choose in the future to invest, in other companies within the electronic payments industry which may compete with our business. Accordingly, in certain circumstances, the interests of our officers, directors, or stockholders or their respective affiliates may compete against us or pursue opportunities instead of us, for which we have no recourse. These actions on the part of our officers, directors, or stockholders or their respective affiliates could adversely impact our business, financial condition, or results of operations.

If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, the price and trading volume of our Class A common stock could decline.

The trading market for our Class A common stock relies, in part, on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts stops covering us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause the stock price or trading volume of our Class A common stock to decline.

As a public reporting company, we are subject to rules and regulations established from time to time by the SEC and Nasdaq regarding our internal control over financial reporting.

We are a public reporting company subject to the rules and regulations established from time to time by the SEC and Nasdaq. These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. For example, we are required to assess the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. If we identify deficiencies in our internal control over financial reporting or if we are unable to comply with the requirements applicable to us as a public company, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. If this occurs, we could become subject to sanctions or investigations by the SEC or other regulatory authorities. In addition, if we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets, and the market price for our Class A common stock may be adversely affected.

Future sales of Class A common stock in the public market (including shares of Class A common stock issuable upon exchange of LLC Interests or upon conversion of our Series A convertible preferred stock), or the perception of future sales, by us or our existing stockholders could cause the market price for our Class A common stock to decline.

The sale of a significant amount of shares of our Class A common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As part of the Reorganization Transactions, the Continuing LLC Owners received certain sale and exchange rights. Specifically, Blueapple has a sale right providing that, upon our receipt of a sale notice from Blueapple, we will use our commercially reasonable best efforts to pursue a public offering of shares of our Class A common stock and use the net proceeds therefrom to purchase LLC Interests from Blueapple. In addition, pursuant to an exchange agreement (the “Exchange Agreement”) each Continuing LLC Owner (other than Blueapple) has an exchange right providing that, upon receipt of an exchange notice from such Continuing LLC Owner, we will exchange the applicable LLC Interests from such Continuing LLC Owner for newly issued shares of our Class A common stock on a one-for-one basis. Each Continuing LLC Owner (other than Blueapple) also received certain registration rights pursuant to a registration rights agreement, including customary piggyback registration rights, which include the right to participate on a pro rata basis in any public offering we conduct in response to our receipt of a sale notice from Blueapple. In addition, MDP received customary demand registration rights that require us to register shares of Class A common stock held by it, including any Class A common stock received upon our exchange of Class A common stock for its LLC Interests. These registration rights also cover the shares of Class A common stock issuable upon conversion of the Series A convertible preferred stock held by MDP. Blueapple has the right, in connection with any public offering we conduct (including any offering conducted as a result of an exercise by MDP of its registration rights), to request that we use our commercially reasonable best efforts to

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pursue a public offering of shares of our Class A common stock and use the net proceeds therefrom to purchase a pro rata portion of its LLC Interests. The market price of shares of our Class A common stock could decline, potentially significantly, if any of these stockholders exercise their registration, sale, or exchange rights.  

In the future, we may also issue securities in connection with investments, acquisitions, or capital raising activities. In particular, the number of shares of our Class A common stock issued in connection with an investment or acquisition, or to raise additional equity capital, could constitute a material portion of our then-outstanding shares of our Class A common stock. In addition, we have reserved shares of Class A common stock for issuance under our Amended and Restated 2018 Omnibus Equity Incentive Plan to our employees, directors, officers, and consultants. Any issuance of additional securities in the future may result in additional dilution to the holders of our Class A common stock or may adversely impact the price of our Class A common stock.

The market price for our Class A common stock may change significantly, and holders of our Class A common stock may not be able to resell shares at or above the price they paid or at all.

It is possible that an active trading market for our Class A common stock will not be sustained, which could make it difficult for holders of our Class A common stock to sell their shares at an attractive price or at all. In addition, volatility in the market price of our Class A common stock may prevent shareholders from selling shares of our Class A common stock at or above the price they paid for them. Many factors, which are outside our control, may cause the market price of our Class A common stock to fluctuate significantly, including those described elsewhere in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, as well as the following:

● results of operations that vary from those of our competitors or the expectations of securities analysts and investors;

● changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

● technology changes, changes in consumer behavior, or changes in merchant relationships in our industry;

● security breaches related to our systems or those of our merchants, affiliates, or partners;

● changes in market valuations of, or earnings and other announcements by, companies in our industry;

● declines in the market prices of stocks generally, particularly those of payment companies;

● market response to the ongoing COVID-19 pandemic and related government actions;

● announcements by us, our competitors, or our partners of significant contracts, new products, acquisitions, joint ventures, other strategic relationships and partnerships, or capital commitments;

● changes in business, regulatory, economic, or market conditions affecting our industry or the economy as a whole and, in particular, in the consumer spending environment;

● investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives;

● announcements relating to litigation or governmental investigations;

● guidance, if any, that we provide to the public, any changes in this guidance, or our failure to meet this guidance;

● the development and sustainability of an active trading market for our Class A common stock;

● changes in accounting principles; and

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● other events or factors, including those resulting from system failures and disruptions, pandemics, natural disasters, war, acts of terrorism, or responses to these events.

Broad market and industry fluctuations may adversely affect the market price of our Class A common stock, regardless of our actual operating performance. Furthermore, the stock market may experience extreme volatility that, in some cases, may be unrelated or disproportionate to the operating performance of particular companies. For example, in 2022, our stock and the stock of many companies in the payments and financial services industries experienced significant volatility. In addition, price volatility may be greater if the public float and trading volume of our Class A common stock is low.

In addition, the price of our Class A common stock increased significantly in connection with the announcement of the Merger. The price of our Class A common stock will significantly decline if the proposed transaction with Global Payments is not consummated within the intended timeframe or at all.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

As of December 31, 2022, we leased 28 office locations in 13 countries around the world, including data centers and our corporate headquarters located in Atlanta, Georgia.

We believe that these facilities are suitable and adequate to support our ongoing business needs. Refer to Note 7, “Leases,” in the notes to the accompanying consolidated financial statements for further information on our leased real property.

ITEM 3. LEGAL PROCEEDINGS

The Company is party to various claims and lawsuits incidental to the normal conduct of its business. The Company does not believe the ultimate outcome of such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market information

Our Class A common stock is traded on the Nasdaq Global Market system under the symbol “EVOP.” There is currently no established public trading market for our Class D common stock.

Holders

There were approximately eleven stockholders of record of our Class A common stock and nine stockholders of record of our Class D common stock as of January 31, 2023. The number of beneficial owners of our Class A common stock is substantially greater than the number of record holders because a large portion of our Class A common stock is held in “street name” by banks and brokers.

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Issuer purchases of equity securities

The following table sets forth information regarding purchases of Class A common stock for the quarter ended December 31, 2022:

				Total Number of Shares	Approximate Dollar Value of Shares
	Total	Average		Purchased as Part of	that May Yet Be Purchased Under
	Number	Price		Publicly Announced	the Plans or Programs
Period	of Shares (1)	per Share		Plans or Programs	(in millions)
October 1, 2022 to October 31, 2022	890	$	33.34	—	$	—
November 1, 2022 to November 30, 2022	4,860	$	33.69	—	$	—
December 1, 2022 to December 31, 2022	9,661	$	33.73	—	$	—
Total	15,411	$	33.70

(1) Shares surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of restricted stock awards issued to employees.

Dividend policy

Since our initial public offering (“IPO”), we have not declared or paid any cash dividends on our common stock, and we have no current plan to do so. Because a significant portion of our operations is through our subsidiaries, our ability to pay dividends depends in part on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur. The terms of our Senior Secured Credit Facilities restrict the ability of EVO Payments International, LLC (“EPI”), a controlled subsidiary of EVO, Inc. and certain of its subsidiaries from paying dividends to EVO, LLC. In addition, our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of us or our subsidiaries.

Recent sales of unregistered securities

There were no unregistered sales of equity during the year ended December 31, 2022, except for shares of Class A common stock issued to the Continuing LLC Owners in satisfaction of the exchange rights granted to them in connection with the IPO.

The Continuing LLC Owners (other than Blueapple) have the right to require us to exchange all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one-for-one basis (simultaneously cancelling an equal number of shares of Class D common stock of the exchanging member). We may, under certain circumstances, elect to redeem the LLC Interests from any exchanging holder under the terms of the EVO LLC Agreement in lieu of any such exchange. On May 25, 2021, pursuant to the Company’s amended and restated certificate of incorporation, each outstanding share of Class C common stock was automatically converted into one share of Class D common stock.

Following the cancellation of our Class B common stock on May 25, 2021, Blueapple continues to hold 32,163,538 LLC Interests and maintains all of its rights under the EVO LLC Agreement, including the sale right under the EVO LLC Agreement that provides that, upon the receipt of a sale notice from Blueapple, the Company will use its commercially reasonable best efforts to pursue a public offering of shares of Class A common stock and use the net proceeds therefrom to purchase LLC Interest from Blueapple. Upon the Company’s receipt of such a sale notice, the Company may elect, at its option (determined solely by its independent directors (within the meaning of the rules of Nasdaq) who are disinterested), to cause EVO LLC to instead redeem the applicable LLC Interest for cash; provided that Blueapple consents to any election by the Company to cause EVO LLC to redeem the LLC Interests.

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Equity compensation plan information

For information regarding securities authorized for issuance under our equity compensation plans, see Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Stock performance graph

The following graph compares the total shareholder return from May 23, 2018, the date on which our Class A common shares commenced trading on the Nasdaq, through December 31, 2022 of (i) our Class A common stock, (ii) the Standard and Poor's 500 Stock Index (“S&P 500 Index”) and (iii) the Standard and Poor's 500 Information Technology Index (“S&P Information Technology”). The stock performance graph and table assume an initial investment of $100 on May 23, 2018.

The performance graph and table are not intended to be indicative of future performance. The performance graph and table shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933 or the Exchange Act.

*S&P 500 Index and S&P Information Technology assume reinvestment of all dividends.

	EVO Payments, Inc.		S&P 500 Index		S&P Information Technology
May 23, 2018	$	100.00	$	100.00	$	100.00
December 31, 2018		129.71		92.82		89.61
December 31, 2019		138.85		122.04		134.67
December 31, 2020		142.01		144.49		193.78
December 31, 2021		134.60		185.97		260.69
December 31, 2022		177.82		152.29		187.19

ITEM 6. RESERVED

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) is intended to provide an understanding of our financial condition, cash flow, liquidity and results of operations. This MD&A should be read in conjunction with our consolidated financial statements and the notes to the accompanying consolidated financial statements appearing elsewhere in this Form 10-K and the Risk Factors included in Part I, Item 1A of this Form 10-K, as well as other cautionary statements and risks described elsewhere in this Form 10-K.

The comparison of results for the years ended December 31, 2021 and 2020 that are not included in this Form 10-K are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Company background

We are a leading payments technology and services provider offering an array of payment solutions to merchants ranging from small and mid-size enterprises to multinational companies and organizations across the Americas and Europe. As a fully integrated merchant acquirer and payment processor across more than 50 markets and 150 currencies worldwide, we provide competitive solutions that promote business growth, increase customer loyalty, and enhance data security in the markets we serve.

Founded in 1989 as an individually owned, independent sales organization in the United States, we have transformed into a publicly traded company that today derives approximately 65% of its revenues from markets outside of the United States. Our revenue consists primarily of transaction and volume based fees, as well as fixed fees for certain services we perform.

We classify our business into two segments: the Americas and Europe. The alignment of our segments is designed to establish lines of business that support the various geographical markets we operate in and allow us to further globalize our solutions while working seamlessly with our teams across these markets. In both of our segments, we provide our customers with merchant acquiring solutions, including integrated solutions for retail transactions at the physical and virtual POS, as well as B2B transactions. Refer to Part I, Item 1 “Business” contained in Part I of this Annual Report for information related to our operating segments and sales distribution channels.

We plan to continue to grow our business and improve our operations by expanding market share in our existing markets and entering new markets. In our current markets, we seek to grow our business through broadening our distribution network, leveraging our innovative payment technology solutions and direct sales force, and acquiring additional merchant portfolios and tech-enabled businesses. We seek to enter new markets through acquisitions and partnerships in Latin America, Europe, and certain other markets.

Executive overview

We delivered solid financial performance in the year ended December 31, 2022, as demonstrated by the highlights below:

● Revenue for the year ended December 31, 2022 was $543.1 million, an increase of 9.4% compared to the year ended December 31, 2021. The increase was primarily due to the growth in our merchant portfolio, processing volumes and transactions, increased card adoption, sales-related activity, including the expansion of our tech-enabled partners, and the increase in economic activity from the abatement of COVID-19 related restrictions, especially in Europe. The strengthening of the U.S. dollar on foreign exchange rates adversely impacted this growth rate by approximately 4.5%.

● Americas segment profit for the year ended December 31, 2022 was $143.3 million, 6.1% higher than the year ended December 31, 2021. The increase was primarily due to the increase in revenue driven by growth in our

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merchant portfolio, processing volumes and transactions, and sales-related activity, including the expansion of tech-enabled partners.

● Europe segment profit for the year ended December 31, 2022 was $81.0 million, 27.4% higher than the year ended December 31, 2021. The increase was primarily due to the recognition of a gain related to our investment in Visa Series A preferred stock, operating income from the termination of the marketing alliance agreement with Liberbank, S.A. (“Liberbank”), and an increase in revenue driven by growth in our merchant portfolio, processing volumes and transactions, increased card adoption, sales-related activity, including the expansion of tech-enabled partners, and the increase in economic activity from the abatement of COVID-19 related restrictions.

● We processed approximately 4.9 billion transactions in the year ended December 31, 2022, an increase of 17.4% from the year ended December 31, 2021.

Merger with Global Payments Inc.

On August 1, 2022, we entered into the Merger Agreement with Global Payments and Merger Sub. Subject to the terms and conditions of the Merger Agreement, Global Payments has agreed to acquire EVO, Inc. in an all-cash transaction for $34.00 per share of Class A common stock. Upon the consummation of the Merger, we will cease to be a publicly traded company. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements. The Merger is expected to close in the first quarter in 2023, subject to customary closing conditions.

Business trends and challenges

Economic conditions and uncertainties

Global economic challenges, including the impact of the crisis in Russia and Ukraine, the COVID-19 pandemic, severe and sustained inflation, rising interest rates, supply chain disruptions, and foreign exchange fluctuations could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market. We closely monitor economic conditions and the impact to our revenue. In response to potential reductions in revenue, we can take actions to align our cost structure and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of potential future adverse economic conditions and reductions in our revenue.

COVID-19

We have seen increased economic activity resulting from the abatement of COVID-19 related restrictions; however, the COVID-19 pandemic continues to evolve, and may continue to impact global economic conditions and our business. We continue to monitor the COVID-19 pandemic to assess and mitigate potential adverse impacts to our business. Longer term, we believe the pandemic will serve as a catalyst for greater utilization of digital payments, a trend we are continuing to see in our markets.

Russia and Ukraine conflict

The ongoing crisis in Russia and Ukraine is also contributing to economic and geopolitical uncertainty. While we do not have operations or merchants in Russia or Ukraine, we are unable to predict the future impact of this evolving situation, including on the political and economic environment in Europe. We will continue to monitor the conflict and assess any potential impact to our operations.

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Other factors impacting our business and results of operations

In general, our revenue is impacted by factors such as global consumer spending trends, foreign exchange rates, the pace of adoption of commerce-enablement and payment solutions, acquisitions and dispositions, types and quantities of products and services provided to merchants, timing and length of contract renewals, new merchant wins, retention rates, mix of payment solution types employed by consumers, and changes in card network fees, including interchange rates and size of merchants served. In addition, we may pursue acquisitions from time to time. These acquisitions could result in redundant costs, such as increased interest expense resulting from indebtedness incurred to finance such acquisitions, or could require us to incur additional costs as we restructure or reorganize our operations following these acquisitions.

Seasonality

We have experienced in the past, and expect to continue to experience, seasonality in our revenues as a result of consumer spending patterns. Historically, in both the Americas and Europe, our revenue has been strongest in the fourth quarter and weakest in the first quarter as many of our merchants experience a seasonal lift during the traditional vacation and holiday months. Operating expenses do not typically fluctuate seasonally.

Foreign currency translation impact on our operations

We present our financial statements in U.S. dollars and have approximately 65% of our revenues in non-U.S. dollar currencies. The primary non-U.S. dollar currencies are the Euro, Polish Zloty, and Mexican Peso. Accordingly, we are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business. It is difficult to predict the future fluctuations of foreign currency exchange rates and how those fluctuations will impact our consolidated statements of operations and comprehensive income (loss) in the future. As a result of the relative size of our international operations, these fluctuations may be material on individual balances. Our revenues and expenses from our international operations are generally denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of currency fluctuations on our operating results and margins is partially mitigated.

Financial institution partners

We maintain referral partnerships with a number of leading financial institutions, including Deutsche Bank USA, Deutsche Bank Group, Grupo Santander, PKO Bank Polski, Bank of Ireland, Raiffeisen Bank, Moneta, Citibanamex, Sabadell, BCI, and the National Bank of Greece among others. We commenced operations in Chile through our joint venture with BCI (“BCI Pagos”) at the end of the second quarter in 2021. In December 2022, we commenced operations in Greece through our joint venture and exclusive referral relationship with the National Bank of Greece.

These long-term relationships are structured in various ways, such as commercial alliance relationships and joint ventures, and our bank partners typically provide exclusive merchant referrals and credit facilities to support the settlement process. Our relationships with our financial institution partners may be impacted by, among other things, consolidations and other transactions in the banking and payments industries.

In January 2022, Citigroup Inc. announced its decision to exit the consumer, small-business and middle-market banking operations of Citibanamex, our financial institution partner in Mexico. The details of the proposed transaction are unknown, including the identity of the purchaser and anticipated timing of the consummation of their transaction. While our long term, exclusive commercial agreement with Citibanamex remains in place, at this time, we cannot estimate the potential impact of this development to our referral relationship with Citibanamex or our Mexican business.

Following the merger of Unicaja Banco, S.A. and Liberbank, and pursuant to the procedures set forth in the marketing alliance agreement related to a change of control of Liberbank, the parties elected to terminate the marketing alliance agreement in the third quarter of 2022. Income from liquidated damages of €7.0 million ($6.9 million, based on the foreign exchange rate as of the date presented) was recognized in other operating income on the consolidated statements of operations. The termination of the Liberbank marketing alliance agreement will not have a material impact to our financial position, results of operations, or cash flows.

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One of our Spanish financial institution referral partners, Banco Popular, was acquired by Santander in June 2017. As reported previously and reflected in our previous years’ financial statements, Santander’s acquisition of Banco Popular has adversely impacted our business in Spain. Revenues from this channel have declined significantly primarily due to reduced merchant referrals following the acquisition and the bank’s failure to perform certain of its other obligations under our agreements. See Note 19, “Commitments and Contingencies,” in the notes to the accompanying consolidated financial statements for additional information.

Increased regulations and compliance

We, our partners, and our merchants are subject to various laws and regulations that affect the electronic payments industry in the many countries in which our services are used, including numerous laws and regulations applicable to banks, financial institutions, and card issuers. A number of our subsidiaries in our Europe segment hold a PI license, allowing them to operate in the EU member states in which such subsidiaries do business. As a PI, we are subject to regulation and oversight, which include, among other obligations, a requirement to maintain specific regulatory capital and adhere to certain rules regarding the conduct of our business, including PSD2.

PSD2 contains a number of additional regulatory mandates, such as provisions relating to SCA, which aim to increase the security of electronic payments by requiring multi-factor user authentication. Failure to comply with SCA requirements may result in fines from card networks as well as declined payments from card issuers. The EU has also enacted legislation relating to the offering of DCC services, which went into effect in April 2020. These new rules require additional disclosures of foreign exchange margins in connection with our DCC product offerings.

We are currently operating in the United Kingdom within the scope of its temporary permissions regime pending approval of our application for a stand alone PI license. In addition, we continue to closely monitor the impact of Brexit on our operations as further details emerge regarding the post-Brexit regulatory landscape.

Key performance indicators

Transactions Processed

Transactions processed refers to the number of transactions we processed during any given period of time and is a meaningful indicator of our business and financial performance, as a significant portion of our revenue is driven by the number and/or value of transactions we process. In addition, transactions processed provides a valuable measure of the level of economic activity across our merchant base. In our Americas segment, transactions include acquired Visa and Mastercard credit and signature debit, American Express, Discover, UnionPay, JCB, PIN-debit, electronic benefit transactions, and gift card transactions. In our Europe segment, transactions include acquired Visa and Mastercard credit and signature debit, other card network merchant acquiring transactions, and ATM transactions.

For the year ended December 31, 2022, we processed approximately 4.9 billion transactions, which included approximately 1.1 billion transactions in the Americas and approximately 3.8 billion transactions in Europe. This represents an increase of 3.2% in the Americas and an increase of 22.3% in Europe for an aggregate increase of 17.4% compared to the year ended December 31, 2021. Transactions processed in the Americas and Europe accounted for 22.3% and 77.7%, respectively, of the total transactions we processed for the year ended December 31, 2022.

The changes in the transactions processed during the year ended December 31, 2022 compared to the prior year was primarily driven by the growth in our merchant portfolio, increased card adoption, sales-related activity, including the expansion of our tech-enabled partners, and the increase in economic activity from the abatement of COVID-19 related restrictions especially in Europe.

For the year ended December 31, 2021, we processed approximately 4.2 billion transactions, which included approximately 1.1 billion transactions in the Americas and approximately 3.1 billion transactions in Europe. This represents an increase of 9.5% in the Americas and an increase of 21.1% in Europe for an aggregate increase of 17.9%

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compared to the year ended December 31, 2020. Transactions processed in the Americas and Europe accounted for 25.4% and 74.6%, respectively, of the total transactions we processed for the year ended December 31, 2021.

Comparison of results for the years ended December 31, 2022 and 2021

The following table sets forth the consolidated statements of operations in dollars and as a percentage of revenue for the period presented.

	Year Ended			Year Ended
(dollar amounts in thousands)	December 31, 2022		% of revenue	December 31, 2021		% of revenue	$ change		% change
Segment revenue:
Americas	$	320,925	59.1%	$	307,183	61.9%	$	13,742	4.5%
Europe		222,157	40.9%		189,462	38.1%		32,695	17.3%
Revenue	$	543,082	100.0%	$	496,645	100.0%	$	46,437	9.4%
Operating expenses:
Cost of services and products	$	89,370	16.5%	$	75,765	15.3%	$	13,605	18.0%
Selling, general, and administrative		309,539	57.0%		266,117	53.6%		43,422	16.3%
Depreciation and amortization		84,143	15.5%		83,389	16.8%		754	0.9%
Total operating expenses		483,052	88.9%		425,271	85.6%		57,781	13.6%
Other operating income		6,939	1.3%		—	0.0%		6,939	100.0%
Income from operations	$	66,969	12.3%	$	71,374	14.4%	$	(4,405)	(6.2%)
Segment profit:
Americas	$	143,297	26.4%	$	135,081	27.2%	$	8,216	6.1%
Europe	$	80,992	14.9%	$	63,588	12.8%	$	17,404	27.4%

Revenue

Revenue was $543.1 million for the year ended December 31, 2022, an increase of $46.4 million, or 9.4% compared to the year ended December 31, 2021. The strengthening of the U.S. dollar on foreign exchange rates adversely impacted this growth rate by approximately 4.5%.

Americas segment revenue was $320.9 million for the year ended December 31, 2022, an increase of $13.7 million, or 4.5%, compared to the year ended December 31, 2021.

Europe segment revenue was $222.2 million for the year ended December 31, 2022, an increase of $32.7 million, or 17.3%, compared to the year ended December 31, 2021. The strengthening of the U.S. dollar on foreign exchange rates adversely impacted this growth rate by approximately 12.2%.

The increase in both Americas and Europe segment revenue for the year ended December 31, 2022 was primarily due to the growth in our merchant portfolio, processing volumes and transactions, increased card adoption, and sales-related activity, including the expansion of our tech-enabled partners.

Operating expenses

Cost of services and products

Cost of services and products was $89.4 million for the year ended December 31, 2022, an increase of $13.6 million, or 18.0%, compared to the year ended December 31, 2021 primarily due to the increase of 17.4% in transactions processed.

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Selling, general, and administrative expenses

Selling, general, and administrative expenses were $309.5 million for the year ended December 31, 2022, an increase of $43.4 million, or 16.3%, compared to the year ended December 31, 2021. The increase was primarily due to higher professional fees related to the Merger, acquisitions, and litigation as well as personnel costs due to growth in headcount, and incentive compensation expenses based on business performance.

Depreciation and amortization

Depreciation and amortization was $84.1 million for the year ended December 31, 2022, an increase of $0.8 million, or 0.9%, compared to the year ended December 31, 2021. The increase was primarily due to the accelerated amortization related to the termination of the Liberbank marketing alliance agreement and the change in recoverability of the Banco Popular marketing alliance agreement, partially offset by lower amortization due to the accelerated amortization method of merchant contract portfolios acquired in prior periods.

Other operating income

Other operating income was $6.9 million for the year ended December 31, 2022. This income was recognized as a result of the termination of the marketing alliance agreement with Liberbank, in lieu of future merchant referrals and revenue that would have otherwise been earned.

Interest expense

Interest expense was $17.6 million for the year ended December 31, 2022, a decrease of $5.5 million, or 23.8%, compared to the year ended December 31, 2021. The decrease was primarily due to the reduction in the credit spread on the term loan as a result of the refinancing on November 1, 2021.

Income tax expense

Income tax expense represents federal, state, local and foreign taxes based on income in multiple domestic and foreign jurisdictions. Historically, as a limited liability company treated as a partnership for U.S. federal income tax purposes, EVO, LLC’s income was not subject to corporate tax in the United States, but only on income earned in foreign jurisdictions. In the United States, our members were taxed on their proportionate share of income of EVO, LLC. However, following the Reorganization Transactions, we incur corporate tax on our share of taxable income of EVO, LLC. Our income tax expense reflects such U.S. federal, state and local income tax as well as taxes payable in foreign jurisdictions by certain of our subsidiaries. For the year ended December 31, 2022, we recorded a tax expense of $36.2 million, which included a net discrete tax expense of $2.6 million primarily related to changes in uncertain tax positions offset by the true up of the deferred taxes due to an increase in the state effective tax rate. For the year ended December 31, 2021, we recorded a tax expense of $22.0 million, which included a tax benefit of $1.5 million primarily related to the true up of the deferred taxes due to an increase in the state effective tax rate offset by a valuation allowance recorded to reduce the deferred tax assets not expected to be realized in Spain.

Segment performance

Americas segment profit for the year ended December 31, 2022 was $143.3 million, compared to $135.1 million for the year ended December 31, 2021, an increase of 6.1%. The increase was primarily due to the increase in revenue driven by growth in our merchant portfolio, processing volumes and transactions, and sales-related activity, including the expansion of tech-enabled partners, partially offset by an increase of employee compensation, as a result of headcount growth. Americas segment profit margin was 44.7% for the year ended December 31, 2022, compared to 44.0% for the year ended December 31, 2021.

Europe segment profit was $81.0 million for the year ended December 31, 2022, compared to $63.6 million for the year ended December 31, 2021, an increase of 27.4%. The increase was primarily due to the recognition of a gain related to our investment in Visa Series A preferred stock, operating income from the termination of the marketing alliance agreement with Liberbank, and an increase in revenue driven by growth in our merchant portfolio, processing volumes and transactions, increased card adoption, sales-related activity, including the expansion of tech-enabled partners, and the increase in economic activity from the abatement of COVID-19 related restrictions. This was partially offset by the impact of the strong U.S. dollar on foreign exchange rates and higher professional fees related to litigation. Europe segment profit margin was 36.5% for the year ended December 31, 2022, compared to 33.6% for the year ended December 31, 2021.

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Corporate expenses not allocated to a segment were $51.5 million for the year ended December 31, 2022, compared to $35.6 million for the year ended December 31, 2021. The increase was primarily due to the higher professional fees related to the Merger, acquisitions, and litigation.

Comparison of results for the years ended December 31, 2021 and 2020

The comparison of results for the years ended December 31, 2021 and 2020 that are not included in this Form 10-K are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Liquidity and capital resources for the years ended December 31, 2022 and 2021

Overview

We have historically funded our operations primarily with cash flow from operations and, when needed, with borrowings, including under our Senior Secured Credit Facilities. Our principal uses for liquidity have been debt service, capital expenditures, working capital, and funds required to finance acquisitions. However, the Merger Agreement with Global Payments imposes certain limitations on how we conduct our business during the period between the execution of the Merger Agreement and the effective time of the Merger, including limitations on our ability to, among other things, engage in certain acquisitions, incur indebtedness or issue or sell new debt securities.

We expect to continue to use capital to innovate and advance our products as new technologies emerge and to accommodate new regulatory requirements in the markets in which we operate. We expect these strategies to be funded primarily through cash flow from operations and borrowings from our Senior Secured Credit Facilities. Short-term liquidity needs will primarily be funded through the revolving credit facility portion of our Senior Secured Credit Facilities.

To the extent that additional funds are necessary to finance future acquisitions, and to meet our long-term liquidity needs as we continue to execute on our strategy, we anticipate that they will be obtained through additional indebtedness, equity, or debt issuances, or both.

As of December 31, 2022, our capacity under the revolving credit facility portion of our Senior Secured Credit Facilities was $200.0 million, with availability of $130.7 million for additional borrowings and utilization of $68.2 million and $1.1 million in revolver and standby letters of credit, respectively.

We have structured our operations in a manner to allow for cash to be repatriated through tax-efficient methods using dividends or long-term loans from foreign jurisdictions as our main source of repatriation. We follow local government regulations and contractual restrictions on cash as well as how much and when dividends can be repatriated. As of December 31, 2022, cash and cash equivalents of $356.5 million includes cash in the United States of $110.0 million and $246.5 million in foreign jurisdictions, respectively. Of the United States cash balances, $2.9 million is available for general purposes, and the remaining $107.1 million is considered merchant reserves and settlement-related cash and is therefore unavailable for our general use. Of the foreign cash balances, $100.1 million is available for general purposes, and the remaining $146.4 million is considered merchant reserves and settlement-related cash and is therefore unable to be repatriated. Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements for additional information on our cash and cash equivalents.

We do not intend to pay cash dividends on our Class A common stock in the foreseeable future. EVO, Inc. is a holding company that does not conduct any business operations of its own. As a result, EVO, Inc.’s ability to pay cash dividends on its common stock, if any, is dependent upon cash dividends and distributions and other transfers from EVO, LLC. The amounts available to EVO, Inc. to pay cash dividends are subject to the covenants and distribution restrictions in our Senior Secured Credit Facilities. Further, EVO, Inc. may not pay cash dividends to holders of Class A common stock unless it concurrently pays full participating dividends to holders of the Preferred Stock on an “as converted” basis. Pursuant to the terms of the Merger Agreement, the Company has agreed to suspend any regular cash dividends during the term of the Merger Agreement.

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In connection with our IPO, we entered into the Exchange Agreement with certain of the Continuing LLC Owners, under which these Continuing LLC Owners have the right, from time to time, to exchange their units in EVO, LLC and related Class D common shares of EVO, Inc. for shares of our Class A common stock or, at our option, cash.  If we choose to satisfy the exchange in cash, we anticipate that we will fund such exchange through cash from operations, funds available under the revolving portion of our Senior Secured Credit Facilities, equity, or debt issuances or a combination thereof. In connection with the Merger Agreement, Blueapple entered into the Common Unit Purchase Agreement with Global Payments and us, pursuant to which Blueapple agreed to sell all of its common units to us in exchange for $1,093,560,292, concurrently with, and contingent and conditioned upon, the closing of the transactions contemplated by the Merger Agreement.

In addition, in connection with the IPO, we entered into the TRA with the Continuing LLC Owners. Payments required under the TRA are generally funded by taxable income and represent the tax benefit from the step-up in tax basis that is passed on to the TRA holders. Any payments made by us to non-controlling LLC owners under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us and, to the extent that we are unable to make payments under the TRA for any reason, the unpaid amounts generally will be deferred and will accrue interest in accordance with the terms of the TRA until paid by us. In connection with the execution of the Merger Agreement, we entered into the TRA amendment, pursuant to which such parties agreed to terminate the TRA immediately after the effective time of the Merger on the terms set forth therein. In connection with the termination, EVO agreed to pay certain other members of EVO, LLC and their assignees (the “TRA Payment Recipients”) an aggregate termination payment equal to $225 million minus any payments made under the TRA to the TRA Payment Recipients between August 1, 2022 and the effective time of the Merger. Refer to Note 5, “Tax Receivable Agreement,” in the notes to the accompanying consolidated financial statements for additional information on the TRA.

The following table sets forth summary cash flow information for the years ended December 31, 2022, 2021, and 2020:

	Year Ended December 31,
(in thousands)	2022		2021		2020
Net cash provided by operating activities	$	163,068	$	103,597	$	116,020
Net cash used in investing activities		(252,142)		(74,704)		(25,967)
Net cash provided by (used in) financing activities		43,837		(24,382)		9,763
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(8,162)		(12,435)		14,634
Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(53,399)	$	(7,924)	$	114,450

Operating activities

Net cash provided by operating activities was $163.1 million for the year ended December 31, 2022, an increase of $59.5 million compared to net cash provided by operating activities of $103.6 million for the year ended December 31, 2021. The increase was primarily due to higher net income and changes in working capital, including the timing of settlement-related assets and liabilities.

Investing activities

Net cash used in investing activities was $252.1 million for the year ended December 31, 2022, an increase of $177.4 million compared to net cash used in investing activities of $74.7 million for the year ended December 31, 2021. The increase was primarily due to the acquisitions of NBG Pay Single Member Societe Anonyme (“NBG Pay”) and Electronic Data Processing Source S.A. (“EDPS”).

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Financing activities

Net cash provided by financing activities was $43.8 million for the year ended December 31, 2022, an increase of $68.2 million, compared to net cash used in financing activities of $24.4 million for the year ended December 31, 2021. The increase was primarily due to the utilization of revolver to facilitate the acquisitions in Greece.

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash are impacted by the fluctuation of foreign exchange rates upon translation of non-U.S. currencies to U.S. dollars. The foreign exchange rate volatility in the current year impacted the translation during the year ended December 31, 2022, compared to the year ended December 31, 2021.

Liquidity and capital resources for the years ended December 31, 2021 and 2020

The discussion of cash flow activities for the year ended December 31, 2021 as compared to the year ended December 31, 2020 that are not included in this Form 10-K are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Senior Secured Credit Facilities

The Company (through its subsidiary EPI) entered into the Restatement Agreement in November 2021 to amend and restate our senior secured credit facilities (as amended and restated by the Restatement Agreement, the “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities are comprised of a $200.0 million revolving credit facility maturing in November 2026, and a $588.0 million term loan maturing in November 2026. In addition, our Senior Secured Credit Facilities also provide us with the option to access incremental credit facilities, refinance the loans with debt incurred outside our Senior Secured Credit Facilities, and extend the maturity date of the revolving loans and term loans, subject to certain limitations and terms. In connection with the Senior Secured Credit Facilities refinanced under the Restatement Agreement, a loss of $5.7 million was presented within other (expense) income in the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2021. The total loss of $5.7 million includes a debt extinguishment loss of $2.2 million and a loss of $3.5 million related to unamortized deferred financing costs.

Borrowings under the Senior Secured Credit Facilities bear interest at an annual rate equal to, at EPI’s option, (a) a base rate, plus an applicable margin or (b) LIBOR, plus an applicable margin. The applicable margin for base rate loans ranges from 0.75% to 1.75% per annum and for LIBOR loans ranges from 1.75% to 2.75% per annum, in each case based upon achievement of certain consolidated leverage ratios. In addition to paying interest on outstanding principal, EPI is required to pay a commitment fee to the lenders in respect of the unutilized revolving commitments thereunder ranging from 0.25% to 0.375% per annum based upon achievement of certain consolidated leverage ratios. The Senior Secured Credit Facilities include provisions that provide for the eventual replacement of LIBOR as a reference rate with the Secured Overnight Financing Rate (as defined in the credit agreement) or otherwise an alternate benchmark rate that has been selected by the administrative agent and EPI and not objected to by a majority of the lenders.

The Senior Secured Credit Facilities require prepayment of outstanding loans, subject to certain exceptions, with: (1) 100% of the net cash proceeds of non-ordinary course asset sales or other dispositions of assets (including casualty events) by EPI and its restricted subsidiaries, subject to reinvestment rights and certain other exceptions (subject to step-downs to 50% and 0% based on achievement of certain consolidated leverage ratios), and (2) 50% of the excess cash flow (subject to certain exceptions and step-downs to 25% and 0% based on achievement of certain consolidated leverage ratios).

EPI may voluntarily repay outstanding loans under the Senior Secured Credit Facilities at any time without a premium.

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All obligations under the Senior Secured Credit Facilities are unconditionally guaranteed by most of EPI’s direct and indirect, wholly-owned domestic subsidiaries, subject to certain exceptions.

● a first-priority lien on the capital stock owned by EPI or by any guarantor in each of EPI’s or their respective subsidiaries (limited, in the case of capital stock of foreign subsidiaries and first tier domestic subsidiaries substantially all the assets of which are the capital stock of foreign subsidiaries, to 65% of the voting stock and 100% of the non-voting stock of such subsidiaries); and

● a first-priority lien on substantially all of EPI’s and each guarantor’s present and future intangible and tangible assets (subject to customary exceptions).

The Senior Secured Credit Facilities contain a number of significant negative covenants. These covenants, among other things, restrict, subject to certain exceptions, EPI and its restricted subsidiaries ability to:

● incur indebtedness;

● create liens;

● engage in mergers or consolidations;

● make investments, loans and advances;

● pay dividends and distributions and repurchase capital stock;

● sell assets;

● engage in certain transactions with affiliates;

● enter into sale and leaseback transactions;

● make certain accounting changes; and

● make prepayments on junior indebtedness.

The Senior Secured Credit Facilities also contain a financial covenant that requires EPI to remain under a maximum consolidated leverage ratio determined on a quarterly basis with step-downs over time. The Borrower may elect to increase the maximum consolidated leverage ratio with which it must comply by 0.5x up to two times during the term upon the consummation of a “material acquisition.”

In addition, the Senior Secured Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Senior Secured Credit Facilities will be entitled to take various actions, including the acceleration of amounts due thereunder and exercise of remedies on the collateral.

Refer to Note 13, “Long-Term Debt and Lines of Credit,” in the notes to the accompanying consolidated financial statements for additional information on our long-term debt and settlement lines of credit.

Upon the consummation of the Merger, our Senior Secured Credit Facilities will be paid off in full. However, there can be no assurance that the Merger will be consummated within the anticipated timeline or at all.  For additional discussion regarding our risks related to the Merger, see the risks described under the caption “Risks related to the Merger” in Item 1A, Part I of this Annual Report.  

Settlement lines of credit

We have specialized lines of credit which are restricted for use in funding settlement. The settlement lines of credit generally have variable interest rates and are subject to annual review. As of December 31, 2022, we had $5.0 million outstanding under these lines of credit with additional capacity of $296.5 million to fund settlement.

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Contractual obligations

Our purchase obligations consists of agreements to purchase goods and services, including POS terminals, software licenses, and software maintenance support, entered into in the ordinary course of business.

We lease certain facilities under non-cancellable operating lease arrangements that expire at various dates in the future. As of December 31, 2022, the value of our obligations under operating leases was $50.8 million. Refer to Note 7, “Leases,” in the notes to the accompanying consolidated financial statements for additional information.

Our tax receivable agreement requires us to make payments to the Continuing LLC Owners in the amount equal to 85% of the applicable cash tax savings, if any. Refer to Note 5, “Tax Receivable Agreement,” in the notes to the accompanying consolidated financial statements for additional information.

Critical accounting policies and estimates

Our discussion and analysis of our financial condition and results of operations for the periods described is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgments in certain circumstances that affect the reported amounts of assets, liabilities, and contingencies as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical information and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have provided a summary of our significant accounting policies, as well as a discussion of our evaluation of the impact of recent accounting pronouncements in Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements. The following discussion pertains to accounting policies management believes are most critical to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective, or complex judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition, results of operations, and cash flows to those of other companies.

Revenue recognition

Our primary revenue source consists of fees for payment processing services and revenue from the sale and rental of electronic POS equipment. Payment processing service revenue is primarily based on a percentage of transaction value or on a specified amount per transaction or related services.

When third parties are involved in the Company’s merchant acquiring arrangements and processing services, we apply judgment to determine whether we are acting as a principal or an agent of the third party. We follow the requirements of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, which states that the determination of whether an entity should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement. To determine whether we are acting as a principal or an agent, we assess indicators including: 1) whether we or the third party is primarily responsible for fulfillment; 2) which party has discretion in establishing pricing for the service; and 3) other considerations deemed to be applicable to the specific situation.

Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 2, “Revenue,” in the notes to the accompanying consolidated financial statements for further information.

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Goodwill and intangible assets

We evaluate our goodwill for impairment annually, or more frequently, if events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. Goodwill is tested for impairment at the reporting unit level. Our reporting units are consistent with our segments: the Americas and Europe.

Factors we consider in the qualitative assessment include macroeconomic conditions, industry and market considerations, changes in certain costs, overall financial performance of each reporting unit, and other relevant entity-specific events. If we elect to bypass the qualitative assessment or if we determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative test would be required.

The quantitative impairment test involves a comparison of the estimated fair value of a reporting unit to its carrying amount. We estimate the fair value of our reporting units using both an income approach and a market approach. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on our estimates of revenue growth rates, operating margins, and other factors, such as working capital and capital expenditures. The discount rate is based on the weighted-average cost of capital adjusted for the relevant risks associated with business specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, we estimate the fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with characteristics similar to the reporting unit. Determining the fair value of a reporting unit involves judgment and the use of significant estimates and assumptions, which include revenue growth rates and operating margins used to calculate projected future cash flows, risk adjusted discount rates, and the selection of appropriate market multiples.

Finite-lived intangible assets include merchant contract portfolios and customer relationships, marketing alliance agreements, trademarks, internally developed and acquired software, and non-competition agreements.

The acquired intangible assets were recorded at their estimated fair value at the date of acquisition. Determination of the fair value of our acquired merchant contract portfolios, customer relationships, marketing alliance agreements, and acquired software involves significant estimates and assumptions related to revenue growth rates, discount rates, merchant attrition rates, and expected merchant referrals from our referral partners. Determination of the fair value of our acquired trademarks involves significant estimates and assumptions related to revenue growth rates, royalty rates, and discount rates.

We also develop software that is used in providing services to our customers. Capitalization of internal-use software occurs when we have completed the preliminary project stage. Costs incurred during the preliminary project stage are expensed as incurred.

Finite-lived intangible assets are amortized over their estimated useful lives ranging from 2 to 21 years using either accelerated or straight-line method. Determination of estimated useful lives of intangible assets requires significant judgment. The useful lives for customer-related intangible assets are based primarily on forecasted cash flows, which include estimates for the revenues, expenses, and customer attrition associated with the assets. The useful lives of contract-based intangible assets are based on the terms of the agreements. The useful lives of trademarks are based on our assumptions regarding the period of time during which a significant portion of the economic value of such assets is expected to be realized. The useful lives of internally developed and acquired software are based on various factors, including analysis of potential obsolescence due to new technology, competition, and other economic factors. We regularly evaluate whether events and circumstances have occurred that indicate the useful lives of finite-lived intangible assets may warrant revision.

Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated from use of the asset and its eventual disposition. If the total of the undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

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Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 9, “Goodwill and Intangible Assets,” in the notes to the accompanying consolidated financial statements for further information.

Income taxes

EVO, LLC is considered a pass-through entity for U.S. federal and most applicable state and local income tax purposes. As a pass-through entity, taxable income or loss is passed through to and included in the taxable income of its members.

EVO, Inc. is subject to U.S. federal, state, and local income taxes with respect to our allocable share of taxable income of EVO, LLC and is taxed at the prevailing corporate tax rates. In addition to incurring actual tax expense, we also may make payments under the TRA. We account for the income tax effects and corresponding TRA effects resulting from future taxable purchases of LLC Interests of the Continuing LLC Owners or exchanges of LLC Interests for Class A common stock at the date of the purchase or exchange by recognizing an increase in our deferred tax assets based on enacted tax rates at that time. Further, we evaluate the likelihood that we will realize the benefit represented by the deferred tax assets and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we reduce the carrying amount of the deferred tax assets with a valuation allowance. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the TRA are estimated at the time of any purchase or exchange and are recorded as an increase to shareholders’ equity; the effects of changes in any of our estimates after this date are included in net earnings. Similarly, the effects of subsequent changes in the enacted tax rates are included in net earnings.

The Company recognizes deferred tax assets to the extent that it is expected that these assets are more likely than not to be realized. The Company evaluates the realizability of the deferred tax assets, and to the extent that the Company estimates that it is more likely than not that a benefit will not be realized, the carrying amount of the deferred tax assets is reduced with a valuation allowance. As a part of this evaluation, the Company assesses all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations (including cumulative losses in recent years), to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets.

The Company has identified objective and verifiable negative evidence in the form of cumulative losses on an unadjusted basis in certain jurisdictions over the preceding twelve quarters ended December 31, 2022. The Company evaluated both its actual forecasts of future taxable income and its historical core earnings by jurisdiction over the prior twelve quarters, adjusted for certain nonrecurring items. On the basis of this assessment, and after considering future reversals of existing taxable temporary differences, and its actual forecasts of future taxable income, the Company determined that valuation allowances are needed in certain European jurisdictions. In the United States, with the exception of the interest expense limitation and a stand alone domestic subsidiary, the Company concluded that its indefinite lived deferred tax assets will be realizable and recorded no valuation allowance. In arriving at this determination, the Company considered both (i) historical core earnings, after adjusting for certain nonrecurring items, and (ii) the projected future profitability of its core operations and the impact of enacted changes in the application of the interest expense limitation rules beginning in 2022.

In the United States jurisdiction, the Company’s future taxable income projections are derived from historical core operations adjusted for certain non-recurring items, which indicate that the Company will move out of a period of cumulative losses as taxable loss periods are replaced by taxable income periods. The amount of the deferred tax asset considered realizable, however, could be adjusted if the Company’s estimates of the projected future profitability of its core operations are reduced by a level significantly different than the Company’s historical revenues and expenses adjusted for certain nonrecurring items. As a secondary measure, the Company compares its adjusted historical core earnings to its actual forecast to ensure that adjusted core earnings are realizable. The Company also evaluates the realizability of the deferred tax assets, and to the extent that the Company estimates that it is more likely than not that a benefit will not be realized, the carrying amount of the deferred tax assets would be offset with a valuation allowance and the related TRA liability would be reduced. The future taxable income projections are subject to a high degree of uncertainty and could be impacted, both positively and negatively, by changes in our business or the markets in which we operate. A change in the assessment of the realizability of its deferred tax assets could materially impact our results of operations.

Refer to Note 5, “Tax Receivable Agreement,” and Note 12, “Income Taxes,” in the notes to the accompanying consolidated financial statements for further information.

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Redeemable non-controlling interest in eService, BCI Pagos, and NBG Pay

Redeemable non-controlling interest (“RNCI”) in eService, BCI Pagos, and NBG Pay relate to the portion of equity in our consolidated subsidiaries in Poland, Chile, and Greece, not attributable, directly or indirectly, to us, which is realizable upon the occurrence of an event that is not solely within our control. We adjust the RNCI at each balance sheet date to reflect our estimate of the maximum redemption amount with changes recognized as an adjustment to our additional paid-in capital or, in the absence of additional paid-in capital, to shareholders’ deficit. Such estimate is based on projected operating performance of the subsidiary and the key assumptions used in estimating the fair value include, but are not limited to, revenue growth rates and weighted-average cost of capital.

Refer to Note 17, “Redeemable Non-controlling Interests,” for further information.

New accounting pronouncements

For information regarding new accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, if any, refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair values of the financial instruments are subject to risks relating to interest rates and foreign currency exchange rates.

Interest rate risk

We are subject to interest rate risk in connection with our long-term debt and settlement facilities, which have variable interest rates. The interest rates on these facilities are based on a fixed margin plus a market interest rate, which can fluctuate but is subject to a minimum rate. Interest rate changes could impact the amount of our interest payments, and accordingly, our future earnings and cash flows, assuming other factors are held constant.

As of December 31, 2022, we had approximately $641.5 million of debt outstanding, net of accrued interest, of which $500.0 million was subject to an interest rate hedge. The Company entered into the interest rate hedge in 2020 to reduce a portion of the exposure to market rate risk associated with its variable-rate debt. The interest rate hedge matured on December 31, 2022. Refer to Note 14, “Derivatives,” in the notes to the accompanying consolidated financial statements.

In the future, interest rates may fluctuate and we may be subject to interest rate risk. Based on the amount outstanding on our Senior Secured Credit Facilities on December 31, 2022, an increase or a decrease of 100 basis points in the applicable interest rate (assuming such reduction would not be below the minimum rate) would increase or decrease our annual interest expense by approximately $6.4 million upon the expiration of the interest rate swap. Effective January 2023, interest rate payments of our entire outstanding term loan will be based on variable interest rates.

Foreign currency risk

We are exposed to changes in foreign currency rates as a result of our significant foreign operations. Revenue and income generated by international operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates related to certain foreign intercompany balances. A hypothetical uniform 10% weakening or strengthening in the value of the U.S. dollar relative to all the currencies in which our revenue and income are denominated would result in an increase or decrease to pretax income of approximately $8.0 million on an annual basis. The change results from revenue and income earned in foreign currencies, primarily denominated in the Euro, Polish Zloty and Mexican Peso. There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that foreign exchange rate movements are linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect our income.

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The Company uses a forward contract, foreign currency swap, and window forward contracts to help mitigate exposure to fluctuations in foreign currency exchange rates related to certain foreign intercompany balances. Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34)	69
Consolidated Balance Sheets as of December 31, 2022 and 2021	72
Consolidated Statements of Operations and Comprehensive Income (Loss) for each of the years ended December 31, 2022, 2021, and 2020	73
Consolidated Statements of Changes in Equity (Deficit) for each of the years ended December 31, 2022, 2021, and 2020	74
Consolidated Statements of Cash Flows for each of the years ended December 31, 2022, 2021, and 2020	77
Notes to Consolidated Financial Statements	78
Schedule I – Condensed Financial Information of Registrant	122
Schedule II – Valuation and Qualifying Accounts	127

68

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of EVO Payments, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of EVO Payments, Inc. and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company as of and for the year ended December 31, 2022, and our report dated February 22, 2023, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America ("generally accepted accounting principles"). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

New York, New York

February 22, 2023

69

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of EVO Payments, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of EVO Payments, Inc. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), changes in equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedules listed in the Index to the Consolidated Financial Statements (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue—Refer to Notes 1 and 2 to the consolidated financial statements

Critical Audit Matter Description

The Company’s revenue primarily consists of transaction-based fees that are made up of a significant volume of low-dollar transactions, sourced from multiple systems, platforms, and applications. The Company’s payment processing services are

70

highly automated and are based on contractual terms with merchants. Because of the nature of the payment processing services, the Company relies on automated systems to process and record its revenue transactions. Netting against the Company’s revenue are commissions for referral partners and third-party processing and assessment costs such as interchange fees and card network fees.

We identified revenue as a critical audit matter because the Company’s multiple systems to process and record revenue are highly automated with multiple platforms, including systems to record commissions cost. This required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), to identify, test, and evaluate the Company’s systems, applications, and automated controls.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s systems to process revenue transactions, including commissions cost, included the following, among others:

●With the assistance of our IT specialists, we:

– Identified the significant systems used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.

– Performed testing of interface controls and automated controls relevant to revenue processes.

● We tested internal controls within the relevant revenue processes, including those in place to reconcile the various systems to the Company’s general ledger.

● For certain components of revenue, we developed an independent expectation of revenue and compared it to the amount recorded by the Company.

● For certain components of revenue, we performed detail transaction testing for a sample of such revenue transactions, by agreeing the amounts recognized to source documents, and tested the mathematical accuracy of the recorded revenue.

● For commissions to referral partners, we developed an independent expectation for commissions cost and compared it to the commissions cost recorded by the Company.

/s/ Deloitte & Touche LLP

New York, New York  

February 22, 2023

We have served as the Company's auditor since 2016.

71

EVO PAYMENTS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share data)

	December 31,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	356,459	$	410,368
Accounts receivable, net		20,107		16,065
Other receivables		23,624		18,087
Inventory		8,113		4,210
Settlement processing assets		732,284		311,681
Other current assets		26,875		20,514
Total current assets		1,167,462		780,925
Equipment and improvements, net		69,957		68,506
Goodwill, net		528,555		385,651
Intangible assets, net		386,688		200,726
Deferred tax assets		241,652		238,261
Operating lease right-of-use assets		40,980		34,704
Investment in equity securities, at fair value		35,818		25,398
Other assets		19,703		19,214
Total assets	$	2,490,815	$	1,753,385
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Settlement lines of credit	$	5,033	$	7,887
Current portion of long-term debt		14,092		14,058
Accounts payable		7,309		6,889
Accrued expenses and other current liabilities		157,347		127,060
Settlement processing obligations		861,080		422,109
Current portion of operating lease liabilities, inclusive of related party liability of $0.7 million and $1.3 million at December 31, 2022 and December 31, 2021, respectively		8,283		7,122
Total current liabilities		1,053,144		585,125
Long-term debt, net of current portion		623,196		568,632
Deferred tax liabilities		25,330		22,207
Tax receivable agreement obligations, inclusive of related party liability of $171.9 million and $169.4 million at December 31, 2022 and December 31, 2021, respectively		182,726		180,143
Operating lease liabilities, net of current portion, inclusive of related party liability of $0.1 million and $1.0 million at December 31, 2022 and December 31, 2021, respectively		34,504		28,948
Other long-term liabilities		12,687		7,891
Total liabilities		1,931,587		1,392,946
Commitments and contingencies
Redeemable non-controlling interests		1,515,450		1,029,090
Redeemable preferred stock (par value, $0.0001 per share), Authorized, Issued and Outstanding – 152,250 shares at December 31, 2022 and December 31, 2021. Liquidation preference: $178,559 and $168,309 at December 31, 2022 and December 31, 2021, respectively		174,531		164,007
Shareholders' equity (deficit):
Class A common stock (par value, $0.0001 per share), Authorized - 200,000,000 shares, Issued and Outstanding - 48,423,077 and 47,446,061 shares at December 31, 2022 and December 31, 2021, respectively		5		5
Class D common stock (par value, $0.0001 per share), Authorized - 32,000,000 shares, Issued and Outstanding - 3,741,074 and 3,783,074 shares at December 31, 2022 and December 31, 2021, respectively		—		—
Additional paid-in capital		—		—
Accumulated deficit attributable to Class A common stock		(928,187)		(652,871)
Accumulated other comprehensive loss		(7,954)		(9,154)
Total EVO Payments, Inc. shareholders' deficit		(936,136)		(662,020)
Nonredeemable non-controlling interests		(194,617)		(170,638)
Total deficit		(1,130,753)		(832,658)
Total liabilities, redeemable non-controlling interests, redeemable preferred stock, and shareholders’ deficit	$	2,490,815	$	1,753,385

See accompanying notes to consolidated financial statements.

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EVO PAYMENTS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share data)

	Year Ended December 31,
	2022		2021		2020
Revenue	$	543,082	$	496,645	$	439,101
Operating expenses:
Cost of services and products		89,370		75,765		84,336
Selling, general, and administrative		309,539		266,117		250,676
Depreciation and amortization		84,143		83,389		85,924
Impairment of intangible assets		—		—		802
Total operating expenses		483,052		425,271		421,738
Other operating income		6,939		—		—
Income from operations		66,969		71,374		17,363
Other expense:
Interest income		3,136		1,651		1,172
Interest expense		(17,641)		(23,161)		(30,160)
Gain on investment in equity securities		7,313		237		17,574
Other (expense) income, net		(3,226)		(10,375)		3,007
Total other expense		(10,418)		(31,648)		(8,407)
Income before income taxes		56,551		39,726		8,956
Income tax expense		(36,245)		(22,037)		(13,122)
Net income (loss)		20,306		17,689		(4,166)
Less: Net income attributable to non-controlling interests in consolidated entities		11,596		9,003		7,189
Less: Net income (loss) attributable to non-controlling interests of EVO Investco, LLC		3,431		33		(9,679)
Net income (loss) attributable to EVO Payments, Inc.		5,279		8,653		(1,676)
Less: Accrual of redeemable preferred stock paid-in-kind dividends		10,524		9,889		6,528
Net loss attributable to Class A common stock	$	(5,245)	$	(1,236)	$	(8,204)
Earnings per share
Basic	$	(0.11)	$	(0.03)	$	(0.20)
Diluted	$	(0.11)	$	(0.03)	$	(0.20)
Weighted-average Class A common stock outstanding
Basic		47,979,393		47,092,937		41,980,163
Diluted		47,979,393		47,092,937		41,980,163
Comprehensive income (loss):
Net income (loss)	$	20,306	$	17,689	$	(4,166)
Change in fair value of interest rate swap, net of tax(1)		(1,126)		1,591		(465)
Change in fair value of cross currency swap, net of tax(2)		(44)		—		—
Unrealized (loss) gain on foreign currency translation adjustment, net of tax (3)		(2,726)		(28,336)		8,774
Other comprehensive (loss) income		(3,896)		(26,745)		8,309
Comprehensive income (loss)		16,410		(9,056)		4,143
Less: Comprehensive income attributable to non-controlling interests in consolidated entities		10,052		3,237		8,774
Less: Comprehensive loss attributable to non-controlling interests of EVO Investco, LLC		(121)		(10,747)		(5,948)
Comprehensive income (loss) attributable to EVO Payments, Inc.	$	6,479	$	(1,546)	$	1,317

(1) Net of tax benefit (expense) of $0.2 million, $(0.2) million, and $0.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

(2) Net of tax benefit of less than $0.1 million for the year ended December 31, 2022.

(3) Net of tax benefit (expense) of $5.6 million, $4.1 million, and $(2.5) million for the years ended December 31, 2022, 2021, and 2020, respectively.

See accompanying notes to consolidated financial statements.

73

EVO PAYMENTS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity (Deficit)

(In thousands)

				Shareholders' Equity (Deficit)
																		Accumulated				Total
																		deficit		Accumulated		EVO
	Redeemable															Additional		attributable to		other		Payments,		Nonredeemable				Redeemable
	Preferred Stock			Class A Common Stock			Class B Common Stock			Class C Common Stock			Class D Common Stock			paid-in		Class A		comprehensive		Inc. equity		non-controlling		Total equity		non-controlling
	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		capital		common stock		income (loss)		(deficit)		interests		(deficit)		interests
Balance, January 1, 2020	—	$	—	41,234	$	4	34,164	$	3	2,322	$	—	4,355	$	—	$	—	$	(587,358)	$	(1,948)	$	(589,299)	$	(293,348)	$	(882,647)	$	1,052,448
Net loss	—		—	—		—	—		—	—		—	—		—		—		(1,676)		—		(1,676)		(1,341)		(3,017)		(1,149)
Cumulative translation adjustment	—		—	—		—	—		—	—		—	—		—		—		—		3,190		3,190		341		3,531		5,243
Contributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		—		—		505
Distributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		24		24		(4,537)
Sale of Class A common stock in secondary offerings	—		—	4,152		1	(2,000)		—	—		—	(2,152)		—		(34,540)		(8,945)		—		(43,484)		94,834		51,350		(51,350)
Fair value adjustment in connection with purchase of Blueapple Class B shares	—		—	—		—	—		—	—		—	—		—		—		(1,436)		—		(1,436)		(214)		(1,650)		1,650
Share-based compensation expense	—		—	—		—	—		—	—		—	—		—		20,664		—		—		20,664		—		20,664		—
Vesting of equity awards	—		—	197		—	—		—	—		—	—		—		(1,345)		—		—		(1,345)		—		(1,345)		—
Exercise of stock options	—		—	405		—	—		—	—		—	—		—		6,145		—		—		6,145		—		6,145		—
Exchanges of Class C and Class D common stock for Class A common stock	—		—	414		—	—		—	(602)		—	188		—		(16,658)		—		—		(16,658)		16,658		—		—
Deferred taxes in connection with increase in ownership of EVO Investco, LLC	—		—	—		—	—		—	—		—	—		—		2,995		—		—		2,995		—		2,995		—
Tax receivable agreement in connection with share exchanges	—		—	—		—	—		—	—		—	—		—		4,548		—		—		4,548		—		4,548		—
Issuance of redeemable preferred stock, net of issuance costs	152		147,590	—		—	—		—	—		—	—		—		—		—		—		—		—		—		—
Accrual of redeemable preferred stock paid-in-kind dividends	—		6,528	—		—	—		—	—		—	—		—		(6,528)		—		—		(6,528)		—		(6,528)		—
Change in fair value of interest rate swap	—		—	—		—	—		—	—		—	—		—		—		—		(197)		(197)		(45)		(242)		(223)
eService redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(43,105)		25,069		—		(18,036)		(1,628)		(19,664)		19,664
Blueapple redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(353,175)		320,136		—		(33,039)		(343)		(33,382)		33,382
Reclassification of additional paid-in capital to accumulated deficit	—		—	—		—	—		—	—		—	—		—		420,999		(420,999)		—		—		—		—		—
Balance, December 31, 2020	152	$	154,118	46,402	$	5	32,164	$	3	1,720	$	—	2,391	$	—	$	—	$	(675,209)	$	1,045	$	(674,156)	$	(185,062)	$	(859,218)	$	1,055,633

See accompanying notes to consolidated financial statements.

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EVO PAYMENTS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity (Deficit)

(In thousands)

				Shareholders' Equity (Deficit)
																		Accumulated				Total
																		deficit		Accumulated		EVO
	Redeemable															Additional		attributable to		other		Payments,		Nonredeemable				Redeemable
	Preferred Stock			Class A Common Stock			Class B Common Stock			Class C Common Stock			Class D Common Stock			paid-in		Class A		comprehensive		Inc. equity		non-controlling		Total equity		non-controlling
	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		capital		common stock		income (loss)		(deficit)		interests		(deficit)		interests
Balance, January 1, 2021	152	$	154,118	46,402	$	5	32,164	$	3	1,720	$	—	2,391	$	—	$	—	$	(675,209)	$	1,045	$	(674,156)	$	(185,062)	$	(859,218)	$	1,055,633
Net income	—		—	—		—	—		—	—		—	—		—		—		8,653		—		8,653		255		8,908		8,781
Cumulative translation adjustment	—		—	—		—	—		—	—		—	—		—		—		—		(10,999)		(10,999)		(1,258)		(12,257)		(16,079)
Contributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		—		—		1,487
Distributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		(213)		(213)		(13,655)
Share-based compensation expense	—		—	—		—	—		—	—		—	—		—		27,419		—		—		27,419		—		27,419		—
Vesting of equity awards	—		—	266		—	—		—	—		—	—		—		(4,577)		—		—		(4,577)		—		(4,577)		—
Exercise of stock options	—		—	450		—	—		—	—		—	—		—		7,866		—		—		7,866		—		7,866		—
Cancellation of Class B common stock	—		—	—		—	(32,164)		(3)	—		—	—		—		3		—		—		—		—		—		—
Conversion of Class C common stock to Class D common stock	—		—	—		—	—		—	(1,599)		—	1,599		—		—		—		—		—		—		—		—
Exchanges of Class C and Class D common stock for Class A common stock	—		—	328		—	—		—	(121)		—	(207)		—		(15,038)		—		—		(15,038)		15,038		—		—
Deferred taxes in connection with increase in ownership of EVO Investco, LLC	—		—	—		—	—		—	—		—	—		—		255		—		—		255		—		255		—
Tax receivable agreement in connection with share exchanges	—		—	—		—	—		—	—		—	—		—		380		—		—		380		—		380		—
Accrual of redeemable preferred stock paid-in-kind dividends	—		9,889	—		—	—		—	—		—	—		—		(9,889)		—		—		(9,889)		—		(9,889)		—
Change in fair value of interest rate swap	—		—	—		—	—		—	—		—	—		—		—		—		800		800		84		884		707
eService redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(22,331)		10,638		—		(11,693)		(904)		(12,597)		12,597
BCI Pagos redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(4,285)		—		—		(4,285)		(343)		(4,628)		4,628
Blueapple redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(75,616)		98,860		—		23,244		1,765		25,009		(25,009)
Reclassification of additional paid-in capital to accumulated deficit	—		—	—		—	—		—	—		—	—		—		95,813		(95,813)		—		—		—		—		—
Balance, December 31, 2021	152	$	164,007	47,446	$	5	—	$	—	—	$	—	3,783	$	—	$	—	$	(652,871)	$	(9,154)	$	(662,020)	$	(170,638)	$	(832,658)	$	1,029,090

See accompanying notes to consolidated financial statements.

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EVO PAYMENTS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity (Deficit)

(In thousands)

				Shareholders' Equity (Deficit)
												Accumulated				Total
												deficit		Accumulated		EVO
	Redeemable									Additional		attributable to		other		Payments,		Nonredeemable				Redeemable
	Preferred Stock			Class A Common Stock			Class D Common Stock			paid-in		Class A		comprehensive		Inc. equity		non-controlling		Total equity		non-controlling
	Shares	Amounts		Shares	Amounts		Shares	Amounts		capital		common stock		loss		(deficit)		interests		(deficit)		interests
Balance, January 1, 2022	152	$	164,007	47,446	$	5	3,783	$	—	$	—	$	(652,871)	$	(9,154)	$	(662,020)	$	(170,638)	$	(832,658)	$	1,029,090
Net income	—		—	—		—	—		—		—		5,279		—		5,279		1,050		6,329		13,977
Cumulative translation adjustment	—		—	—		—	—		—		—		—		1,814		1,814		(325)		1,489		(4,215)
Contributions	—		—	—		—	—		—		—		—		—		—		—		—		3,201
Distributions	—		—	—		—	—		—		—		(3,449)		—		(3,449)		(821)		(4,270)		(11,703)
Acquired redeemable noncontrolling interest	—		—	—		—	—		—		—		—		—		—		—		—		159,784
Share-based compensation expense	—		—	—		—	—		—		29,223		—		—		29,223		—		29,223		—
Vesting of equity awards	—		—	454		—	—		—		(3,675)		—		—		(3,675)		—		(3,675)		—
Exercise of stock options	—		—	481		—	—		—		9,566		—		—		9,566		—		9,566		—
Exchanges of Class D common stock for Class A common stock	—		—	42		—	(42)		—		(1,895)		—		—		(1,895)		1,895		—		—
Deferred taxes in connection with increase in ownership of EVO Investco, LLC	—		—	—		—	—		—		206		—		—		206		—		206		—
Tax receivable agreement in connection with share exchanges	—		—	—		—	—		—		47		—		—		47		—		47		—
Change in ownership of nonredeemable non-controlling interest	—		—	—		—	—		—		—		2,396		—		2,396		(2,396)		—		—
Accrual of redeemable preferred stock paid-in-kind dividends	—		10,524	—		—	—		—		(10,524)		—		—		(10,524)		—		(10,524)		—
Change in fair value of interest rate swap	—		—	—		—	—		—		—		—		(590)		(590)		(55)		(645)		(481)
Change in fair value of cross currency swap	—		—	—		—	—		—		—		—		(24)		(24)		(2)		(26)		(18)
eService redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—		(20,659)		(5,916)		—		(26,575)		(2,060)		(28,635)		28,635
BCI Pagos redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—		3,240		—		—		3,240		250		3,490		(3,490)
Blueapple redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—		(340,950)		73,278		—		(267,672)		(20,629)		(288,301)		288,301
NBG Pay redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—		(11,483)		—		—		(11,483)		(886)		(12,369)		12,369
Reclassification of additional paid-in capital to accumulated deficit	—		—	—		—	—		—		346,904		(346,904)		—		—		—		—		—
Balance, December 31, 2022	152	$	174,531	48,423	$	5	3,741	$	—	$	—	$	(928,187)	$	(7,954)	$	(936,136)	$	(194,617)	$	(1,130,753)	$	1,515,450

See accompanying notes to consolidated financial statements.

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EVO PAYMENTS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

	Year Ended December 31,
	2022		2021		2020
Cash flows from operating activities:
Net income (loss)	$	20,306	$	17,689	$	(4,166)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		84,143		83,389		85,924
Gain on sale of investment		—		—		(336)
Gain on investment in equity securities		(7,313)		(237)		(17,574)
Amortization of deferred financing costs		1,185		2,427		2,675
Loss on unamortized deferred financing costs		—		3,471		—
Loss on extinguishment of debt		—		2,196		—
Loss on disposal of equipment and improvements		—		1,308		1,741
Share-based compensation expense		29,223		27,419		20,664
Deferred taxes, net		4,475		8,258		2,599
Other		(1,029)		4,983		(4,873)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		(3,655)		293		(267)
Other receivables		(5,339)		1,652		4,020
Inventory		(4,067)		801		3,993
Other current assets		(1,084)		(4,610)		(1,413)
Operating lease right-of-use assets		7,825		6,554		7,825
Other assets		(3,713)		(3,802)		3,466
Accounts payable		1,395		2,475		(8,326)
Accrued expenses and other current liabilities		29,584		10,728		(895)
Settlement processing funds, net		20,159		(49,566)		34,157
Operating lease liabilities		(7,694)		(7,584)		(8,571)
Other		(1,333)		(4,247)		(4,623)
Net cash provided by operating activities		163,068		103,597		116,020
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired		(192,315)		(18,809)		—
Purchase of equipment and improvements		(36,232)		(33,395)		(20,481)
Acquisition of intangible assets		(23,595)		(22,550)		(6,821)
Return of capital on equity method investment		—		—		906
Collections of notes receivable		—		50		429
Net cash used in investing activities		(252,142)		(74,704)		(25,967)
Cash flows from financing activities:
Net repayments of settlement lines of credit		(2,598)		(5,584)		(19,896)
Proceeds from long-term debt		158,034		725,600		185,250
Repayments of long-term debt		(104,534)		(728,769)		(301,843)
Deferred financing costs paid		—		(5,927)		—
Deferred and contingent consideration paid		(3,633)		(610)		(2,130)
Secondary offering proceeds		—		—		115,538
Purchase of LLC Interests, Class B and Class D common stock in connection with the secondary offerings		—		—		(115,538)
Repurchases of shares to satisfy minimum tax withholding		(3,675)		(4,577)		(1,345)
Proceeds from issuance of redeemable preferred stock		—		—		149,250
Redeemable preferred stock issuance costs		—		—		(1,660)
Proceeds from exercise of common stock options		9,566		7,866		6,145
Distributions to non-controlling interest holders		(12,524)		(13,868)		(4,513)
Contribution from non-controlling interest holders		3,201		1,487		505
Net cash provided by (used in) financing activities		43,837		(24,382)		9,763
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(8,162)		(12,435)		14,634
Net (decrease) increase in cash, cash equivalents, and restricted cash		(53,399)		(7,924)		114,450
Cash, cash equivalents, and restricted cash, beginning of year		410,615		418,539		304,089
Cash, cash equivalents, and restricted cash, end of year	$	357,216	$	410,615	$	418,539

See accompanying notes to consolidated financial statements.

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EVO PAYMENTS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) Description of Business and Summary of Significant Accounting Policies

(a) Description of Business

EVO, Inc. is a Delaware corporation whose primary asset is its ownership of approximately 57.4% of the membership interests of EVO, LLC as of December 31, 2022. EVO, Inc. was incorporated on April 20, 2017 for the purpose of completing the Reorganization Transactions in order to consummate the IPO and to carry on the business of EVO, LLC. EVO, Inc. is the sole managing member of EVO, LLC and operates and controls all of the businesses and affairs conducted by EVO, LLC and its subsidiaries (the “Group”). The Company is a leading payment technology and services provider, offering an array of innovative, reliable, and secure payment solutions to merchants across the Americas and Europe and servicing more than 700,000 merchants across more than 50 markets. The Company supports all major card types in the markets it serves.

The Company provides card-based payment processing services to small and middle market merchants, multinational corporations, government agencies, and other business and nonprofit enterprises located throughout the Americas and Europe. These services enable merchants to accept credit and debit cards and other electronic payment methods as payment for their products and services by providing terminal devices, card authorization, data capture, funds settlement, risk management, fraud detection, and chargeback services. The Company also offers value-added solutions such as gateway solutions, online hosted payments page capabilities, mobile-based SMS integrated payment collection services, security tokenization and encryption solutions at the physical and virtual POS, DCC, ACH, Level 2 and Level 3 data processing, management reporting solutions, loyalty programs, and Visa Direct, among other ancillary solutions. Other industry-specific processing capabilities are also in our product suite, such as recurring billing, multi-currency authorization, and cross-border processing and settlement. The Company operates two reportable segments: the Americas and Europe.

(b) Merger with Global Payments Inc.

On August 1, 2022, EVO, Inc. entered into the Merger Agreement with Global Payments and Merger Sub. Subject to the terms and conditions of the Merger Agreement, Global Payments has agreed to acquire EVO, Inc. in an all-cash transaction for $34.00 per share of Class A common stock. Upon the consummation of the Merger, EVO, Inc. will cease to be a publicly traded company.

The Merger Agreement contains representations, warranties, covenants, closing conditions, and termination rights customary for transactions of this type. Until the earlier of the termination of the Merger Agreement and the effective time of the Merger, the Company has agreed to operate in the ordinary course of business and has agreed to certain other operating covenants, as set forth in the Merger Agreement. The Merger is expected to close in the first quarter of 2023, subject to customary closing conditions.

(c) Basis of Presentation and Use of Estimates

Certain prior period amounts have been reclassified to conform to the current year presentation where applicable.

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The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported assets and liabilities, as of the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Estimates used for accounting purposes include, but are not limited to, valuation of RNCI, evaluation of realizability of deferred tax assets, determination of liabilities under the tax receivable agreement, determination of liabilities and corresponding right-of-use assets arising from lease agreements, determination of assets or liabilities arising from derivative transactions, determination of fair value of share-based compensation, establishment of severance liabilities, establishment of allowance for doubtful accounts, and assessment of impairment of goodwill and intangible assets.

(d) Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company. As the sole managing member of EVO, LLC, the Company exerts control over the Group. In accordance with ASC 810, Consolidation, EVO, Inc. consolidates the Group’s financial statements and records the interests in EVO, LLC that it does not own as non-controlling interests. All intercompany accounts and transactions have been eliminated in consolidation. The Company accounts for investments over which it has significant influence, but not a controlling financial interest using the equity method of accounting.

(e) Cash and Cash Equivalents, Restricted Cash, Settlement Related Cash and Merchant Reserves

Cash and cash equivalents include all cash balances and highly liquid securities with original maturities of three months or less. Cash balances often exceed federally insured limits; however, concentration of credit risk is limited due to the payment of funds on the same day or the day following receipt in satisfaction of the settlement process. Included in cash and cash equivalents are settlement-related cash and merchant reserves.

Settlement-related cash represents funds that the Company holds when the incoming amount from the card networks precedes the funding obligation to the merchant. Settlement-related cash balances are not restricted, however these funds are generally paid out in satisfaction of settlement processing obligations and therefore are not available for general purposes. As of December 31, 2022 and 2021, settlement-related cash balances were $157.1 million and $133.3 million, respectively.

Merchant reserves represent funds collected from the Company’s merchants that serve as collateral to minimize contingent liabilities associated with any losses that may occur under the respective merchant agreements. While this cash is not restricted in its use, the Company believes that maintaining merchant reserves to collateralize merchant losses strengthens its fiduciary standings with its card network sponsors and is in accordance with the guidelines set by the card networks. As of December 31, 2022 and 2021, merchant reserves were $96.4 million and $101.6 million, respectively.

Restricted cash represents funds held as a liquidity reserve at our Chilean and Greek subsidiaries, as required by local regulations.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total amount shown in the consolidated statements of cash flows:

	December 31,		December 31,
	2022		2021
	(In thousands)
Cash and cash equivalents	$	356,459	$	410,368
Restricted cash included in other assets		757		247
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	357,216	$	410,615

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(f) Accounts Receivable and Other Receivables

Accounts receivable include amounts due from ISOs and merchants related to the transaction processing services and sale of POS equipment and peripherals. Other receivables include advances to merchants, amounts of foreign value-added taxes to be recovered through regular business operations, and other amounts due to the Company.

Receivable balances are stated net of allowance for doubtful accounts. The Company regularly evaluates its receivables for collectability. The Company analyzes historical losses, the financial position of its customers and known or expected trends when estimating the allowance for doubtful accounts. As of December 31, 2022 and 2021, allowance for doubtful accounts was $8.8 million and $7.2 million, respectively.

(g) Inventory

Inventory consists primarily of electronic POS terminals and prepaid mobile phone cards and is stated at the lower of cost or net realizable value. Cost is determined based on the first-in, first-out (“FIFO”) method.

(h) Earnings Per Share

Basic earnings per share of Class A common stock is calculated pursuant to the two-class method as a result of the issuance of 152,250 shares of Series A Convertible Preferred Stock (the “Preferred Stock”) on April 21, 2020. The Preferred Stock is considered a participating security because the holders of Preferred Stock are entitled, on an as-converted basis, to participate in and receive any dividends declared or paid on the Class A common stock, and no dividends may be paid to holders of Class A common stock unless full participating dividends are concurrently paid to holders of Preferred Stock. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common stock and participating securities based on their respective rights to receive dividends. The Preferred Stock is not included in the computation of basic earnings per share in periods in which the Company reports a net loss, as the Preferred Stock holders are not contractually obligated to share in the net losses. However, the cumulative dividends that accrete on the Preferred Stock for the period reduce the net income or increase the net loss allocated to common stockholders. Earnings per share is not separately presented for Class B common stock, Blueapple LLC Interests, Class C common stock, and Class D common stock since they have no economic rights to the earnings of the Company.

Diluted earnings per share of Class A common stock is calculated using the more dilutive of the (a) treasury stock method and as-converted method or (b) the two-class method. Class B common stock, which was automatically cancelled on May 25, 2021, and Blueapple LLC Interests are not considered when calculating diluted earnings per share as this class of common stock and LLC Interests may not convert to Class A common stock. Class C common stock, which was automatically converted into one share of Class D common stock on May 25, 2021, and Class D common stock are considered in the calculation of diluted earnings per share on an if-converted basis as these classes, together with the paired LLC Interests, have exchange rights that could result in additional shares of Class A common stock being issued. Potentially dilutive shares issuable upon conversion of the Preferred Stock are considered in the calculation of diluted earnings per share on an if-converted basis. All other potentially dilutive securities are determined based on the treasury stock method. Refer to Note 4, “Earnings Per Share,” and Note 21, “Shareholders’ Equity,” for further information.

(i) Settlement Processing Assets and Obligations

Settlement processing assets and obligations represent intermediary balances arising in our settlement process. Refer to Note 3, “Settlement Processing Assets and Obligations,” for further information.

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(j) Equipment and Improvements

Equipment and improvements are stated at cost less accumulated depreciation. Card processing equipment, office equipment, computer software, and furniture and fixtures are depreciated over their respective estimated useful lives on a straight-line basis. Leasehold improvements are depreciated over the lesser of the estimated useful life of the asset or the lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are recognized as expense when incurred. Refer to Note 8, “Equipment and Improvements,” for further information.

(k) Deferred Financing Costs

The costs associated with obtaining debt financing are capitalized and amortized over the term of the related debt. Such costs are presented as a reduction of the long-term debt.

(l) Goodwill and Intangible Assets

The Company regularly evaluates whether events and circumstances have occurred that indicate the carrying amounts of goodwill and other intangible assets may not be recoverable. Goodwill represents the excess of the consideration transferred over the fair value of identifiable net assets acquired through business combinations. The Company evaluates its goodwill for impairment annually as of October 1, or more frequently, if an event occurs or circumstances change that indicate the fair value of a reporting unit might be below its carrying amount. Our reporting units are consistent with our segments: the Americas and Europe. ASC 350, Intangibles - Goodwill and Other, allows the Company to conduct a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test.

As of October 1, 2022 and 2021, the Company performed a qualitative assessment to evaluate the goodwill for indicators of impairment. A qualitative assessment includes consideration of macroeconomic conditions, industry and market considerations, changes in certain costs, overall financial performance of each reporting unit, and other relevant entity-specific events. In performing its qualitative assessment, the Company considered the results of its quantitative impairment test performed in 2020 and the financial performance of the reporting units during 2022 and 2021. Based upon such assessment, the Company determined that it was more likely than not that the fair values of these reporting units exceeded their carrying amounts as of the date of the impairment test. There were no significant events or changes in the circumstances since the date of the Company’s annual impairment test that would have required a reassessment of the results as of December 31, 2022 and 2021.

As of December 31, 2022, there are no indefinite-lived intangible assets other than goodwill.

Finite-lived assets include merchant contract portfolios and customer relationships, marketing alliance agreements, trademarks, internally developed and acquired software, and non-competition agreements, and are stated net of accumulated amortization and impairment charges and foreign currency translation adjustments.

Merchant contract portfolios and customer relationships consist of merchant or customer contracts acquired from third parties that will generate revenue for the Company. The useful lives of these assets are determined using forecasted cash flows, which are based on, among other factors, the estimates of revenue, expenses, and attrition associated with the underlying portfolio of merchant or customer accounts. The useful lives are determined based upon the period of time over which a significant portion of the economic value of such assets is expected to be realized. The useful life of merchant contract portfolios and customer relationships ranges from 5 to 19 years. Amortization of these assets is recognized under an accelerated method, which approximates the expected distribution of the portfolios’ forecasted cash flows.

Marketing alliance agreements are amortized on a straight-line basis over the term of the agreements, which range from 5 to 21 years.

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Trademarks are amortized on a straight-line basis over the period of time during which a significant portion of the economic value of such assets is expected to be realized, which ranges from 2 to 20 years.

Internally developed and acquired software is amortized on a straight-line basis over the estimated useful lives, which range from 3 to 10 years. The estimated useful lives of the software are based on various factors, including obsolescence, technology, competition, and other economic factors. The costs related to the internally developed software are capitalized during the developmental phase of a project, and amortization commences when the software is placed into use by the Company. The costs incurred during the preliminary project stage are expensed as incurred.

Non-competition agreements are amortized on a straight-line basis over the term of the agreement, which is 3 years.

When factors indicate that a long-lived asset should be assessed for impairment, the Company evaluates whether the carrying value of the asset will be recovered through the future undiscounted cash flows from the ongoing use of the asset, and if applicable, its eventual disposition. When the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to the difference. Refer to Note 9, “Goodwill and Intangible Assets,” for further information.

(m) Derivatives

The Company recognizes derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of a particular derivative, whether the Company has elected to designate or not designate such derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a cash flow hedge. Investments in foreign operations with functional currencies other than the reporting currency are subject to foreign currency risk as foreign instruments are remeasured each period resulting in fluctuations in the cumulative translation adjustment (CTA) section within other comprehensive (loss) income. Net investment hedge accounting offers protection from remeasurement risk as changes in fair value of the derivative are also recorded in CTA. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The Company uses a forward contract, foreign currency swap, and window forward contracts to mitigate its exposure to fluctuations in foreign currency exchange rates. The Company elected not to designate the instruments as a hedge and they are not subject to hedge accounting.

The Company entered into a cross currency swap to hedge the risk of fluctuations in the exchange rate related to a net investment in a foreign subsidiary. The Company designated the cross currency swap as a net investment hedge. Changes in the fair value of a net investment hedge are recorded in accumulated other comprehensive loss and reclassified into earnings when the hedged net investment is sold or substantially liquidated. Components excluded from the assessment of effectiveness will be recognized in earnings using a systematic and rational method over the life of the hedging instrument.

Changes in the fair value of a derivative that is designated as, and meets all the required criteria for, a cash flow hedge are recorded in accumulated other comprehensive loss and reclassified into earnings as the underlying hedged item affects earnings. Changes in the fair value of a derivative that is not designated as a cash flow hedge are recorded as a component of other (expense) income.

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Refer to Note 14, “Derivatives,” and Note 18, “Fair Value,” for further information on the derivative instruments.

(n) Revenue Recognition

The Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue From Contracts With Customers (“ASC 606”) on January 1, 2019, using the modified retrospective method and applying the standard to all contracts not completed on the date of adoption.

The Company primarily earns revenue from payment processing services. The payment processing services involve capturing, routing, and clearing transactions through the applicable payment network. The Company obtains authorization for each transaction and requests funds settlement from the card issuing financial institution through the payment network. In addition, the Company also earns revenue from the sale and rental of electronic POS equipment.

The Company’s revenue consists primarily of transaction-based fees that are made up of a significant volume of low-dollar transactions, sourced from multiple systems, platforms, and applications. The payment processing is highly automated, and is based on contractual terms with merchants. Because of the nature of payment processing services, the Company relies on automated systems to process and record the revenue transactions. Netting against the revenue is certain commissions for referral partners and third party processing and assessment costs such as interchange fees and card network fees.

The Company’s core performance obligation is to provide continuous access to the Company’s processing services in order to be able to process as many transactions as its customers require on a daily basis over the contract term, as the timing and quantity of transactions to be processed is not determinable. Under a stand-ready obligation, the Company’s performance is defined by each time increment rather than by the underlying activities satisfied over time based on days elapsed. Because the service of standing ready is substantially the same each day, and has the same pattern of transfer to the customer, the Company has determined that its stand-ready performance obligation comprises a series of distinct days of service.

The Company’s contractual agreements outline the pricing related to payment processing services including fixed fees and pricing related to the sale or rental of POS equipment. Given the nature of the promise to stand ready to provide payment processing services and the fees which are based on unknown quantities of services to be performed over the contract term, the consideration related to the payment processing services is determined to be variable consideration. The variable consideration is usage-based and the variability is satisfied each day the services are provided to the customer. The Company allocates variable fees to the distinct day of service to which it relates, considering the services performed each day in order to allocate the appropriate amount of total fees to that day. Therefore, the Company recognizes revenue for payment processing services over time on a daily basis based on the services performed on that day. Revenue from the sale of POS equipment is recognized at a point in time when the POS equipment is shipped and title passes to the customer. Revenue recognized at a point in time is not material. Revenue from the rental of electronic POS equipment is recognized over time.

ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations; however, as permitted by the standard, the Company has elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. As discussed above, the Company’s core performance obligation is a stand-ready obligation comprised of a series of distinct days of service, and revenue related to this performance obligation is generally billed and recognized as the services are performed. The variable consideration allocated to this performance obligation meets the specified criteria for disclosure exclusion. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.

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The Company follows the requirements of ASC 606-10, Principal Agent Considerations, which states that the determination of whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement.

For payment processing services, the determination of gross versus net recognition for interchange, card network fees, and commissions depends on whether the Company controls the good or service before it is transferred to the merchant or whether the Company is acting as an agent of a third party.

The Company frequently enters into agreements with third parties under which the third party engages the Company to provide payment processing services to all of their customers. Under these agreements the third party acts as supplier of products or services by achieving most of the shared risks and rewards of customer contracts and the Company passes the third party’s share of merchant receipts to them as commissions. The Company incurs interchange and card network fees from the card issuers and payment networks respectively, and does not have the ability to direct the use of or receive the benefits from the services provided by the card issuers or the payment networks. The Company has no discretion over which card issuing bank will be used to process a transaction and is unable to direct the activity of the merchant to another card issuing bank. Interchange and card network rates are pre-established by the card networks, and the Company has no latitude in determining these fees. Therefore, the Company is acting as an agent with respect to these services. Revenue generated from payment processing is presented net of interchange, card network fees, and certain commissions. Commissions payable to referral and reseller partners are recognized as incurred.

(o) Share-Based Compensation

The Company follows ASC 718, Compensation: Stock Compensation (“ASC 718”), which requires that all share-based payments to employees, including stock options and restricted stock units (“RSUs”), be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period. The fair value of the stock option awards is determined through the application of the Black-Scholes model. The fair value of RSUs is determined based on the market price at the time of grant. The Company has elected to recognize forfeitures at the time they occur. Refer to Note 22, “Stock Compensation Plans and Share-Based Compensation Awards,” for further information on the share-based compensation awards.

(p) Income Taxes

Subsequent to consummation of the Reorganization Transactions and the IPO, the Company is subject to United States federal, state and local income taxes. The Company's subsidiaries are subject to income taxes in the respective jurisdictions in which they operate. Prior to the consummation of the Reorganization Transactions and the IPO, provision for United States federal, state, and local income tax was not material, as EVO, LLC is a limited liability company and is treated as a pass-through entity for United States federal, state, and local income tax purposes.

Deferred Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted jurisdictional tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates is recognized in the consolidated statements of operations and comprehensive income (loss) in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that it is expected that these assets are more likely than not to be realized. The Company evaluates the realizability of the deferred tax assets, and to the extent that the Company estimates that it is more likely than not that a benefit will not be realized, the carrying

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amount of the deferred tax assets is reduced with a valuation allowance. As a part of this evaluation, the Company assesses all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations, to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets.

The Company has identified objective and verifiable negative evidence in the form of cumulative losses on an unadjusted basis in certain jurisdictions over the preceding twelve quarters ended December 31, 2022. The Company also evaluated its historical core earnings by jurisdiction, after adjusting for certain nonrecurring items. On the basis of this assessment, and after considering future reversals of existing taxable temporary differences, the Company established valuation allowances in the current and prior periods to reduce the carrying amount of deferred tax assets to an amount that is more likely than not to be realized in certain European jurisdictions. In the United States, with the exception of the interest expense limitation and a stand alone domestic subsidiary, the Company concluded that its indefinite lived deferred tax assets will be realizable and recorded no valuation allowance. In arriving at this determination, the Company considered both (i) historical core earnings, after adjusting for certain nonrecurring items, and (ii) the projected future profitability of its core operations and the impact of enacted changes in the application of the interest expense limitation rules beginning in 2022.

As of December 31, 2022 and 2021, a valuation allowance of $14.9 million and $11.6 million, respectively, has been established to reduce the carrying amount of the deferred tax asset to an amount that is more than likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased, or if objective negative evidence in the form of cumulative losses is no longer present, and additional weight may be given to subjective evidence such as the Company’s projections for growth.

Uncertain Tax Positions

The Company records uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”), on the basis of a two-step process: (1) determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position, and (2) for those tax positions that meet the more-likely-than-not recognition threshold, recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company is subject to tax audits in various jurisdictions and regularly assesses the likely outcome of such audits in order to determine the need for liabilities for uncertain tax benefits. The Company continually evaluates the appropriateness of liabilities for uncertain tax positions, considering factors such as statutes of limitations, audits, proposed settlements, and changes in tax law. Refer to Note 12, “Income Taxes,” for further information.

(q) Nonredeemable Non-controlling Interests and Redeemable Non-controlling Interests

Non-controlling interests relate to the portion of equity in a consolidated subsidiary not attributable, directly or indirectly, to the Company. Where redemption of such non-controlling interests is solely within the control of the Company, such interests are reflected in the consolidated balance sheets as “Nonredeemable non-controlling interests.”

RNCI refers to non-controlling interests that are redeemable upon the occurrence of an event that is not solely within the Company’s control and is reported in the mezzanine section between total liabilities and shareholders’ deficit, as temporary equity in the Company’s consolidated balance sheets. The Company adjusts RNCI balance to reflect its estimate of the maximum redemption amount each reporting period. Refer to Note 17, “Redeemable Non-controlling Interests,” for further information.

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(r) Foreign-Currency Translation

The Company has operations in foreign countries whose functional currency is the local currency. Gains and losses on transactions and monetary assets and liabilities, denominated in currencies other than the functional currency, are included in the net income or loss for the period.

The assets and liabilities of subsidiaries whose functional currency is a foreign currency are translated at the period-end exchange rates. Income statement items are translated at the average monthly rates for the year. The resulting translation adjustment is recorded as a component of other comprehensive (loss) income and is included in shareholders’ deficit.

(s) Fair-Value Measurements

The Company follows ASC 820, Fair Value Measurements (“ASC 820”), which defines fair value as 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 determination of fair value is based on the principal or most advantageous market in which the Company could participate and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Also, determination of fair value assumes that market participants will consider the highest and best use of the asset.

The Company uses the hierarchy prescribed in ASC 820 for fair value measurements, based on the available inputs to the valuation and the degree to which they are observable or not observable in the market.

The three levels of the hierarchy are as follows:

Level 1 Inputs — Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date;

Level 2 Inputs — Other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:

· quoted prices for similar assets or liabilities in active markets;

· quoted prices for identical or similar assets or liabilities in markets that are not active;

· inputs other than quoted prices that are observable for the asset or liability; or

· inputs that are derived principally from or corroborated by observable market data by correlation or other means;

Level 3 Inputs — Unobservable inputs for the asset or liability used to measure fair value allowing for inputs reflecting the Company’s assumptions about what other market participants would use in pricing the asset or liability, including assumptions about risk.

(t) Investment in equity securities

The Company’s accounting treatment for investments in equity securities differs for those with and without readily determinable fair values. Investments in equity securities with readily determinable fair values are recorded at fair value on the consolidated balance sheets with changes in fair value at each reporting period recognized on the consolidated statements of operations and comprehensive income (loss). Investments in equity securities without readily determinable fair value are recorded at cost, less impairment, if any, plus or minus observable price changes in orderly transactions of an identical or similar investment of the same issuer.

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(u) Segment Reporting

The Company has two operating segments: the Americas and Europe. The Company’s reportable segments are the same as its operating segments. The alignment of the Company’s segments is designed to establish lines of business that support the geographical markets in which the Company operates and allows the Company to further globalize its solutions while working seamlessly with teams across these markets.

The America’s segment comprises the geographical markets of the United States, Canada, Mexico, and Chile. The Europe segment comprises the geographical markets of Western Europe (Spain, United Kingdom, Ireland, Germany, Gibraltar, Malta, and Greece) and Eastern Europe (Poland and Czech Republic). The Company also provides general corporate services to its segments through corporate functions, the cost of which is not allocated to segments. Such costs are reported as “Corporate.” Refer to Note 20, “Segment Information,” for further information on segment reporting.

(v) Leases

The Company adopted ASU 2016-02, Leases, on January 1, 2019, using the optional modified retrospective method under which the prior period financial statements were not restated for the new guidance.

At contract inception the Company determines whether an arrangement is, or contains a lease, and for each identified lease, evaluates the classification as operating or financing. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rate is a fully collateralized rate that considers the Company’s credit rating, market conditions, and the term of the lease. The Company accounts for all components in a lease arrangement as a single combined lease component.

Operating lease cost is recognized on a straight-line basis over the lease term. Total lease costs include variable lease costs, which are primarily comprised of costs of maintenance and utilities. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and obligations. Refer to Note 7, “Leases,” for further information.

(w) Preferred Stock

On April 21, 2020, we issued 152,250 shares of Preferred Stock for approximately $149.3 million in total net proceeds. Holders of shares of Preferred Stock are entitled to cumulative, paid-in-kind dividends, and generally have the right, at their option, to convert the Preferred Stock, in whole or in part, into fully paid and non-assessable shares of Class A Common Stock at any time. If the Company undergoes a change of control (as defined in the certificate of designations for the Preferred Stock), the holders of Preferred Stock may require us to repurchase all or a portion of its then-outstanding shares of Preferred Stock for cash consideration. In connection with the execution of the Merger Agreement, the holders of the Preferred Stock agreed to convert the Preferred Stock into Class A Common Stock effective immediately prior to the closing of the Merger. Because the occurrence of a change of control may be outside of our control, we have classified the Preferred Stock as mezzanine equity on the consolidated balance sheets. Refer to Note 16, “Redeemable Preferred Stock,” for further discussion.

(x) Recent Accounting Pronouncements

New accounting pronouncements issued by the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies are adopted as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption.

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Recently Adopted Accounting Pronouncement

Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This update simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The Company adopted this ASU on January 1, 2022. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, with amendments in 2021. This update provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of LIBOR or by another reference rate expected to be discontinued. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur on a prospective basis no later than December 31, 2022. On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. The Company will continue to evaluate the effect of the discontinuance of LIBOR on our outstanding debt and hedging instrument and the related effect of ASU 2020-04 on our consolidated financial statements, as applicable.

Acquired Contract Assets and Liabilities in Business Combinations

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update requires entities to recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is effective for fiscal periods beginning after December 15, 2022, including interim periods within those years, with early adoption permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. The Company will continue to evaluate the impact of this ASU, which will depend on the contract assets and liabilities acquired in future business combinations.

(y) Termination of marketing alliance agreement

The Company recognized income from liquidated damages of €7.0 million ($6.9 million, based on the foreign exchange rate as of the date presented) in other operating income in the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2022, as a result of the termination of the marketing alliance agreement with Liberbank in the third quarter of 2022. The net book value of the marketing alliance agreement intangible asset was zero as of December 31, 2022. Refer to Note 9, “Goodwill and Intangible Assets,” for further information.

(2)      Revenue  

The Company primarily earns revenue from payment processing services, and has contractual agreements with its customers that set forth the general terms and conditions of the service relationship, including line item pricing, payment terms and contract duration.

The Company also earns revenue from the sale and rental of electronic POS equipment. The revenue recognized from the sale and rental of POS equipment totaled $36.2 million, $38.9 million, and $39.3 million for the years ended December 31, 2022, 2021, and 2020, respectively.

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The Company disaggregates revenue based on reporting segment and division. The Company’s divisions are as follows:

● Direct – Represents the direct solicitation of merchants through referral relationships, including financial institutions and the Company’s direct sales channel. The Company has long-term, exclusive referral relationships with leading international financial institutions that represent thousands of branch locations which actively pursue new merchant relationships on the Company’s behalf. The Company also utilizes a direct sales team, including outbound telesales, to build and maintain relationships with its merchants and referral partners. The Company also has referral arrangements with ISOs that refer merchants to the Company.

● Tech-enabled – Represents merchants requiring a technical integration at the point of sale between the Company and a third party software vendor whereby the third party passes information to our systems to enable payment processing. These merchant acquiring arrangements are supported by partnerships with independent software providers, integrated software dealers, and eCommerce gateway providers. In the United States, this division also supports B2B customers via proprietary solutions sold directly to merchants and via enterprise resource planning software dealers and integrators.

● Traditional – Represents the Company’s heritage United States portfolio composed primarily of ISO relationships where the merchant portfolio is not actively managed by the Company. The Company is not focused on this sales model and it will represent an increasingly smaller portion of the business over time.

	Year Ended December 31, 2022
	Americas		Europe		Total
	(In thousands)
Divisions:
Direct	$	143,116	$	170,324	$	313,440
Tech-enabled		138,741		51,833		190,574
Traditional		39,068		—		39,068
Totals	$	320,925	$	222,157	$	543,082

	Year Ended December 31, 2021
	Americas		Europe		Total
	(In thousands)
Divisions:
Direct	$	130,752	$	148,538	$	279,290
Tech-enabled		134,360		40,924		175,284
Traditional		42,071		—		42,071
Totals	$	307,183	$	189,462	$	496,645
	Year Ended December 31, 2020
	Americas		Europe		Total
	(In thousands)
Divisions:
Direct	$	113,442	$	128,458	$	241,900
Tech-enabled		117,882		35,410		153,292
Traditional		43,909		—		43,909
Totals	$	275,233	$	163,868	$	439,101

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(3)       Settlement Processing Assets and Obligations

Settlement processing assets and obligations represent intermediary balances within the settlement process involving the movement of funds between consumers, card issuers, card networks, the Company, and its merchants. The Company processes funds settlement through two models, the sponsorship model and the direct membership model.

In certain markets, the Company operates under the sponsorship model whereby the Company has a sponsorship agreement with a bank that is a member of the various card networks (collectively, the “Member Banks”) providing for the funds settlement by such Member Banks on behalf of the Company related to the transactions processed by the Company through card networks, such as Visa and MasterCard. Under the sponsorship model, it is the responsibility of the Member Bank to ensure that the Company adheres to the standards of the card networks.

In other markets, the Company operates under the direct membership model whereby the Company has direct membership with the various card networks for the funds settlement related to the transactions processed by the Company through the card networks. As a direct member under the direct membership model, it is the responsibility of the Company to adhere to the standards of the card networks.

The card networks operate as an intermediary between the card issuing banks, on the one hand, and, as applicable, either the Member Banks or the Company (under the sponsorship model or the direct membership model, respectively), on the other hand, whereby funds are received by the card issuing banks and remitted to the Member Bank or the Company, as applicable, via the card networks on a daily basis. The Company then remits these funds to its merchants, either through a Member Bank under the sponsorship model, or directly to merchants under the direct membership model. Incoming funds due from the card networks on behalf of the card issuing bank are classified as receivables from card networks in the table below, whereas the funds due from the Company to its merchants are classified as settlement liabilities due to merchants.

The Company enters into agreements with its merchants which outline the fees charged by the Company for processing payment transactions and performing funds settlement. Fees are either settled daily or monthly on a net basis or monthly through an invoice arrangement. Receivables from merchants as presented below represent amounts to be either net settled or invoiced to the Company’s merchants related to the various fees associated with the payment processing and funds settlement services provided by the Company.

As described in Note 1, “Description of Business and Summary of Significant Accounting Policies,” the Company collects funds from merchants that serve as collateral to mitigate potential future losses, and recognizes a corresponding liability which is presented as merchant reserves within the settlement processing obligations. Refer to the table below.

While receivables from card networks and settlement liabilities due to merchants represent intermediary balances in the transaction settlement process, timing differences, interchange expense, merchant reserves and exception items cause differences between the amount the Company receives through the Member Banks from the card networks and the amount funded to merchants.

A summary of settlement processing assets and obligations is as follows:

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	December 31,		December 31,
	2022		2021
	(In thousands)
Settlement processing assets:
Receivable from card networks	$	629,500	$	209,734
Receivable from merchants		102,784		101,947
Totals	$	732,284	$	311,681
Settlement processing obligations:
Settlement liabilities due to merchants	$	(764,664)	$	(320,537)
Merchant reserves		(96,416)		(101,572)
Totals	$	(861,080)	$	(422,109)

(4) Earnings Per Share

The following table sets forth the computation of the Company's basic and diluted earnings per share of Class A common stock, as well as the anti-dilutive shares excluded (in thousands, except share and per share data):

	Year Ended December 31,		Year Ended December 31,		Year Ended December 31,
	2022		2021		2020
Numerator:
Net income (loss) attributable to EVO Payments, Inc.	$	5,279	$	8,653	$	(1,676)
Less: Accrual of redeemable preferred stock paid-in-kind dividends		10,524		9,889		6,528
Undistributed loss attributable to shares of Class A common stock	$	(5,245)	$	(1,236)	$	(8,204)
Denominator:
Weighted-average Class A common stock outstanding		47,979,393		47,092,937		41,980,163
Effect of dilutive securities		—		—		—
Total dilutive securities		47,979,393		47,092,937		41,980,163
Earnings per share:
Basic	$	(0.11)	$	(0.03)	$	(0.20)
Diluted	$	(0.11)	$	(0.03)	$	(0.20)
Weighted-average anti-dilutive securities:
Redeemable preferred stock		152,250		152,250		106,076
Stock options		5,517,739		5,828,309		5,040,423
RSUs		1,672,902		1,364,534		1,166,526
RSAs		72		418		4,256
PSUs		257,639		—		—
Class C common stock		—		658,847		2,132,497
Class D common stock		3,765,469		3,227,836		4,245,743

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(5) Tax Receivable Agreement

In connection with the IPO, the Company entered into a Tax Receivable Agreement (“TRA”) that requires the Company to make payments to the Continuing LLC Owners that are generally equal to 85% of the applicable cash tax savings, if any, realized as a result of favorable tax attributes that will be available to the Company as a result of the Reorganization Transactions, exchanges of LLC Interests and paired Class C common stock or paired Class D common stock for Class A common stock, purchases or redemptions of LLC Interests, and payments made under the TRA. Payments will occur only after the filing of U.S. federal and state income tax returns and realization of cash tax savings from the favorable tax attributes. Due to net losses attributable to the Company in prior years, there were no realized tax savings attributable to the TRA, therefore no payments have been made related to the TRA obligation.

As a result of the purchases of LLC Interests and the exchanges of LLC Interests and paired shares of Class C common stock and paired Class D common stock for shares of Class A common stock sold in connection with and following the IPO, through December 31, 2022, the Company’s deferred tax asset and payment liability pursuant to the TRA were approximately $215.0 million ($175.4 million net of amortization) and $182.7 million, respectively at December 31, 2022, and approximately $211.9 million ($184.1 million net of amortization) and $180.1 million, respectively at December 31, 2021. The Company recorded a corresponding increase to paid-in capital for the difference between the TRA liability and the related deferred tax asset. The amounts recorded as of December 31, 2022, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S. federal and state income tax returns. Future payments under the TRA with respect to subsequent exchanges would be in addition to these amounts.

For the TRA, the cash savings realized by the Company are computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been no increase to the tax basis of the assets from member exchanges or sales of LLC Interests, and no tax benefit as a result of the Net Operating Losses (“NOLs”) generated by the increase in the Company’s tax basis of the assets in EVO, LLC. Subsequent adjustments of the TRA obligations due to certain events (e.g., changes to the expected realization of NOLs or changes in tax rates) will be recognized within other (expense) income in the consolidated statements of operations and comprehensive income (loss).

In May 2021, pursuant to the Company’s amended and restated certificate of incorporation, each outstanding share of Class C common stock was automatically converted into one share of Class D common stock. Refer to Note 21, “Shareholders’ Equity,” for further information.

On August 1, 2022, EVO, Inc. entered into the Merger Agreement with Global Payments and Merger Sub. In connection with the execution and delivery of the Merger Agreement, EVO, Inc., EVO, LLC, and certain other parties to the TRA entered into Amendment No. 1 to the TRA (the “TRA Amendment”), pursuant to which such parties agreed to certain terms with respect to the treatment of the TRA upon the consummation of the Merger. In the event the Merger Agreement is terminated, the TRA Amendment will no longer be of any force and effect.

(6) Acquisitions

The acquisitions described below have an immaterial financial impact on both an individual basis and in the aggregate. As such pro forma disclosures are not provided.

2022 Acquisitions

(a) NBG Pay Single Member Societe Anonyme

In December 2022, a subsidiary of EVO, Inc. acquired 51% ownership of NBG Pay from NBG for €158.1 million ($166.3 million, based on the foreign exchange rate at the time of the acquisition). EVO and NBG formed the joint venture to establish a long-term strategic partnership to provide merchant acquiring and payment processing services in Greece. NBG will refer customers to NBG Pay and EVO will manage and

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provide its market leading card acceptance solutions through its proprietary products and processing platforms.

The Company, on a preliminary basis, allocated the cost of acquiring the 51% interest in NBG Pay to the assets and liabilities assumed based on their fair values at the date of acquisition as follows:

	As of the		Estimated
	acquisition date		Useful Life
Definite-lived intangible assets	(In thousands )
Customer relationships	$	46,070	7 years
Marketing alliance agreement		156,730	20 years
Other liabilities, net		(111)
Goodwill		123,400
Total purchase price		326,089
Less: fair value of redeemable non-controlling interest		(159,784)
Total consideration, net of cash acquired	$	166,305

The allocation of the purchase price above is preliminary and subject to further adjustment, pending additional refinement and final completion of valuations. Thus, the measurements of fair value set forth above are subject to change. The Company expects to finalize the valuations as soon as practical, but not later than one year from the acquisition date. Goodwill generated from the NBG Pay acquisition is deductible for tax purposes. NBG Pay is presented in the Company’s Europe segment.

(b) Electronic Data Processing Source S.A.

In December 2022, a subsidiary of EVO, Inc. completed the acquisition of 100% of the outstanding shares of EDPS, a leading merchant service provider in Greece, in order to enhance the Company’s in-market tech-enabled capabilities. The total consideration paid for the acquisition was €26.0 million ($27.4 million, based on the foreign exchange rate at the time of the acquisition), which includes an upfront payment of €20.0 million and a deferred payment of €6.0 million payable 18 months after the closing date.

The preliminary purchase price allocation of the net assets acquired in the EDPS acquisition is provided in the table below:

	As of the		Estimated
	acquisition date		Useful Life
Definite-lived intangible assets	(In thousands )
Acquired software	$	1,160	5 years
Customer relationships		6,530	7 years
Deferred tax liabilities		(1,692)
Other assets, net		2,046
Goodwill		19,355
Total purchase price	$	27,399

The allocation of the purchase price above is preliminary and subject to further adjustment, pending additional refinement and final completion of valuations. Thus, the measurements of fair value set forth above are subject to change. The Company expects to finalize the valuations as soon as practical, but not later than one year from the acquisition date. Goodwill generated from the EDPS acquisition is not deductible for tax purposes. EDPS is presented in the Company’s Europe segment.

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(c) North49 Business Solutions, Inc.

In May 2022, a subsidiary of EVO, Inc. completed the acquisition of 100% of the outstanding shares of North49 Business Solutions, Inc. (“North49”), a certified Sage development partner based in Canada, to provide enhanced B2B integrated payment solutions for Sage customers. North49 is presented in the Company’s Americas segment. This acquisition was not significant, individually or in the aggregate, to the Company’s financial position, results of operations, or cash flows.

2021 Acquisitions

(a) Anderson Zaks Limited

In July 2021, a subsidiary of EVO, Inc. completed the acquisition of 100% of the outstanding shares of Anderson Zaks Ltd., an omni-channel payment gateway provider based in the United Kingdom. Anderson Zaks Ltd. is presented in the Company’s Europe segment.

(b) Pago Fácil

In June 2021, subsidiaries of EVO, Inc. completed the acquisition of 100% of the outstanding shares of Pago Fácil Tecnologia SpA and PST Pago Fácil SpA (together, “Pago Fácil”), a leading eCommerce payment gateway in Chile, in partnership with its joint venture partner BCI. The total consideration paid for the acquisition was $20.9 million, which includes an upfront payment of $18.0 million and deferred considerations of $0.9 million and $2.0 million payable 9 months and 18 months after the closing date, respectively. The deferred considerations of $0.9 million and $2.0 million were paid in full in March 2022 and December 2022, respectively.

The purchase price allocation, which was finalized during the quarter ended June 30, 2022, is provided within the table below:

	As of the		Estimated
	acquisition date		Useful Life
Definite-lived intangible assets	(In thousands )
Acquired software	$	9,400	5 years
Customer relationships		3,000	7 years
Trademarks		440	2 years
Non-compete agreement		150	3 years
Deferred tax liabilities		(3,507)
Other assets, net		855
Goodwill		10,562
Total purchase price	$	20,900

Goodwill generated from the Pago Fácil acquisition is not deductible for tax purposes. Pago Fácil is presented in the Company’s Americas segment.

(7) Leases

The Company’s leases consist primarily of real estate and personal property leases throughout the markets in which the Company operates. At contract inception, the Company determines whether an arrangement is or contains a lease, and for each identified lease, evaluates the classification as operating or financing. The Company had no finance leases as of December 31, 2022 and 2021. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The weighted-average remaining lease term was 5.54 years and 6.36 years as of December 31, 2022 and 2021, respectively. The Company had no significant short-term leases as of December 31, 2022 and 2021.

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The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rates were determined based on a portfolio approach considering the Company’s current secured borrowing rate adjusted for market conditions and the length of the lease term. The weighted-average discount rates used in the measurement of lease liabilities were 6.03% and 5.81% as of December 31, 2022 and 2021, respectively.

Operating lease cost is recognized on a straight-line basis over the lease term. Operating lease costs were $12.7 million and $10.8 million, for the years ended December 31, 2022 and 2021, respectively. These costs are included in selling, general, and administrative expenses in the consolidated statements of operations and comprehensive income (loss). Total lease costs include variable costs of approximately $2.8 million and $2.1 million for the years ended December 31, 2022 and 2021, respectively, which in each case are primarily comprised of costs of maintenance and utilities, and are determined based on the actual costs incurred during the period. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities.

Cash paid for amounts included in the measurement of operating lease liabilities for each of the years ended December 31, 2022 and 2021 were $9.4 million, which is included as a component of cash provided by operating activities in the consolidated statements of cash flows.

As of December 31, 2022, maturities of lease liabilities are as follows:

		(In thousands)
Years ending:
2023	$	10,169
2024		9,765
2025		8,823
2026		8,207
2027		6,770
2028 and thereafter		7,040
Total future minimum lease payments (undiscounted)		50,774
Less: present value discount		(7,987)
Present value of lease liability	$	42,787

(8) Equipment and Improvements

Equipment and improvements consisted of the following:

	Estimated
	Useful
	Lives in	December 31,		December 31,
	Years	2022		2021
		(In thousands)
Card processing equipment	3-5	$	170,390	$	155,843
Office equipment	3-5		47,225		44,393
Computer software	3-5		58,398		60,226
Leasehold improvements	various		19,919		17,883
Furniture and fixtures	5-7		5,193		4,433
Totals			301,125		282,778
Less accumulated depreciation			(228,419)		(213,761)
Foreign currency translation adjustment			(2,749)		(511)
Totals		$	69,957	$	68,506

Depreciation expense related to equipment and improvements was $31.4 million, $37.8 million, and $40.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

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In the year ended December 31, 2022, gross equipment and improvements, and accumulated depreciation were each reduced by $17.5 million and $16.8 million, respectively, and in the year ended December 31, 2021 by $12.2 million and $10.9 million, respectively, primarily related to asset retirements.

(9) Goodwill and Intangible Assets

Intangible assets, net consist of the following:

	December 31, 2022
	Gross carrying value		Accumulated amortization		Accumulated impairment charges		Translation and other adjustments		Net
	(In thousands)
Merchant contract portfolios and customer relationships	$	350,320	$	(211,032)	$	(5,685)	$	(30,230)	$	103,373
Marketing alliance agreements		354,145		(100,261)		(7,557)		(19,407)		226,920
Internally developed and acquired software		136,382		(68,627)		(9,324)		(4,647)		53,784
Trademarks, definite-lived		20,851		(14,536)		-		(3,765)		2,550
Non-compete agreements		150		(66)		-		(23)		61
Total	$	861,848	$	(394,522)	$	(22,566)	$	(58,072)	$	386,688
	December 31, 2021
	Gross carrying value		Accumulated amortization		Accumulated impairment charges		Translation and other adjustments		Net
	(In thousands)
Merchant contract portfolios and customer relationships	$	297,056	$	(197,187)	$	(5,685)	$	(30,713)	$	63,471
Marketing alliance agreements		197,412		(79,811)		(7,557)		(20,896)		89,148
Internally developed and acquired software		110,396		(53,110)		(10,191)		(3,236)		43,859
Trademarks, definite-lived		22,068		(13,427)		(901)		(3,596)		4,144
Non-compete agreements		6,612		(6,487)		-		(21)		104
Total	$	633,544	$	(350,022)	$	(24,334)	$	(58,462)	$	200,726

Amortization expense related to intangible assets was $52.7 million, $45.6 million, and $45.3 million for the years ended December 31, 2022, 2021, and 2020, respectively.

As of December 31, 2022, the gross carrying value of non-compete agreements, internally developed software, and definite-lived trademarks were reduced by $6.5 million, $2.2 million, and $1.2 million, respectively, with an offset to accumulated amortization, accumulated impairment charges, and translation and other adjustments, for fully amortized or previously impaired intangible assets.

Due to the termination of the Liberbank marketing alliance agreement and the change in recoverability of the Banco Popular marketing alliance agreement, amortization of the respective intangible assets of $5.7 million was accelerated and as a result, their net book values were zero as of December 31, 2022.

In the year ended December 31, 2021, gross intangible assets and accumulated depreciation were each reduced by $2.3 million, related to the expiration of a marketing alliance agreement.

Estimated amortization expense to be recognized during each of the five years subsequent to December 31, 2022:

96

	(In thousands)
Years ending:
2023	$	64,233
2024		52,222
2025		42,661
2026		31,970
2027		26,842
2028 and thereafter		168,760
Total	$	386,688

For each of the years ended December 31, 2022 and 2021, there were no impairments.

The following represents intangible assets, net by segment:

	December 31,		December 31,
	2022		2021
	(In thousands)
Intangible assets, net:
Americas
Merchant contract portfolios and customer relationships	$	41,466	$	49,435
Marketing alliance agreements		51,438		56,996
Internally developed and acquired software		40,229		28,812
Trademarks, definite-lived		1,269		1,497
Non-compete agreements		61		104
Total		134,463		136,844
Europe
Merchant contract portfolios and customer relationships		61,907		14,036
Marketing alliance agreements		175,482		32,152
Internally developed and acquired software		13,555		15,047
Trademarks, definite-lived		1,281		2,647
Total		252,225		63,882
Total intangible assets, net	$	386,688	$	200,726

97

The change in the carrying amount of goodwill for the years ended December 31, 2022 and 2021, in total and by reportable segment, is as follows:

	Reportable Segment
	Americas		Europe		Total
	(In thousands)
Goodwill, gross, as of December 31, 2020	$	266,848	$	140,551	$	407,399
Accumulated impairment losses		—		(24,291)		(24,291)
Goodwill, net, as of December 31, 2020		266,848		116,260		383,108
Business combinations		10,562		3,921		14,483
Foreign currency translation adjustment		(2,480)		(9,460)		(11,940)
Goodwill, net, as of December 31, 2021	$	274,930	$	110,721	$	385,651
Goodwill, gross, as of December 31, 2021	$	274,930	$	135,012	$	409,942
Accumulated impairment losses		—		(24,291)		(24,291)
Goodwill, net, as of December 31, 2021		274,930		110,721		385,651
Business combinations		6,790		142,755		149,545
Foreign currency translation adjustment		(948)		(5,693)		(6,641)
Goodwill, net, as of December 31, 2022	$	280,772	$	247,783	$	528,555

(10) Accounts Payable, Accrued Expenses, and Other Current Liabilities

The Company’s accounts payable, accrued expenses, and other current liabilities consisted of the following:

	December 31,		December 31,
	2022		2021
	(In thousands)
Compensation and related benefits	$	19,558	$	23,205
Third-party processing and payment network fees		46,257		43,529
Trade payables		7,177		6,089
Taxes payable		37,723		20,399
Commissions payable to third parties		15,750		16,025
Unearned revenue		4,327		4,723
Other		33,864		19,979
Total accounts payable, accrued expenses, and other current liabilities	$	164,656	$	133,949

(11) Related Party Transactions

Related party balances consist of the following:

	December 31,		December 31,
	2022		2021
	(In thousands)
Due from related parties, current	$	697	$	782
Due to related parties, current		(4,638)		(4,207)
Due to related parties, long-term		(185)		(185)

Due from related parties, current, consists primarily of receivables due from a non-controlling interest holder of a consolidated subsidiary, which are included as a component of other current assets on the consolidated balance sheets.

98

Due to related parties, current, consists of $3.6 million and $3.0 million as of December 31, 2022 and 2021, respectively, primarily due to a non-controlling interest holder of a consolidated subsidiary, and $1.0 million and $1.2 million as of December 31, 2022 and 2021, respectively, representing commissions payable to unconsolidated investees of the Company. The liability is included as a component of accrued expenses and other current liabilities on the consolidated balance sheets.

Due to related parties, long-term, consists of ISO commission reserves in connection with an unconsolidated investee, which are included as a component of other long-term liabilities on the consolidated balance sheets.

The Company leases office space located at 515 Broadhollow Road in Melville, New York from 515 Broadhollow, LLC. 515 Broadhollow, LLC is majority owned, directly and indirectly, by the Company’s founder and chairman. As of December 31, 2022 and 2021, the liability related to this lease amounted to $0.5 million and $1.9 million, respectively, and is included in the operating lease liabilities on the consolidated balance sheets.

The Company leases vehicles from a non-controlling interest holder of a consolidated subsidiary. As of December 31, 2022 and 2021, these lease liabilities amounted to $0.2 million and $0.4 million, respectively, and are included in the operating lease liabilities on the consolidated balance sheets.

A portion of the TRA obligation is payable to members of management and current employees. Refer to Note 5, “Tax Receivable Agreement,” for further information on the tax receivable agreement.

Related party commission expense incurred with unconsolidated investees of the Company amounted to $11.7 million, $13.1 million, and $15.3 million for the years ended December 31, 2022, 2021, and 2020, respectively, and is netted against revenue in the consolidated statements of operations and comprehensive income (loss).

The Company provides certain professional and other services to Blueapple Inc. (“Blueapple”), a member and holder of LLC interests of EVO, LLC. Blueapple is controlled by entities affiliated with the Company’s founder and chairman. The expense related to these services was $0.2 million for each of the years ended December 31, 2022, 2021, and 2020.

The Company, through two wholly owned subsidiaries and one unconsolidated investee, conducts business under ISO agreements with a relative of the Company’s founder and chairman pursuant to which the relative of the Company’s founder and chairman provides certain marketing services and equipment in exchange for a commission based on the volume of transactions processed for merchants acquired by the relative of the Company’s founder and chairman. For the years ended December 31, 2022, 2021, and 2020, the Company paid commissions of less than $0.1 million, $0.1 million, and $0.6 million related to this activity, respectively.

NFP is the Company’s benefit and insurance broker and 401(k) manager. NFP is a portfolio company of MDP and one of the Company’s executive officers owns a minority interest in NFP. For the years ended December 31, 2022, 2021, and 2020, the Company paid $1.1 million, $1.2 million, and $0.7 million in brokerage fees and other expenses to NFP, respectively.

(12) Income Taxes

Domestic and foreign income before income taxes is as follows for the years ended December 31:

	2022		2021		2020
	(In thousands)
Domestic	$	(28,541)	$	(21,242)	$	(37,043)
Foreign		85,092		60,968		45,999
Income (loss) before income taxes	$	56,551	$	39,726	$	8,956

99

Income tax expense is comprised of the following for the years ended December 31:

	2022		2021		2020
	(In thousands)
Current:
Foreign	$	30,929	$	13,978	$	10,594
Federal		392		(226)		61
State		449		(43)		(15)
Total current income tax expense		31,770		13,709		10,640
Deferred:
Foreign		(1,810)		11,399		2,637
Federal		5,467		(2,769)		(96)
State		818		(302)		(59)
Total deferred income tax expense (benefit)		4,475		8,328		2,482
Totals	$	36,245	$	22,037	$	13,122

The Company’s effective tax rate, as applied to income before income taxes, differ from federal statutory rates as follows for the years ended December 31:

	2022	2021	2020
Federal statutory rate	21.0%	21.0%	21.0%
State taxes, net of federal benefit	(2.4)	(12.5)	26.3
Foreign tax rate differential	(0.3)	(0.2)	(0.4)
Decrease in U.S. valuation allowance	—	—	(28.6)
Non-controlling interest	(11.0)	(9.9)	1.2
Other miscellaneous permanent differences	2.9	(2.4)	(21.0)
Remeasurement of deferred tax assets	(0.6)	(6.1)	(4.4)
Undistributed earnings of foreign subsidiaries	—	0.1	4.2
U.S. federal tax related to foreign effectively connected income	—	0.1	2.7
Mexico income tax provision	26.5	20.0	85.8
Poland income tax provision	15.6	18.0	75.7
German income tax provision	6.7	8.9	—
Spain income tax provision	—	—	(29.1)
Other foreign tax provisions	3.0	4.0	13.1
Increase in U.S. valuation allowance	1.8	—	—
Increase in Foreign valuation allowance	0.9	14.5	—
Effective tax rate	64.1%	55.5%	146.5%

The primary components of deferred tax items were as follows as of December 31:

100

	2022		2021
	(In thousands)
Deferred tax assets:
U.S. net operating losses(1)	$	30,777	$	29,569
U.S. interest limitation(1)		614		—
Partnership basis adjustment(1)		175,358		184,119
Other partnership basis items(1)		31,218		24,235
Foreign net operating losses		13,338		12,014
Foreign intangibles		1,573		1,345
Foreign accrued expenses and other temporary differences		8,007		5,653
		260,885		256,935
Valuation allowance		(14,887)		(11,634)
Deferred tax asset		245,998		245,301
Deferred tax liabilities:
Acquisition related intangibles		(27,122)		(23,656)
Foreign equipment and improvements		(1,130)		(2,070)
Foreign accrued expenses and other temporary differences		(1,424)		(3,521)
Deferred tax liability		(29,676)		(29,247)
Net	$	216,322	$	216,054

(1)U.S. jurisdiction deferred tax assets

The following table includes the valuation allowance associated with the deferred tax assets recognized as tax expense in the consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2022, 2021, and 2020.

	Valuation
	Allowance
	(In thousands)
Beginning balance, January 1, 2020	$	8,152
Additions to deferred tax assets in foreign jurisdictions		1,097
Reduction of U.S. interest limitation		(2,558)
Reductions to deferred tax assets in foreign jurisdictions		(1,601)
December 31, 2020	$	5,090
Additions to deferred tax assets in foreign jurisdictions		8,389
Reductions to deferred tax assets in foreign jurisdictions		(1,845)
December 31, 2021	$	11,634
Additions to deferred tax assets in U.S. jurisdictions		999
Additions to deferred tax assets in foreign jurisdictions		3,833
Reductions to deferred tax assets in foreign jurisdictions		(1,579)
December 31, 2022	$	14,887

101

The following table includes the total net operating losses carryforwards by country and years which they are available to offset future taxable income as of December 31, 2022:

	Net Operating		Available
	Losses		Years
	(In thousands)
United States	$	133,617	Indefinite
Spain		26,041	Indefinite
Gibraltar		21,456	Indefinite
Mexico		5,457	2023-2032
Chile		4,584	Indefinite
Ireland		3,069	Indefinite
Czech Republic		2,784	2023-2027
UK		670	Indefinite
Canada		550	2023-2042
Greece		383	2023-2027

Gross unrecognized tax benefits increased by $5.2 million during the year ended December 31, 2022.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated statements of operations and comprehensive income (loss). Accrued interest and penalties are included within the other long-term liabilities line in the consolidated balance sheets.

The following table reconciles the beginning and ending balance of gross unrecognized tax benefits:

	2022
	(In thousands)
Beginning Balance at January 1, 2022	$	1,027
Lapses of statues of limitations		—
Increases in balances related to tax positions taken during prior periods (including those related to acquisitions made during the year)		10,888
Decreases in balances related to tax positions taken during prior periods		—
Increases in balances related to tax positions taken during current period		—
Decreases in balances related to settlements with taxing authorities		(5,651)
Ending Balance at December 31, 2022	$	6,264

As of December 31, 2022, the total amount of gross unrecognized income tax benefits that, if recognized, would affect that provision for income taxes is $6.3 million. It is possible that our existing unrecognized tax benefits may change up to $6.3 million as a result of audit examinations expected to be completed within the next 12 months.

EVO, LLC’s domestic or foreign subsidiary’s income tax filings are periodically audited by the local tax authorities. EVO, LLC’s open tax years by major taxing jurisdictions are as follows:

Jurisdiction	Years
United States	2019-2022
Mexico	2017-2022
Poland	2017-2022
Germany	2017-2022

102

(13)    Long-Term Debt and Lines of Credit

Credit Facility

In November 2021, EVO Payments International, LLC (“EPI”), a wholly-owned subsidiary of EVO, Inc., entered into a Second Restatement Agreement to Amended and Restated Credit Agreement (the “Restatement Agreement”) by and among EPI, as borrower, the subsidiaries of the borrower identified therein, as guarantors, Citibank, N.A., as administrative agent, Truist Bank, as the successor administrative agent and the lenders party thereto, to amend and restate our existing senior secured credit facilities (as amended and restated by the Restatement Agreement, the “Senior Secured Credit Facilities”). As of December 31, 2022, the Senior Secured Credit Facilities include revolver commitments of $200.0 million that mature in November 2026 and a $588.0 million term loan that matures in November 2026. In connection with the Senior Secured Credit Facilities refinanced under the Restatement Agreement, a loss of $5.7 million was presented within other (expense) income in the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2021. The total loss of $5.7 million includes a debt extinguishment loss of $2.2 million and a loss of $3.5 million related to unamortized deferred financing costs.

The Senior Secured Credit Facilities provide the Company with the capacity to support both domestic and international growth, as well as fund general operating needs. The loans under the Senior Secured Credit Facilities bear interest at an annual rate equal to, at EPI’s option, (a) a base rate, plus an applicable margin or (b) LIBOR, plus an applicable margin. The applicable margin for base rate loans ranges from 0.75% to 1.75% per annum and for LIBOR loans ranges from 1.75% to 2.75% per annum, in each case based upon achievement of certain consolidated leverage ratios. In addition to paying interest on outstanding principal, EPI is required to pay a commitment fee to the lenders in respect of the unutilized revolving commitments thereunder ranging from 0.25% to 0.375% per annum based upon achievement of certain consolidated leverage ratios. The Senior Secured Credit Facilities include provisions that provide for the eventual replacement of LIBOR as a reference rate with the Secured Overnight Financing Rate (as defined therein) or otherwise an alternate benchmark rate that has been selected by the administrative agent and EPI and not objected to by a majority of the lenders.

As of December 31, 2022, the term loan had an interest rate of 6.14% and the revolving credit facility had interest rates of 8.25% for prime rate revolver, 6.40% for three-month LIBOR revolver, and 6.14% for one-month LIBOR revolver.

All amounts outstanding under the Senior Secured Credit Facilities are secured, subject to permitted liens and other exceptions, by a first-priority lien on the capital stock owned by EPI or by any guarantor in each of EPI’s or their respective subsidiaries (limited, in the case of capital stock of foreign subsidiaries and first tier domestic subsidiaries substantially all the assets of which are the capital stock of foreign subsidiaries, to 65% of the voting stock and 100% of the non-voting stock of such subsidiaries) and a first-priority lien on substantially all of EPI’s and each guarantor’s present and future intangible and tangible assets (subject to customary exceptions).

The Senior Secured Credit Facilities also contain a number of significant negative covenants. These covenants, among other things, restrict, subject to certain exceptions, EPI’s and its controlled subsidiaries ability to: incur indebtedness; create liens; engage in mergers or consolidations; make investments, loans and advances; pay dividends or other distributions and repurchase capital stock; sell assets; engage in certain transactions with affiliates; enter into sale and leaseback transactions; make certain accounting changes; and make prepayments on junior indebtedness.

The Senior Secured Credit Facilities also contain a financial covenant that requires EPI to remain under a maximum consolidated leverage ratio determined on a quarterly basis with step-downs over time. The Borrower may elect to increase the maximum consolidated leverage level with which it must comply by 0.5x up to two times during the term upon the consummation of a “material acquisition.”

103

As a result of these restrictions, substantially all of the net assets of EPI at December 31, 2022 were restricted from distribution to EVO, LLC or any of its members. The Company currently intends to retain all available funds and any future earnings for use in the operation of its business.

In addition, the Senior Secured Credit Facilities contain certain customary representations and warranties, affirmative covenants, and events of default. If an event of default occurs, the lenders under the Senior Secured Credit Facilities will be entitled to take various actions, including the acceleration of amounts due thereunder and exercise of the remedies on the collateral. As of December 31, 2022 and 2021, the Company was in compliance with all its financial covenants under the Senior Secured Credit Facilities.

As of December 31, 2022 and 2021, the Company’s long-term debt consists of the following:

	December 31,		December 31,
	2022		2021
	(In thousands)
Term loan	$	573,300	$	588,000
Revolver		68,200		—
Less debt issuance costs		(4,212)		(5,310)
Total long-term debt		637,288		582,690
Less current portion of long-term debt, net of current portion of debt issuance costs		(14,092)		(14,058)
Total long-term debt, net of current portion	$	623,196	$	568,632

Principal payment requirements on the above obligations in each of the years remaining subsequent to December 31, 2022 are as follows:

Years ending:	(In thousands)
2023	$	14,700
2024		29,400
2025		44,100
2026		553,300
Total	$	641,500

Upon the consummation of the Merger, our Senior Secured Credit Facilities will be paid off in full. However, there can be no assurance that the Merger will be consummated within the anticipated timeline or at all.

Settlement Lines of Credit

The Company maintains intraday and overnight facilities to fund its settlement obligations. These facilities are short-term in nature, have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. At December 31, 2022 and December 31, 2021, the Company had $5.0 million and $8.0 million outstanding under these lines of credit, respectively, with additional capacity of $296.5 million and $142.6 million, respectively, to fund its settlement obligations. The weighted-average interest rates on these borrowings were 8.7% and 5.2% as of December 31, 2022 and 2021, respectively.

104

(14) Derivatives

Designated Derivatives

Interest Rate Swap

In 2020, the Company entered into an interest rate swap with a notional amount of $500.0 million to reduce a portion of the exposure to fluctuations in LIBOR interest rates associated with our variable-rate term loan. The interest rate swap had a fixed rate of 0.2025% and matured on December 31, 2022.

The interest rate swap was designated as an effective cash flow hedge involving the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount.

The Company performed a regression analysis at inception of the hedging relationship in which it compared the historical monthly changes in the termination clean price of the actual designated interest rate swap to the historical monthly changes in the termination clean price of a hypothetically perfect interest rate swap with terms that exactly match the hedged transactions and a fair value of zero at its inception using 37 different forward curves. Based on the regression results, the Company determined that the hedging instrument was highly effective at inception. On an ongoing basis, the Company assessed hedge effectiveness prospectively and retrospectively. The hedge continued to be highly effective until its maturity on December 31, 2022.

The interest rate swap was recognized at fair value in the consolidated balance sheets. The table below presents the fair value of the interest rate swap and its classification on the consolidated balance sheets as of December 31, 2021:

	December 31, 2021
	Balance Sheet		Fair Value
	Location		(In thousands)
Interest Rate Swap - current portion	Other current assets	$	1,297

Since the Company designated the swap as an effective cash flow hedge that qualified for hedge accounting, unrealized gains or losses resulting from adjusting the swap to fair value were recorded as a component of other comprehensive (loss) income and subsequently reclassified into interest expense in the same period during which the hedged transaction affected earnings. Cash flows resulting from settlements were presented as a component of cash flows from operating activities within the consolidated statements of cash flows.

The table below presents the effect of hedge accounting on accumulated other comprehensive loss for the years ended December 31, 2022, 2021, and 2020:

	Year Ended		Year Ended		Year Ended
	December 31, 2022		December 31, 2021		December 31, 2020
	(In thousands)
Beginning accumulated derivative gain (loss) in accumulated other comprehensive loss	$	1,297	$	(533)	$	—
Derivative gain (loss) recognized in the current period in accumulated other comprehensive loss		6,257		1,354		(653)
Less: Derivative gain (loss) reclassified from accumulated other comprehensive loss to interest expense		7,554		(476)		(120)
Ending accumulated derivative gain (loss) in accumulated other comprehensive loss	$	—	$	1,297	$	(533)

105

The table below presents the effect of hedge accounting on the consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2022, 2021, and 2020:

	Year Ended		Year Ended		Year Ended
	December 31, 2022		December 31, 2021		December 31, 2020
	(In thousands)
Total interest expense including the effects of cash flow hedges	$	(17,641)	$	(23,161)	$	(30,160)
Derivative gain (loss) reclassified from accumulated other comprehensive loss into interest expense	$	7,554	$	(476)	$	(120)

Cross Currency Swap

In April 2022, the Company entered into a float-to-float cross currency swap to hedge the risk of fluctuations in the exchange rate related to a net investment in a foreign subsidiary. The Company delivered a notional amount of $26.2 million and received a notional amount of EUR 25.0 million on the initial exchange date of November 15, 2022 and will deliver EUR 25.0 million and receive $26.2 million on the maturity date of November 15, 2027.

The cross currency swap is designated as a net investment hedge involving the receipt of functional currency floating rate amounts from a counterparty in exchange for the Company making foreign currency floating rate payments over the life of the agreement. The loss on the swap prior to designation was recorded in earnings.

The cross currency swap is recognized at fair value in the consolidated balance sheets. The table below presents the fair value of the cross currency swap and its classification on the consolidated balance sheets as of December 31, 2022:

	December 31, 2022
	Balance Sheet		Fair Value
	Location		(In thousands)
Cross Currency Swap - current portion	Other current assets	$	451
Cross Currency Swap - long-term portion	Other long-term liabilities	$	(610)

The Company recognized in earnings the initial value of the component excluded from the assessment of effectiveness using a systematic and rational method over the life of the hedging instrument. Any changes in the fair value of a net investment hedge are recorded in accumulated other comprehensive loss and reclassified into earnings when the hedged net investment is sold or substantially liquidated.

The table below presents the effect of the Company’s net investment hedge on accumulated other comprehensive loss for the year ended December 31, 2022:

		Amount of Gain (Loss) Recognized in OCI	Location of Gain (Loss) Reclassified from AOCI into Income		Amount of Gain (Loss) Reclassified from AOCI into Income
	Year Ended December 31, 2022
	(In thousands)
Cross Currency Swap	$	(51)	Interest expense	$	141

106

Non-designated Derivatives

In April 2022, the Company entered into a forward contract to mitigate exposure to fluctuations in foreign currency exchange rates related to certain foreign intercompany balances. The terms of the contract provide for an exchange of a notional amount of GBP 34.5 million for MXN 960.1 million, calculated using the contract rate as applicable at the settlement date.

The forward contract is recognized at fair value in the consolidated balance sheets. The table below presents the fair value of the forward contract and its classification on the consolidated balance sheets as of December 31, 2022:

		December 31, 2022
	Settlement	Balance Sheet		Fair Value
	Date	Location		(In thousands)
Forward Contract	April 13, 2023	Other current assets	$	6,530

The Company did not designate the forward contract as an accounting hedge. Any unrealized gain or loss resulting from adjusting the forward to fair value is recorded as a component of other (expense) income, to offset the unrealized gain or loss recorded within other (expense) income from the remeasurement of the intercompany balance being hedged. Cash flows resulting from the settlement will be presented as a component of cash flows from operating activities within the consolidated statements of cash flows.

The table below presents the unrealized gain (loss) on the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2022:

	Location of	Year Ended
	Unrealized Gain	December 31, 2022
Forward Contract	Other income	$	6,530

107

(15)     Supplemental Cash Flows Information

Supplemental cash flow disclosures and non-cash investing and financing activities are as follows:

	Years Ended December 31,
	2022		2021		2020
	(In thousands)
Supplemental disclosure of cash flow data:
Interest paid	$	16,226	$	20,917	$	30,962
Income taxes paid		17,901		10,259		13,429
Supplemental disclosure of non-cash investing and financing activities:
Operating lease liabilities arising from obtaining new or modified right-of-use assets	$	14,908	$	9,845	$	3,347
Decrease in operating lease liabilities and corresponding right-of-use assets resulting from lease modifications		—		(3,158)		(6,801)
Software and equipment assets acquired by assuming directly related liabilities		—		—		11,603
Deferred consideration payable		11,616		3,439		—
Contingent consideration payable		—		472		—
Accrual of redeemable preferred stock paid-in-kind-dividends		10,524		9,889		6,528
Exchanges of Class C and Class D common stock for Class A common stock		1,895		15,038		16,658
Secondary offering		—		—		43,484

(16)    Redeemable Preferred Stock

On April 21, 2020, the Company issued 152,250 shares of Preferred Stock. The Company received approximately $149.3 million in total net proceeds from the sale of the Preferred Stock and incurred approximately $1.7 million in stock issuance costs as part of the sale.

The Preferred Stock ranks senior to the Class A common stock with respect to dividends and distributions on liquidation, winding-up, and dissolution. Each share of Preferred Stock had an initial liquidation preference of $1,000 per share. Holders of shares of Preferred Stock are entitled to cumulative, paid-in-kind (“PIK”) dividends, which are payable semi-annually in arrears by increasing the liquidation preference for each outstanding share of Preferred Stock. These PIK dividends accrue at an annual rate of (i) 6.00% per annum for the first ten years and (ii) 8.00% per annum thereafter. At the 2021 annual meeting of stockholders, the Company’s stockholders voted to approve the elimination of the limitation on conversion of the Preferred Stock in the event the conversion results in Class A Common Stock ownership in excess of 19.99% if the aggregate voting power as required by Nasdaq Listing Rule 5635. Holders of Preferred Stock are also entitled, on an as-converted basis, to participate in and receive any dividends declared or paid on the Class A Common Stock, and no dividends may be paid to holders of Class A Common Stock unless full participating dividends are concurrently paid to holders of Preferred Stock.

The Preferred Stock’s initial carrying value is recorded at a discount to its liquidation preference. In accordance with the SEC’s Staff Accounting Bulletin Topic 5.Q, Increasing Rate Preferred Stock, the discount is considered an unstated dividend cost that must be amortized over the period preceding commencement of the perpetual dividend using the effective interest method, by charging the imputed dividend cost against retained earnings and increasing the carrying amount of the preferred stock by a corresponding amount. The discount is therefore being amortized over ten years using a 6.22% effective interest rate. The total PIK dividends and accretion of the discount combined represents a period’s total preferred stock dividend cost, which is subtracted from net income or added to net loss to arrive at net loss attributable to Class A common stockholders on the consolidated statements of operations and comprehensive income (loss). For the years ended December 31, 2022, 2021, and 2020, the initial

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carrying value of the preferred stock has been increased by $10.5 million, $9.9 million, and $6.5 million, respectively, for the accretion of the PIK dividend.

Each holder of Preferred Stock has the right, at its option, to convert its Preferred Stock, in whole or in part, into fully paid and non-assessable shares of Class A Common Stock, at any time. The number of shares of Class A Common Stock into which a share of Preferred Stock will convert at any time is equal to the product of (i) the then-effective conversion rate and (ii) the quotient obtained by dividing the sum of the then-effective liquidation preference per share of Preferred Stock and the amount of any accrued and unpaid PIK dividends by the initial liquidation preference of $1,000. The conversion rate of the Preferred Stock was initially set at 63.2911 shares of Class A Common Stock, based on an implied conversion price of $15.80 per share of Class A Common Stock. The conversion rate is subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events. The Company has the right to settle any conversion at the request of a holder of Preferred Stock in cash based on the last reported sale price of the Class A Common Stock.

Subject to certain conditions, the Company may, at its option, require conversion of all (but not less than all) of the outstanding shares of Preferred Stock to Class A Common Stock if, for at least 20 trading days during the 30 consecutive trading days immediately preceding notification of the election to convert, the last reported closing price of the Company’s Class A common stock is at least (i) 180% of the conversion price prior to the fourth semi-annual PIK dividend payment date, (ii) 170% of the conversion price on or after the fourth and prior to the sixth semi-annual PIK dividend payment date, (iii) 160% of the conversion price on or after the sixth and prior to the eighth semi-annual PIK dividend payment date, or (iv) 150% of the conversion price on or after the eighth semi-annual PIK dividend payment date. If the Company elects to mandatorily convert all outstanding shares of Preferred Stock prior to the sixth semi-annual PIK dividend payment date, then, for purposes of such conversion, the liquidation preference of each outstanding share of Preferred Stock will be increased by the compounded amount of all remaining scheduled PIK dividend payments on the Preferred Stock through, and including, the sixth semi-annual PIK dividend payment date.

The holders of the Preferred Stock are generally entitled to vote with the holders of the shares of Class A common stock on all matters submitted for a vote to the Class A common stockholders (voting together with the holders of shares of Class A common stock as one class) on an as-converted basis, subject to certain limitations.

The Preferred Stock may be redeemed by the Company at any time after ten years for a cash purchase price equal to the liquidation preference as of the redemption date plus accumulated and unpaid regular PIK dividends. If the Company undergoes a change of control (as defined in the certificate of designations for the Preferred Stock), each holder of Preferred Stock may require the Company to repurchase all or a portion of its then-outstanding shares of Preferred Stock for cash consideration equal to 150% of the then-current liquidation preference per share of Preferred Stock plus accumulated and unpaid dividends, if any (or, if the repurchase date for such change of control is on or after the sixth semi-annual PIK dividend payment date, 100% of the liquidation preference per share of Series A Preferred Stock plus accumulated and unpaid dividends, if any). Because the occurrence of a change of control may be outside of the Company’s control, the Company has classified the Preferred Stock as mezzanine equity on the consolidated balance sheets. If a change of control were to occur as of December 31, 2022, the Company might have been required to repurchase the Preferred Stock for $267.8 million. As of December 31, 2022, the Company believed that the occurrence of a change of control outside of the Company’s control that would trigger the right of the holder of Preferred Stock to require the Company to repurchase all or a portion of the Preferred Stock for cash was not probable, as the occurrence of a business combination as defined under generally accepted accounting principles would not be considered probable until it has been consummated. Therefore, the Preferred Stock is not accreted to the current redemption value.

In connection with the execution and delivery of the Merger Agreement, the holders of Preferred Stock agreed to convert the Preferred Stock into Class A common stock effective immediately prior to the closing of the Merger.

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(17)     Redeemable Non-controlling Interests

The Company owns 66% of eService, the Company’s Polish subsidiary. The eService shareholders’ agreement includes a provision whereby PKO Bank Polski, the owner of 34% of eService, has the option to compel the Company to purchase the shares of eService held by PKO Bank Polski, at a price per share based on the fair value of the shares. The option expires on January 1, 2024. Because the exercise of this option is not solely within the Company’s control, the Company has classified this interest as RNCI and presents the redemption value within the mezzanine equity section of the consolidated balance sheets. At each balance sheet date, the RNCI is reported at its redemption value, which represents the estimated fair value, with a corresponding adjustment to additional paid-in capital, or accumulated deficit in absence of additional paid-in capital.

In October 2020, the Company, through its Mexican subsidiary, formed a joint venture with BCI, pursuant to which the Company owns 50.1% and BCI owns 49.9% of the equity of BCI Pagos pursuant to the terms of a shareholders agreement between the parties. Under the shareholders agreement, BCI has the option to compel the Company to purchase BCI’s shares in BCI Pagos at a price per share based on the fair value of the shares. The option became effective two years after the agreement date. Because the exercise of this option is not solely within the Company’s control, the Company has classified this interest as RNCI and presents the redemption value within the mezzanine equity section of the consolidated balance sheets. At each balance sheet date, the RNCI is reported at its redemption value, which represents the estimated fair value, with a corresponding adjustment to additional paid-in capital, or accumulated deficit in absence of additional paid-in capital.

In December 2022, the Company, through one of its subsidiaries, formed a joint venture with NBG, pursuant to which the Company owns 51% and NBG owns 49% of the equity of NBG Pay pursuant to the terms of the shareholders agreement between the parties. Under the shareholders agreement, NBG has the option, under certain limited circumstances, to compel the Company to purchase NBG’s shares in NBG Pay at a price set forth in the transaction agreements. In addition, beginning December 2025, NBG has the option to compel the Company to purchase NBG’s shares in the Greek subsidiary at a price per share based on the fair value of the shares. Because the exercise of this option is not solely within the Company’s control, the Company has classified this interest as RNCI and presents the redemption value within the mezzanine equity section of the consolidated balance sheets. At each balance sheet date, the RNCI is reported at its redemption value, which represents the estimated fair value, with a corresponding adjustment to additional paid-in capital, or accumulated deficit in absence of additional paid-in capital.

As of December 31, 2022, EVO, Inc. owns 57.4% of EVO, LLC. The EVO, LLC operating agreement includes a provision whereby Blueapple may deliver a sale notice to EVO, Inc., upon receipt of which EVO, Inc. will use its commercially reasonable best efforts to pursue a public offering of shares of its Class A common stock and use the net proceeds therefrom to purchase LLC Interests from Blueapple. Upon receipt of such a sale notice, the Company may elect, at the Company’s option (determined solely by its independent directors (within the meaning of the rules of the Nasdaq stock market) who are disinterested), to cause EVO, LLC to instead redeem the applicable LLC Interests for cash; provided that Blueapple consents to any election by the Company to cause EVO, LLC to redeem the LLC Interests based on the fair value of the Company’s Class A common shares on such date. Because this option is not solely within the Company’s control, the Company has classified this interest as RNCI and reports the RNCI at redemption value, which represents the fair value, as temporary within the mezzanine equity section of the consolidated balance sheets. The changes in redemption value are recorded with a corresponding adjustment to additional paid-in capital, or accumulated deficit in the absence of additional paid-in capital.

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The following table details the components of RNCI for the years ended December 31, 2022 and 2021:

	Blueapple		eService		BCI Pagos		NBG Pay		Total
	(In thousands)
Beginning balance, January 1, 2022	$	823,386	$	198,531	$	7,173	$	—	$	1,029,090
Contributions		—		—		3,201		—		3,201
Distributions		—		(11,703)		—		—		(11,703)
Acquired RNCI		—		—		—		159,784		159,784
Net income (loss) attributable to RNCI		3,070		12,578		(1,365)		(306)		13,977
Unrealized (loss) gain on foreign currency translation adjustment		(2,671)		(3,978)		203		2,231		(4,215)
Unrealized loss on change in fair value of interest rate swap		(481)		—		—		—		(481)
Unrealized loss on change in fair value of cross currency swap		(18)		—		—		—		(18)
Increase (decrease) in the maximum redemption amount of RNCI		288,301		46,334		(5,643)		19,996		348,988
Allocation of eService fair value RNCI adjustment to Blueapple		(17,699)		—		—		—		(17,699)
Allocation of BCI Pagos fair value RNCI adjustment to Blueapple		2,153		—		—		—		2,153
Allocation of NBG Pay fair value RNCI adjustment to Blueapple		(7,627)		—		—		—		(7,627)
Ending balance, December 31, 2022	$	1,088,414	$	241,762	$	3,569	$	181,705	$	1,515,450

	Blueapple		eService		BCI Pagos		Total
	(In thousands)
Beginning balance, January 1, 2021	$	868,738	$	186,436	$	459	$	1,055,633
Contributions		—		—		1,487		1,487
Distributions		—		(13,655)		—		(13,655)
Net income (loss) attributable to RNCI		47		10,329		(1,595)		8,781
Unrealized loss on foreign currency translation adjustment		(10,313)		(5,045)		(721)		(16,079)
Unrealized gain on change in fair value of interest rate swap		707		—		—		707
(Decrease) increase in the maximum redemption amount of RNCI		(25,009)		20,466		7,543		3,000
Allocation of eService fair value RNCI adjustment to Blueapple		(7,869)		—		—		(7,869)
Allocation of BCI Pagos fair value RNCI adjustment to Blueapple		(2,915)		—		—		(2,915)
Ending balance, December 31, 2021	$	823,386	$	198,531	$	7,173	$	1,029,090

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(18) Fair Value

The table below presents information about items, which are carried at fair value on a recurring basis:

	December 31, 2022
	(In thousands)
	Level 1		Level 2		Level 3		Total
Cash equivalents	$	40,443	$	—	$	—	$	40,443
Contingent consideration		—		—		(625)		(625)
Blueapple RNCI		(1,088,414)		—		—		(1,088,414)
eService RNCI		—		—		(241,762)		(241,762)
NBG Pay RNCI		—		—		(181,705)		(181,705)
BCI Pagos RNCI		—		—		(3,569)		(3,569)
Cross currency swap		—		(159)		—		(159)
Forward contract		—		6,530		—		6,530
Investment in equity securities		—		35,818		—		35,818
Total	$	(1,047,971)	$	42,189	$	(427,661)	$	(1,433,443)

	December 31, 2021
	(In thousands)
	Level 1		Level 2		Level 3		Total
Cash equivalents	$	95,919	$	—	$	—	$	95,919
Contingent consideration		—		—		(611)		(611)
Blueapple RNCI		(823,386)		—		—		(823,386)
eService RNCI		—		—		(198,531)		(198,531)
BCI Pagos RNCI		—		—		(7,173)		(7,173)
Interest rate swap		—		1,297		—		1,297
Investment in equity securities		—		25,398		—		25,398
Total	$	(727,467)	$	26,695	$	(206,315)	$	(907,087)

Cash equivalents consist of a money market fund that is valued using a market price in an active market (Level 1). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Contingent consideration relates to potential payments that the Company may be required to make associated with acquisitions. The fair values are based on the present value of expected payments made to the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. These estimates are based on inputs not observable in the market and thus represent a Level 3 measurement.

The estimated fair value of Blueapple’s RNCI is derived from the closing stock price of the Company’s Class A common stock on the last day of the period.

The estimated fair value of eService’s RNCI is determined utilizing an income approach, weighted at 50%, based on the forecasts of expected future cash flows, and the market approach, weighted at 50%, based on the guideline public company data. In applying the income approach, significant unobservable inputs included (i) the weighted-average cost of capital (“WACC”) used to discount the future cash flows, which were 14.5% and 12.0%, based on the markets in which the business operates and (ii) growth rates used within the future cash flows, which were up to 12.9% and 12.3%, based on historic trends, current and expected market conditions, and management’s forecast assumptions as of December 31, 2022 and 2021, respectively. A future increase in the WACC would result in a decrease in the fair value of RNCI in eService. Conversely, a decrease in the WACC would result in an increase in the fair value of RNCI in eService. In applying the market approach, the ranges of the valuation multiples as of December 31, 2022 were 5.25x-5.75x and 9.25x-10.75x for revenue and EBITDA, respectively. The ranges of the

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valuation multiples as of December 31, 2021 were 4.75x-5.25x and 9.25x-10.75x for revenue and EBITDA, respectively.

The estimated fair value of NBG Pay’s RNCI and redemption value of the put option embedded in RNCI, approximates its carrying amount as of December 31, 2022, given the proximity of the transaction date (i.e. formation of the joint venture) and the measurement date.

The estimated fair value of BCI Pagos’ RNCI is determined utilizing an income approach, weighted at 50%, based on the forecasts of expected future cash flows, and the market approach, weighted at 50%, based on the guideline public company data. In applying the income approach, significant unobservable inputs included (i) the WACC used to discount the future cash flows, which were 19.0%, and 17.0%, based on the markets in which the business operates and (ii) growth rates used within the future cash flows, which were up to 30.0% and 17.9%, based on historic trends, current and expected market conditions, and management’s forecast assumptions as of December 31, 2022 and 2021, respectively. A future increase in the WACC would result in a decrease in the fair value of RNCI in BCI Pagos. Conversely, a decrease in the WACC would result in an increase in the fair value of RNCI in BCI Pagos. In applying the market approach, the ranges of the valuation multiples as of December 31, 2022 were 1.25x-2.25x and 9.50x for revenue and EBITDA, respectively. The valuation multiples as of December 31, 2021 were 1.75x and 6.00x for revenue and EBITDA, respectively.

In May 2020, the Company entered into an interest rate swap to reduce a portion of the exposure to fluctuations in LIBOR interest rates associated with its variable-rate debt, which matured on December 31, 2022. The fair value of the interest rate swap was determined based on the present value of the estimated future net cash flows using the LIBOR forward rate curve as of December 31, 2021. The future interest rates are derived from observable market interest rate curves and thus fall within Level 2 of the valuation hierarchy. The credit valuation adjustment associated with the derivative, related to the likelihood of default by the Company and the counterparty, was not significant to the overall valuation. As a result, the fair value of the interest rate swap is classified as Level 2 of the fair value hierarchy. As described in Note 14, “Derivatives,” the fair value of the interest rate swap was a $1.3 million asset at December 31, 2021.

In April 2022, the Company entered into a cross currency swap to hedge the risk of fluctuations in the exchange rate related to a net investment in a foreign subsidiary. The fair value of the cross currency swap was determined based on the cash flows of the swap contract, forward foreign exchange points and interest rate market data, which are derived from readily observable market inputs. The credit valuation adjustment associated with the derivative, related to the likelihood of default by the Company and the counterparty, was significant to the overall valuation. As a result, the fair value of the cross currency swap is classified as Level 2 of the fair value hierarchy. As described in Note 14, “Derivatives,” the fair value of the cross currency swap was a $0.2 million liability at December 31, 2022.

In April 2022, the Company entered into a forward contract to mitigate exposure to fluctuations in foreign currency exchange rates related to certain foreign intercompany balances. The fair value of the forward contract was determined based on an estimate of the expected cash flows using the mark-to-market rate as of December 31, 2022. The Company also considers counterparty credit risk in the determination of fair value. The mark-to-market rates are derived from observable inputs and thus fall within Level 2 of the valuation hierarchy. As described in Note 14, “Derivatives,” the fair value of the forward contract was a $6.5 million asset at December 31, 2022.

The Company was a member of Visa Europe Limited (“Visa Europe”) through certain of the Company’s subsidiaries in Europe. In 2016, Visa Inc. (“Visa”) acquired all of the membership interests in Visa Europe. As part of the proceeds from the sale of its membership interests, one of the Company’s subsidiaries received shares of Visa Series C preferred stock and another subsidiary received economic rights relating to shares of Visa Series C preferred stock under a contractual arrangement with a former member of Visa Europe.

The Visa Series C preferred stock is convertible into Visa Series A preferred stock at periodic intervals over the 12 year period following the acquisition date at Visa’s discretion. In July 2022 and September 2020, Visa issued a partial conversion and conversion adjustment with respect to its Series C preferred stock. Pursuant to the partial

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conversion and conversion adjustment, holders of Series C preferred stock received shares of Series A preferred stock and the conversion ratio for such holder’s shares of Series C preferred stock was reduced. The Series A preferred stock is convertible into shares of Visa Class A common stock upon a transfer to any holder that is eligible to hold Visa Class A common stock. Holders of Series A preferred stock are able to effectuate a transfer to an eligible holder through a sales facility established by Visa’s transfer agent or through a third party broker.

The Visa Series A preferred stock, which is presented in investments in equity securities on the consolidated balance sheets, is reported at fair value. In connection with the measurement of the investment in Visa Series A preferred stock at fair value, the Company recognized gains of $7.3 million, $0.2 million, and $17.6 million for the years ended December 31, 2022, 2021, and 2020, respectively. The fair value of Visa Series A preferred stock is determined using a market approach based on the quoted market price of Visa Class A common stock, and as a result is classified as Level 2 of the fair value hierarchy.

The remaining Visa Series C preferred stock is carried at cost in the amount of €3.5 million and €6.5 million ($4.0 million and $7.4 million based on the foreign exchange rate at the time of the acquisition) as of December 31, 2022 and 2021, respectively, and is presented in other assets on the consolidated balance sheets. The estimated fair value of the remaining Visa Series C preferred stock of $10.4 million and $20.3 million as of December 31, 2022 and 2021, respectively, is based upon inputs classified as Level 3 of the fair value hierarchy. These inputs include the fair value of Visa Class A common stock as of December 31, 2022, the conversion factor of Visa Series C preferred stock to Visa Class A common stock, and a discount due to the lack of liquidity, which represents a measure of fair value that is unobservable or requires management’s judgment.

The estimated fair value of receivables, settlement processing assets and obligations, due to and from related parties and settlement lines of credit approximate their respective carrying values due to their short term nature.

The estimated fair value of long-term debt as of December 31, 2022 and 2021 was $641.5 million and $588.0 million, respectively, which approximated its carrying value as long-term debt bore interest based on prevailing variable market rates and as such was categorized as a Level 2 in the fair value hierarchy.

There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the years ended December 31, 2022 and 2021.

(19) Commitments and Contingencies

Litigation

One of the Company’s financial institution referral partners, Grupo Banco Popular, was acquired by Santander in June 2017, which has adversely impacted the Company’s business in Spain. Revenues from this channel have declined significantly due primarily to reduced merchant referrals following Santander’s consolidation of Grupo Banco Popular branches and the bank’s lack of performance of certain of its obligations under our agreements. The Company believes that its agreements with Santander, including the bank’s referral obligations, remain in full force and effect.

In December 2020, the Company filed a claim in the Court of First Instance in Madrid, Spain seeking recovery in connection with Santander’s breach of certain of its exclusivity, non-compete and merchant referral obligations under the commercial agreements between the parties. The trial commenced in November 2022. In December 2022, the court issued a ruling dismissing the Company’s claims. The Company filed an appeal in January 2023 to reverse this ruling. The appeal is ongoing and the outcome and timing of a decision on the appeal remain uncertain. The Company cannot at this time determine the likelihood of any outcome or any damages that may be awarded to it. There can be no assurance as to when or if the Company will recover the amounts to which the Company believes it is entitled.

The Company is also party to various claims and lawsuits incidental to its business. The Company does not believe the ultimate outcome of such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

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(20)    Segment Information

Information on segments and reconciliations to revenue and net income (loss) attributable to the shareholders of EVO, Inc. and members of EVO, LLC are set forth below. Segment profit, which is the measure used by our chief operating decision maker to evaluate the performance of and allocate resources to our segments, is calculated as segment revenue less (1) segment expenses, plus (2) segment income from unconsolidated investees, plus (3) segment other income, net, less (4) segment non-controlling interests.

Certain corporate-wide governance functions, as well as depreciation and amortization, are not allocated to our segments. The Company does not evaluate performance or allocate resources based on segment assets, and therefore, such information is not presented.

	Year Ended December 31,
	2022		2021		2020
		(In thousands)
Segment revenue:
Americas	$	320,925	$	307,183	$	275,233
Europe		222,157		189,462		163,868
Revenue	$	543,082	$	496,645	$	439,101
Segment profit:
Americas	$	143,297	$	135,081	$	106,052
Europe		80,992		63,588		65,448
Total segment profit		224,289		198,669		171,500
Corporate		(51,463)		(35,628)		(34,157)
Depreciation and amortization		(84,143)		(83,389)		(85,924)
Net interest expense		(14,505)		(21,510)		(28,988)
Provision for income tax expense		(36,245)		(22,037)		(13,122)
Share-based compensation expense		(29,223)		(27,419)		(20,664)
Less: Net income (loss) attributable to non-controlling interests of EVO Investco, LLC		3,431		33		(9,679)
Net income (loss) attributable to EVO Payments, Inc.	$	5,279	$	8,653	$	(1,676)
Capital expenditures:
Americas	$	15,148	$	14,080	$	9,716
Europe		21,084		19,315		10,765
Consolidated total capital expenditures	$	36,232	$	33,395	$	20,481

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The Company’s long-lived assets, which consist of equipment and improvements, net, and operating lease right-of-use assets, by geographic location are as follows:

	December 31,		December 31,
	2022		2021
	(In thousands)
Long-lived assets:
Poland	$	32,517	$	31,534
United States		27,285		30,228
Mexico		17,264		18,554
Other		33,871		22,894
Totals	$	110,937	$	103,210

Revenue is attributed to individual countries based on the location where the relationship is managed. For the year ended December 31, 2022, revenue in the United States, Mexico, and Poland, as a percentage of total consolidated revenue, was 34.6%, 20.9%, and 17.8%, respectively. For the year ended December 31, 2021, revenue in the United States, Mexico, and Poland, as a percentage of total consolidated revenue, was 38.0%, 20.5%, and 17.6%, respectively. For the year ended December 31, 2020, revenue in the United States, Mexico, and Poland, as a percentage of total consolidated revenue, was 41.2%, 18.5%, and 18.0%, respectively. For the years ended December 31, 2022, 2021, and 2020, there is no one customer that represents more than 10% of total revenue.

(21) Shareholders’ Equity

EVO, Inc. was incorporated under the laws of the State of Delaware on April 20, 2017. On May 25, 2018, we completed the IPO and shares of our Class A common stock began trading on the Nasdaq stock exchange on May 23, 2018 under the symbol “EVOP.” In connection with the IPO, we completed the Reorganization Transactions to implement an “Up-C” capital structure. As a result of the Reorganization Transactions and the IPO, EVO, Inc. is the sole managing member of EVO, LLC and a holding company whose principal assets are the LLC Interests and the preferred membership interests (“Preferred LLC Interests”) in EVO, LLC. As the sole managing member of EVO, LLC, the Company operates and controls all of the business and affairs of EVO, LLC and its subsidiaries. The Company has the sole voting interest in, and controls the management of, EVO, LLC. Therefore, EVO, Inc. has consolidated the financial results of EVO, LLC and its subsidiaries.

From the date of the Reorganization Transactions and the IPO until May 24, 2021, the Company had four classes of common stock: Class A common stock, Class B common stock (classified as redeemable non-controlling interest), Class C common stock (classified as non-redeemable non-controlling interest) and Class D common stock (classified as non-redeemable non-controlling interest).

On May 25, 2021, pursuant to the Company’s amended and restated certificate of incorporation, all 32,163,538 outstanding shares of Class B common stock were automatically cancelled for no consideration, and each outstanding share of Class C common stock was automatically converted into one share of Class D common stock. Following the cancellation of Class B common stock, Blueapple continues to hold 32,163,538 LLC Interests and maintains all of its rights under the EVO LLC Agreement.

Following these changes in the Company’s equity capital structure, the Company has two classes of common stock outstanding: Class A common stock and Class D common stock.

The Company has one class of preferred stock outstanding, which is convertible into shares of Class A common stock. The Preferred Stock was issued on April 21, 2020 in connection with an investment by MDP. Refer to Note 16, “Redeemable Preferred Stock,” for additional details regarding the transaction.  

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The voting and economic rights associated with our classes of common and preferred stock are summarized in the following table:

Class of Common Stock	Holders	Voting rights	Economic rights
Class A common stock	Public, MDP, Executive Officers, and Current and Former Employees	One vote per share	Yes
Class D common stock	MDP and Current and Former Employees, and Executive Officers	One vote per share	No
Series A Preferred Stock	MDP	On an as-converted basis	Yes

Following the cancellation of Class B common stock on May 25, 2021, Blueapple continues to hold 32,163,538 LLC Interests and maintains all of its rights under the EVO LLC Agreement, including the sale right that provides that, upon the receipt of a sale notice from Blueapple, the Company will use its commercially reasonable best efforts to pursue a public offering of shares of Class A common stock and use the net proceeds therefrom to purchase LLC Interests from Blueapple. Upon the Company’s receipt of such a sale notice, the Company may elect, at its option (determined solely by its independent directors (within the meaning of the rules of Nasdaq) who are disinterested), to cause EVO, LLC to instead redeem the applicable LLC Interests for cash; provided that Blueapple consents to any election by the Company to cause EVO, LLC to redeem the LLC Interests.

Continuing LLC Owners (other than Blueapple) have an exchange right providing that, upon receipt of an exchange notice from such Continuing LLC Owners, the Company will exchange the applicable LLC Interests from such Continuing LLC Owners for newly issued shares of its Class A common stock on a one-for-one basis pursuant to an exchange agreement (the “Exchange Agreement”). Upon its receipt of such an exchange notice, the Company may elect, at its option (determined solely by its independent directors (within the meaning of the rules of Nasdaq) who are disinterested), to cause EVO, LLC to instead redeem the applicable LLC Interests for cash; provided that such Continuing LLC Owners consents to any election by the Company to cause EVO, LLC to redeem the LLC Interests. In the event that Continuing LLC Owners do not consent to an election by the Company to cause EVO, LLC to redeem the LLC Interests, the Company is required to exchange the applicable LLC Interests for newly issued shares of Class A common stock.

If the Company elects to cause EVO, LLC to redeem LLC Interests for cash in lieu of exchanging LLC Interests for newly issued shares of its Class A common stock, the Company will offer the other Continuing LLC Owners the right to have their respective LLC Interests redeemed in an amount up to such person’s pro rata share of the aggregate LLC Interests to be redeemed. The Company is not required to redeem any LLC Interests from Blueapple or any other Continuing LLC Owners in response to a sale notice from Blueapple if the Company elects to pursue, but is unable to complete, a public offering of shares of its Class A common stock.

Continuing LLC Owners also hold certain registration rights pursuant to a registration rights agreement. MDP holds demand registration rights that require the Company to register shares of Class A common stock held by it, including any Class A common stock received upon its exchange of Class A common stock for its LLC Interests, or upon conversion of any shares of Preferred Stock held by MDP. All Continuing LLC Owners (other than Blueapple) hold customary piggyback registration rights, which includes the right to participate on a pro rata basis in any public offering the Company conducts in response to its receipt of a sale notice from Blueapple. Blueapple also has the right, in connection with any public offering the Company conducts (including any offering conducted as a result of an exercise by MDP of its registration rights), to request that the Company uses its commercially reasonable best efforts to pursue a public offering of shares of its Class A common stock and use the net proceeds therefrom to purchase a like amount of Blueapple’s LLC Interests.

In connection with the execution and delivery of the Merger Agreement, certain Continuing LLC Owners have agreed to exchange their LLC Interests for shares of Class A common stock subject to, and effective immediately prior to, the closing of the Merger.

117

(22) Stock Compensation Plans and Share-Based Compensation Awards

The Company provides share-based compensation awards to its employees under the Amended and Restated 2018 Omnibus Incentive Stock Plan (the “Amended and Restated 2018 Plan”). The original Omnibus Equity Incentive Plan (the “2018 Plan”) was adopted in conjunction with the Company’s IPO and became effective on May 22, 2018. In February 2020, the Company adopted the Amended and Restated 2018 Plan, which was approved by the Company’s stockholders at the Company’s 2020 annual meeting of stockholders held in June 2020. The Amended and Restated 2018 Plan amended and restated the 2018 Plan in its entirety and increased the number of shares of the Company’s Class A common stock available for grant and issuance under the 2018 Plan from 7,792,162 shares to 15,142,162 shares. The Amended and Restated 2018 Plan was further amended in November 2021 solely to clarify certain provisions in anticipation of the implementation of the Company’s performance-based equity awards. The Amended and Restated 2018 Plan provides for accelerated vesting under certain conditions.

The following table summarizes share-based compensation expense, and the related income tax benefit recognized for share-based compensation awards. Share-based compensation expense is presented within selling, general, and administrative expenses within the consolidated statements of operations and comprehensive income (loss):

	Year Ended December 31,
	2022		2021		2020
Share-based compensation expense	$	29,223	$	27,419	$	20,664
Income tax benefit	$	(4,871)	$	(4,053)	$	(3,406)

Restricted stock units

Service-Based Restricted Stock Units

The Company recognized share-based compensation expense for RSUs granted of $17.3 million, $13.4 million, and $8.5 million, for the years ended December 31, 2022, 2021, and 2020, respectively.

A summary of RSUs activity is as follows (in thousands, except per share data):

	Number of RSUs	Weighted-average grant date fair value
Balance at December 31, 2020	1,149	$	22.92
Granted	711		25.74
Vested	(428)		23.25
Forfeited	(93)		22.36
Balance at December 31, 2021	1,339	$	24.35
Granted	1,000		23.85
Vested	(604)		22.78
Forfeited	(91)		24.29
Balance at December 31, 2022	1,644	$	24.62

As of December 31, 2022 and 2021, total unrecognized share-based compensation expense related to outstanding RSUs was $26.8 million and $22.5 million, respectively. RSUs settle in Class A common stock. RSUs granted in connection with the Company’s annual long-term incentive plan and off-cycle grants vest in equal annual vesting installments over a period of three or four years from the grant date. RSUs granted to the Company’s executive officers as part of the annual 2021 and all participants as part of the annual 2022 grant, vest in equal annual vesting

118

installments over a period of three years from the grant date. The weighted-average remaining vesting period over which expense will be recognized for unvested RSUs is 1.8 years as of December 31, 2022 and 2.0 years as of December 31, 2021. The total fair value of shares vested during the years ended December 31, 2022 and 2021 was $13.7 million and $10.0 million, respectively.

Stock options

Service-Based Stock Options

The Company recognized share-based compensation expense for the service-based stock options granted of $8.6 million, $12.5 million, and $12.1 million, for the years ended December 31, 2022, 2021, and 2020, respectively.

A summary of service-based stock option activity is as follows (in thousands, except per share and term data):

	Number of Options	Weighted-average grant date fair value		Weighted-average exercise price		Weighted-average remaining contractual term		Total intrinsic value
Balance at December 31, 2020	5,084	$	7.60	$	21.06		8.36	$	30,405
Granted	1,115		9.76		25.73		—		—
Exercised	(450)		6.27		17.48		—		4,886
Forfeited	(258)		8.42		23.45		—		—
Balance at December 31, 2021	5,491	$	8.11	$	22.19		7.67	$	19,802
Granted	—		—		—		—		—
Exercised	(481)		7.31		19.87		—		5,112
Forfeited	(138)		9.15		25.32		—		—
Balance at December 31, 2022	4,872	$	8.15		22.32		6.66	$	56,136
Exercisable at December 31, 2022	3,337	$	7.74	$	20.80		6.29	$	43,522

As of December 31, 2022 and 2021, total unrecognized share-based compensation expense related to unvested service-based stock options was $8.0 million and $17.7 million, respectively. The weighted-average remaining vesting period over which expense will be recognized for unvested stock options is 1.3 years as of December 31, 2022 and 2.0 years as of December 31, 2021. Stock options granted in connection with the Company’s annual long-term incentive plan and off-cycle grants vest in equal annual installments over a period of four years from grant date. Stock options granted to the Company’s executive officers (excluding the Chief Executive Officer (“CEO”)) as part of the annual 2021 grant vest in equal annual vesting installments over a period of three years from the grant date. Stock options expire no later than 10 years from the date of grant.

Market and Service-Based Stock Options

During the quarter ended March 31, 2021, 287,395 stock options with a fair value of approximately $2.9 million were granted to the Company’s CEO. These options vest only upon the satisfaction of certain market-based and service-based vesting conditions. The market-based vesting condition, which was met in the second quarter of 2021, required that the twenty trading day trailing average price for the Company’s Class A common stock must equal or exceed 110% of the closing price of the Company’s Class A common stock on the grant date for a period of twenty consecutive trading days. In addition, the options are subject to a service-based vesting condition that is satisfied in three equal annual installments on the first, second and third anniversaries of the grant date. As of December 31, 2022, 95,798 stock options were exercisable.

119

For the purpose of calculating share-based compensation expense, the fair value of this grant was determined through the application of the Monte-Carlo simulation model with the following assumptions:

Expected life (in years)		7.00
Weighted-average risk-free interest rate		1.15%
Expected volatility		34.65%
Dividend yield		0.00%
Exercise price	$	25.46

The Company recognizes share-based compensation expense related to this award with market-based and service-based conditions over the derived service period of 3.0 years using the graded vesting method. The Company recognized share-based compensation expense for these stock options of $1.0 million and $1.5 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, total unrecognized share-based compensation expense related to these stock options was $0.4 million and $1.4 million, respectively. The weighted-average remaining vesting period over which expense will be recognized for these stock options is 1.0 years as of December 31, 2022 and 1.5 years as of December 31, 2021.

Performance-stock units

Performance and service based stock units

During the quarter ended March 31, 2022, the Compensation Committee of the Board of Directors granted 151,187 Performance Stock Units (“PSUs”) with a grant date fair value of approximately $3.6 million to the Company’s executive officers under the Company’s long-term incentive plan. The PSUs will cliff vest three years from the grant date at a range between 0% and 200% based upon annual performance cycles and settle in Class A common stock. The vesting criteria is based on financial performance measures including revenue and EPS growth targets. Compensation costs recognized on the performance and service based stock units are adjusted, as applicable, for performance above or below the target specified in the award.

The Company recognized share-based compensation expense for PSUs granted of $1.2 million for the year ended December 31, 2022. As of December 31, 2022, total unrecognized share-based compensation expense related to outstanding PSUs was $3.2 million. The weighted-average remaining vesting period over which expense will be recognized for unvested PSUs is 2.2 years as of December 31, 2022.

Market and service-based performance stock units

During the quarter ended March 31, 2022, the Compensation Committee of the Board of Directors granted 151,187 market and service-based performance stock units (“MPSUs”) with a grant date fair value of approximately $3.9 million to the Company’s executive officers under the Company’s long-term incentive plan. These MPSUs will cliff vest on March 31, 2025, the last day of the performance period, if the twenty trading day trailing average closing stock price for the Company’s Class A common stock meets or exceeds the threshold stock price for a twenty trading day period at any time during the performance period.

For the purpose of calculating share-based compensation expense, the fair value of this grant was determined through the application of the Monte-Carlo simulation model with the following assumptions:

Expected life (in years)		3.10
Weighted-average risk-free interest rate		1.74%
Expected volatility		47.62%
Dividend yield		0.00%
Estimated grant date fair value (per share)	$	23.69

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The Company recognized share-based compensation expense for these MPSUs of $1.1 million for the year ended December 31, 2022. As of December 31, 2022, total unrecognized share-based compensation expense related to these MPSUs was $2.8 million. The weighted-average remaining vesting period over which expense will be recognized for these MPSUs is 2.2 years as of December 31, 2022.

(23) Employee Benefit Plans

The Company maintains retirement plans for employees in various countries where the Company maintains an office. Each plan is subject to allowable contributions and limitations based on local country laws and regulations covering retirement plans. In each location and plan, the Company, at its discretion, may contribute to the plan and, depending on location, the Company may match a percentage of the employee contributions. The Company’s contributions are vested over time, at different rates depending on location. The Company recognized a contribution expense of $2.1 million, $2.0 million, and $1.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

121

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

EVO PAYMENTS, INC.

(Parent Company Only)

Condensed Statements of Balance Sheets

(In thousands)

	December 31,		December 31,
	2022		2021
Assets
Due from related parties	$	323	$	223
Other current assets		68		59
Total current assets		391		282
Deferred tax asset, net		235,901		237,042
Total assets	$	236,292	$	237,324
Liabilities and Shareholders' Deficit
Accrued expenses	$	391	$	282
Total current liabilities		391		282
Tax receivable agreement obligations, inclusive of related party liability of $171.9 million and $169.4 million at December 31, 2022 and 2021, respectively		182,726		180,143
Net deficit in investment in a subsidiary		814,780		554,912
Total liabilities		997,897		735,337
Redeemable preferred stock (par value, $0.0001 per share), Authorized, Issued and Outstanding – 152,250 shares at December 31, 2022 and December 31, 2021. Liquidation preference: $178,559 and $168,309 at December 31, 2022 and December 31, 2021, respectively		174,531		164,007
Shareholders' deficit:
Class A common stock (par value, $0.0001 per share), Authorized - 200,000,000 shares, Issued and Outstanding - 48,423,077 and 47,446,061 shares at December 31, 2022 and 2021, respectively		5		5
Class D common stock (par value, $0.0001 per share), Authorized - 32,000,000 shares, Issued and Outstanding - 3,741,074 and 3,783,074 shares at December 31, 2022 and 2021, respectively		—		—
Additional paid-in capital		—		—
Accumulated deficit		(928,187)		(652,871)
Accumulated other comprehensive loss		(7,954)		(9,154)
Total deficit		(936,136)		(662,020)
Total liabilities, redeemable preferred stock, and shareholders' deficit	$	236,292	$	237,324

See accompanying notes to condensed financial statements_.

122

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

EVO PAYMENTS, INC.

(Parent Company Only)

Condensed Statements of Operations and Comprehensive Income (Loss)

(In thousands)

	Year Ended December 31,
	2022		2021		2020
Net revenue	$	—	$	—	$	—
Operating expenses:
Selling, general, and administrative		4,268		4,160		6,473
Loss from operations		(4,268)		(4,160)		(6,473)
Other income:
Income (loss) from investment in unconsolidated investee		4,558		128		(9,610)
Dividend income		10,524		9,889		6,528
Other income (expense)		1,952		(177)		8,255
Total other income		17,034		9,840		5,173
Income (loss) before income taxes		12,766		5,680		(1,300)
Income tax (expense) benefit		(7,487)		2,973		(376)
Net income (loss)		5,279		8,653		(1,676)
Net income (loss) attributable to EVO Payments, Inc.	$	5,279	$	8,653	$	(1,676)
Comprehensive income (loss):
Net income (loss)	$	5,279	$	8,653	$	(1,676)
Change in fair value of interest rate swap, net of tax(1)		(590)		800		(197)
Change in fair value of cross currency swap, net of tax(2)		(24)		—		—
Unrealized gain (loss) on foreign currency translation adjustment, net of tax(3)		1,814		(10,999)		3,190
Other comprehensive income (loss)		1,200		(10,199)		2,993
Comprehensive income (loss)		6,479		(1,546)		1,317
Comprehensive income (loss) attributable to EVO Payments, Inc.	$	6,479	$	(1,546)	$	1,317

(1) Net of tax benefit (expense) of $0.2 million, $(0.2) million, and $0.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

(2) Net of tax benefit of less than $0.1 million for the year ended December 31, 2022.

(3) Net of tax benefit (expense) of $5.6 million, $4.1 million, and $(2.5) million for the years ended December 31, 2022, 2021, and 2020, respectively.

See accompanying notes to condensed financial statements.

123

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

EVO PAYMENTS, INC.

(Parent Company Only)

Condensed Statements of Cash Flows

(In thousands)

	Year Ended December 31,
	2022		2021		2020
Cash flows from operating activities:
Net cash provided by operating activities	$	—	$	—	$	—
Cash flows from investing activities:
Investment in unconsolidated investee		(5,891)		(3,289)		(152,390)
Net cash used in investing activities		(5,891)		(3,289)		(152,390)
Cash flows from financing activities:
Secondary offering proceeds		—		—		115,538
Purchase of LLC Interests, Class B and Class D common stock in connection with the secondary offerings		—		—		(115,538)
Proceeds from exercise of common stock options		9,566		7,866		6,145
Proceeds from issuance of redeemable preferred stock		—		—		149,250
Redeemable preferred stock issuance costs		—		—		(1,660)
Repurchases of shares to satisfy minimum tax withholding		(3,675)		(4,577)		(1,345)
Net cash provided by financing activities		5,891		3,289		152,390
Effect of exchange rate changes on cash and cash equivalents		—		—		—
Net increase in cash and cash equivalents		—		—		—
Cash and cash equivalents, beginning of year		—		—		—
Cash and cash equivalents, end of year	$	—	$	—	$	—

See accompanying notes to condensed financial statements.

124

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

EVO PAYMENTS, INC.

(Parent Company Only)

Notes to the Condensed Financial Statements

(1) Basis of Presentation

EVO Payments, Inc. (“EVO, Inc.”) is a Delaware corporation whose value is driven by its ownership of approximately 57.4% of the membership interests of EVO, LLC as of December 31, 2022. EVO, Inc. was incorporated on April 20, 2017 for the purpose of completing the Reorganization Transactions, in order to consummate the IPO, and to carry on the business of EVO, LLC. The accompanying condensed parent company-only financial statements are required in accordance with Rule 5-04 of Regulation S-X. These condensed financial statements have been presented on a standalone basis for EVO Payments, Inc. The condensed financial statements of EVO, Inc. reflect the historical results of operations and the financial position of EVO, Inc., commencing on May 23, 2018. Prior to May 23, 2018, the condensed financial statements included herein represent the financial statements of EVO, LLC on a standalone basis.

EVO, Inc. is a holding company that does not conduct any business operations of its own and therefore its assets consist primarily of investments in subsidiaries. In the ordinary course of business, EVO, Inc. will incur certain expenses which are paid on behalf of EVO, Inc. by EVO, LLC and recognized as guaranteed payments in other income. Additionally, EVO, Inc. anticipates the settlement of certain future tax liabilities will require future distributions from EVO, LLC. EVO, Inc. may not be able to access cash generated by its subsidiaries in order to fulfill cash commitments or to pay cash dividends on its common stock. The amounts available to EVO, Inc. to fulfill cash commitments or to pay cash dividends are also subject to the covenants and distribution restrictions in our Senior Secured Credit Facilities. For a discussion on the tax receivable agreements, see Note 5, “Tax Receivable Agreement,” in the notes to the accompanying consolidated financial statements. Net income (loss) attributable to EVO Payments, Inc. and comprehensive income (loss) attributable to EVO Payments, Inc. represent the amount of income (loss) and comprehensive income (loss) attributable to EVO, Inc. exclusive of losses incurred prior to the Reorganization Transactions, which is allocable to EVO, LLC and, therefore, the members of EVO, LLC. This loss has been excluded from net loss attributable to EVO Payments, Inc. as EVO, Inc. was not a member of EVO, LLC prior to the Reorganization Transactions.

For the purposes of this condensed financial information, EVO, Inc.’s investment in its consolidated subsidiary is presented under the equity method of accounting. Under the equity method, investment in its subsidiary is stated at cost plus contributions and equity in undistributed income (loss) of subsidiary less distributions received. As of December 31, 2022 and 2021, EVO, Inc.’s investment in EVO, LLC was in a net deficit due to the accumulation of net losses to date, therefore it is presented as a liability on the condensed balance sheet. EVO, Inc.’s financial statements should be read in conjunction with the Company's consolidated financial statements appearing in this Annual Report on Form 10-K.

(2) Distributions

There were no distributions made to EVO, Inc. from EVO, LLC or its subsidiaries, for the years ended December 31, 2022, 2021, and 2020.

125

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

EVO PAYMENTS, INC.

(Parent Company Only)

Notes to the Condensed Financial Statements

(3) Long-term debt and credit facilities

As of December 31, 2022 and 2021, EVO, Inc. held no debt. Certain subsidiaries of the Company are subject to debt agreements. The subsidiaries’ long-term debt, including accrued interest, consists of the following:

	2022		2021
	(In thousands)
Subsidiary debt:
Term loan	$	573,300	$	588,000
Revolver		68,200		—
Deferred financing costs		(4,212)		(5,310)
Total subsidiary debt	$	637,288	$	582,690
Settlement lines of credit	$	5,033	$	7,887

For further discussion on the nature and terms of these agreements and details regarding restricted net assets, refer to Note 13, “Long-Term Debt and Lines of Credit,” to the Company’s consolidated financial statements.

(4) Redeemable Preferred Stock

For further discussion on the issuance of preferred stock, refer to Note 16, “Redeemable Preferred Stock,” to the Company’s consolidated financial statements.

(5) Commitments and Contingencies

For a discussion of commitments and contingencies, see Note 19, “Commitments and Contingencies,” to the Company’s consolidated financial statements.

126

SCHEDULE II

EVO PAYMENTS, INC. AND SUBSIDIARIES

Valuation and Qualifying Accounts

(In thousands)

	Balance at		Additions:				Balance at
	Beginning of		Charged to Costs				End of
Description	Period		and Expenses		Deductions(1)		Period
Allowance for doubtful accounts
Year ended December 31, 2022	$	7,150	$	1,987	$	(346)	$	8,791
Year ended December 31, 2021		4,440		3,309		(599)		7,150
Year ended December 31, 2020		3,736		935		(231)		4,440
Deferred income tax asset valuation allowance
Year ended December 31, 2022	$	11,634	$	4,832	$	(1,579)	$	14,887
Year ended December 31, 2021		5,090		8,389		(1,845)		11,634
Year ended December 31, 2020		8,152		1,097		(4,159)		5,090
(1) Includes accounts receivable written off, the write-off or write-down of valuation allowances, and translation adjustments.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management conducted an evaluation, under the supervision and with the participation of its CEO and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) at December 31, 2022. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based upon the evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective at December 31, 2022.

Changes to Internal Control over Financial Reporting

There have been no changes to the Company’s internal control over financial reporting during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) for the Company. The Company’s internal control over financial reporting is a process designed under the supervision of the CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. GAAP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Due to such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, such risk.

Management has made a comprehensive review, evaluation, and assessment of the Company’s internal control over financial reporting at December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the Internal Control — Integrated Framework (2013). Management excluded from its assessment the internal control over financial reporting for the EDPS and NBG acquisitions which closed in December 2022, and whose financial statements constitute approximately 18.6% of total assets and 0.6% of total revenues of the Company’s consolidated financial statement amounts as of and for the year ended December 31, 2022. Based on that assessment, management concluded that, at December 31, 2022, the Company’s internal control over financial reporting is effective.

128

Deloitte & Touche LLP has issued an attestation report on our internal control over financial reporting, which is included herein as the Report of Independent Registered Public Accounting Firm under Item 8 - Financial Statements and Supplementary Data as of December 31, 2022.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table sets forth certain information about our directors and executive officers:

Name	Age	Position
James G. Kelly	60	Chief Executive Officer and Director
Brendan F. Tansill	44	President, the Americas
Darren Wilson	55	President, International
Thomas E. Panther	54	Executive Vice President, Chief Financial Officer
Michael L. Reidenbach	60	Executive Vice President, Chief Information Officer
Kelli E. Sterrett	43	Executive Vice President, General Counsel and Secretary
Catherine E. Lafiandra	60	Executive Vice President, Chief Human Resources Officer
David L. Goldman	40	Executive Vice President, Business Development and Strategy
Anthony J. Radesca	53	Senior Vice President, Chief Accounting Officer
Rafik R. Sidhom	58	Chairman of the Board of Directors
Vahe A. Dombalagian	49	Director
Mark A. Chancy	58	Director
John S. Garabedian	61	Director
Nikki T. Harland	47	Director
David W. Leeds	66	Director
Laura M. Miller	58	Director
Stacey V. Panayiotou	50	Director
Gregory S. Pope	57	Director
Matthew W. Raino	44	Director

Set forth below is a brief biography of each of our executive officers and directors.

James G. Kelly has served as EVO’s Chief Executive Officer since its formation, as a member of our board of directors since May 2018, and as Chief Executive Officer and a member of the board of managers of EVO LLC since January 2012. Before joining EVO, Mr. Kelly served as President and Chief Operating Officer of Global Payments Inc., as Senior Executive Vice President of Global Payments Inc. and as Chief Financial Officer of Global Payments Inc. Prior to that, Mr. Kelly served as managing director of Alvarez & Marsal, a global professional services firm, and as manager of Ernst & Young’s mergers and acquisitions/audit groups. Mr. Kelly is a graduate of the University of Massachusetts, Amherst.

Mr. Kelly was elected to our board of directors because of his extensive experience in executive leadership positions in the payment services industry and his knowledge of our business in particular, gained through his service as our Chief Executive Officer and implementation of our strategic objectives over the past ten years.

Brendan F. Tansill has served as EVO’s President, the Americas, since its formation, and as President, the Americas, of EVO LLC since January 2016. Prior to his current role, Mr. Tansill served as Executive Vice President, Business Development and Strategy of EVO LLC from April 2012 until December 2015, where he was responsible for EVO’s global mergers and acquisitions activity and corporate strategy. Before joining EVO, Mr. Tansill was an investment

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professional at CCMP Capital Advisors. Mr. Tansill received his Masters of Business Administration from the Kellogg School of Management at Northwestern University and his Bachelor of Arts from the University of Virginia.

Darren Wilson has served as EVO’s President, International, since its formation, and as President, International, of EVO LLC since April 2014. Before joining EVO, Mr. Wilson served as Managing Director of Streamline (a Worldpay company) and as CEO/President of Global Payments’ Western European business. Mr. Wilson has also held various positions at HSBC Bank. Mr. Wilson has the Associate of the Chartered Institute of Bankers degree and has studied at Birmingham and Warwick Universities.

Thomas E. Panther has served as EVO’s Executive Vice President, Chief Financial Officer since November 2019. Before joining EVO, Mr. Panther worked for over 19 years at SunTrust Banks, Inc., where he served in numerous leadership roles including Chief Accounting Officer, Corporate Controller, Director of Corporate Finance and Head of Capital Planning & Analysis. Mr. Panther began his career at Arthur Andersen, delivering accounting and advisory services to financial institutions for nine years. Mr. Panther is a certified public accountant and earned his bachelor’s degree from the University of Richmond.

Michael L. Reidenbach has served as EVO’s Executive Vice President, Chief Information Officer since its formation, and as Executive Vice President, Chief Information Officer of EVO LLC since March 2013. Before joining EVO, Mr. Reidenbach served as Executive Vice President, Chief Information Officer of Global Payments Inc. Mr. Reidenbach is a former U.S. Air Force instructor pilot and aircraft commander. Mr. Reidenbach received his Master of Business Administration/Finance and his Master of Management Information Systems from Georgia College and his Bachelor of Science from the U.S. Air Force Academy.

Kelli E. Sterrett has served as EVO’s Executive Vice President, General Counsel and Secretary since July 2021. Ms. Sterrett joined EVO in 2018 as Senior Vice President and Deputy General Counsel. Prior to joining EVO, Ms. Sterrett served as Vice President and Deputy General Counsel of Scientific Games Corporation. Ms. Sterrett began her career as a corporate attorney with the law firm Gibson, Dunn & Crutcher LLP in New York. Ms. Sterrett received her Juris Doctorate from Columbia Law School and her Bachelor of Arts from Colgate University.

Catherine E. Lafiandra has served as EVO’s Executive Vice President, Chief Human Resources Officer since its formation, and as Chief Human Resources Officer of EVO LLC since March 2016. Before joining EVO, Ms. Lafiandra served as Vice President of Human Resources of Beazer Homes USA, Inc. from October 2014 to March 2016 and as Senior Vice President of Human Resources of PRGX Global, Inc. from March 2010 to March 2014. Ms. Lafiandra received her Juris Doctorate from the University of Virginia School of Law and her Bachelor of Arts from Southern Methodist University.

David L. Goldman has served as EVO’s Executive Vice President of Business Development and Strategy since its formation, and as Executive Vice President of Business Development and Strategy of EVO LLC since June 2016. Before joining EVO, Mr. Goldman served as Managing Director of PointState Capital LP from January 2011 to April 2014 and as Vice President of Duquesne Capital Management, LLC from April 2007 to December 2010. Prior to that, Mr. Goldman served as an Associate at TPG Capital, L.P. and as an investment banking analyst at Morgan Stanley. Mr. Goldman received his Bachelor of Business Administration from the University of Michigan.

Anthony J. Radesca has served as EVO’s Senior Vice President and Chief Accounting Officer since April 2019. Before joining EVO, Mr. Radesca served as the Senior Vice President and Chief Accounting Officer of CA Technologies, a global technology company that designs and develops infrastructure software solutions, from May 2016 until February 2019. Prior to that, he served as Vice President of Accounting of CA Technologies. Mr. Radesca received his Bachelor of Business Administration, Public Accounting, from Hofstra University and his Juris Doctor from Saint John’s University School of Law. Mr. Radesca is a certified public accountant.

Rafik R. Sidhom has served as Chairman of our board of directors since May 2018, and, prior to that, as Chairman and a member of the board of managers of EVO LLC since December 2012. As our original founder, Mr. Sidhom began his career in the acquiring industry selling card processing services and equipment to small retail merchants.

Mr. Sidhom was elected to our board of directors because of his role in founding our Company and his extensive experience with, and in-depth knowledge of, both the card processing services industry and our business in particular.

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Mark A. Chancy has served as a member of our board of directors since March 2020. Mr. Chancy most recently served as Vice Chairman and Co-Chief Operating Officer at SunTrust Banks, Inc. In this role, he was responsible for SunTrust’s consumer banking, consumer lending, private wealth management and mortgage businesses, as well as enterprise marketing and data and analytics functions for the company. Prior to this role, Mr. Chancy held various executive roles at SunTrust from 2001 to 2017, including Chief Financial Officer and Wholesale Segment Executive. Mr. Chancy was recruited to the corporate finance department at The Robinson-Humphrey Company in 1989 after beginning his career with The First Boston Corporation in New York in 1986. Mr. Chancy serves on the board of directors of Wells Fargo & Company. He also serves as a member of the boards of the Westside Future Fund and Children’s Healthcare of Atlanta where he also serves as the chair of its Foundation. Mr. Chancy holds an MBA in finance from the J.L. Kellogg Graduate School of Management at Northwestern University and a bachelor’s degree from Southern Methodist University.

Mr. Chancy was elected to our board because of his extensive financial, operational, and strategic experience, as well as his knowledge of the financial services industry.

Vahe A. Dombalagian has served as a member of our board of directors since May 2018 and as a member of the board of managers of EVO LLC since December 2012. Mr. Dombalagian is a Managing Director and Co-Head of the MDP Financial & Transaction Services team. Prior to joining MDP, he was with TPG, Inc. and Bear, Stearns & Co. Inc. Mr. Dombalagian also serves on the boards of directors of The Amynta Group, Ankura Consulting Group, The Ardonagh Group Limited, Benefytt Technologies, Inc., Navacord Corp., and NFP Corp. Mr. Dombalagian received his Bachelor of Science from Georgetown University and his Master in Business Administration from the Harvard Graduate School of Business Administration.

Mr. Dombalagian was elected to our board of directors because of his role in the development and implementation of our strategic objectives during his six years as a member of the board of managers of EVO LLC, his extensive experience serving as a director of other businesses, and his experience as a private equity investor with respect to acquisitions and a variety of debt and equity financings.

John S. Garabedian has served as a member of our board of directors since May 2018. Mr. Garabedian is currently a General Partner of KB Partners, a Chicago-based investment firm. Prior to joining KB Partners, Mr. Garabedian served as a senior advisor for the Boston Consulting Group (BCG), a management consulting firm, from 2018 to April 2022 and as a Senior Partner of BCG from 2006 to 2018. He was a member of BCG’s Financial Institutions practice and led the practice in the Americas from 2007 to 2012. Prior to joining BCG, Mr. Garabedian was vice president for Gemini Consulting, where he was the North American Financial Services practice leader. He also worked in strategic planning at Continental Bank. Mr. Garabedian received a Master of Management degree from the Kellogg School of Management and a Bachelor of Science degree in Accounting from Frostburg State University.

Mr. Garabedian was elected to our board of directors because of his experience working with banking, insurance and asset management firms on strategy and operational matters.

Nikki T. Harland has served as a member of our board of directors since March 2022. Ms. Harland has served as Chief Operating Officer of Paradies Lagardère since October 2021. Prior to her current role, Ms. Harland held several leadership roles at Paradies Lagardère, including President of the Retail Division and Senior Vice President of Human Resources. Prior to joining Paradies Lagardère in 2014, Ms. Harland held leadership positions at Gap, Inc., Toys “R” Us and Turner Broadcasting System. Ms. Harland currently serves on the Children’s Healthcare of Atlanta Foundation Board of Trustees and the National Black Arts Festival Board of Directors. Ms. Harland holds an MBA from Clark Atlanta University and a bachelor's degree from Spellman College.

Ms. Harland was elected to our board of directors because of her experience and expertise in retail and operational matters.

David W. Leeds has served as a member of our board of directors since July 2018. Mr. Leeds was associated with Ernst & Young LLP for over 40 years before his retirement in June 2018, having served as an assurance and audit partner in the Financial Services and Technology practice groups of the firm since 1991. Mr. Leeds serves and has served on the boards of several non-profit and educational organizations, in which capacity he has served as board chair, finance chair, and on various committees. Mr. Leeds received his Bachelor of Business Administration from the University of Texas and has been a Certified Public Accountant since 1981.

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Mr. Leeds was elected to our board of directors because of his extensive experience with financial reporting and audit matters.

Laura M. Miller has served as a member of our board of directors since September 2019. Ms. Miller has served as Chief Information Officer at Macy’s Inc. since March 2021. Prior to joining Macy’s, Ms. Miller was with InterContinental Hotels Group PLC (IHG) from 2013 to January 2020, where she held the role of Global Chief Information Officer. Prior to joining IHG, Ms. Miller was Senior Vice President, Financial Services Application Development for First Data Corporation, where she was responsible for the company’s credit card issuing, merchant acquiring, ATM and online banking solutions. Ms. Miller currently serves as a member of the Society of Information Management, Women in Technology and the Technology Association of Georgia. Ms. Miller has a bachelor’s degree in Information Systems Management from the University of Maryland, Baltimore County, and holds a master’s degree in Computer Systems Management from the University of Maryland University College.

Ms. Miller was elected to our board of directors because of her leadership experience as well as her extensive expertise of technology and cybersecurity matters.

Stacey Valy Panayiotou has served as a member of our board of directors since August 2021. Ms. Panayiotou has served as Executive Vice President, Human Resources of Ball Corporation since November 2021. Prior to Ball Corporation, Ms. Panayiotou served as Executive Vice President, Human Resources of Graphic Packaging International (GPI). Prior to joining GPI in April 2019, Ms. Panayiotou was with The Coca-Cola Company from February 2006 through April 2019 where she held a variety of senior HR leadership roles, including Global Vice President of Talent and Development and Vice President, HR, Europe, Middle East & Africa, which consisted of over 120 countries. Prior to joining The Coca-Cola Company, Ms. Panayiotou led the organization development function for Pactiv Corporation. Ms. Panayiotou currently serves on the advisory board for the University of Iowa Tippie College of Business and on the Children’s Healthcare of Atlanta Foundation Board of Trustees. Ms. Panayiotou has a bachelor’s degree in Management & Organizations from the University of Iowa and holds a dual master’s degree in International HR & Organization Development from Loyola University Chicago.

Ms. Panayiotou was elected to our board of directors because of her leadership experience as well as her extensive expertise in human resources matters.

Gregory S. Pope has served as a member of our board of directors since May 2018. Mr. Pope has served as Chief Operations Officer at Masters Capital Management LLC, an investment management firm, since June 2000. Prior to joining Masters Capital, Mr. Pope worked for J.C. Bradford & Co. from 1989 until July 2000. Mr. Pope previously served on the board of directors for Georgia Commerce Bancshares, Inc. and was a member of its audit and asset-liability committee from 2011 until 2015. Mr. Pope currently serves on the board of directors of Big Brothers Big Sisters of Atlanta and is a past board member of several other charitable foundations. Mr. Pope received a Bachelor of Science degree in Finance from Georgia State University.

Mr. Pope was elected to our board of directors because of his experience working in the banking and investment management sectors on a variety of strategic and operational matters.

Matthew W. Raino has served as a member of our board of directors since April 2020 and previously, from May 2018 to December 2019, and was a member of the board of managers of EVO LLC from December 2012 to December 2019. Mr. Raino is a Managing Director of the MDP Financial & Transaction Services team. Prior to rejoining MDP in August 2007, Mr. Raino attended Northwestern University J.L. Kellogg Graduate School of Management. From July 2003 to July 2005, Mr. Raino served as an associate at MDP. Mr. Raino also serves on the boards of directors of the Amynta Group, Ankura Consulting Group, Benefytt Technologies, Inc., Navacord Corp., and NFP Corp. Mr. Raino has a Bachelor of Business Administration from the University of Michigan and a Master in Business Administration from Northwestern University J.L. Kellogg Graduate School of Management.

Mr. Raino was elected to our board of directors because of his role in the development and implementation of our strategic objectives during his six years as a member of the board of managers of EVO LLC, his extensive experience serving as a director of other businesses, and his experience as a private equity investor with respect to acquisitions and a variety of debt and equity financings.

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Board Committees

We have six committees of the board of directors, each of which operates under a charter that has been approved by our board of directors: audit committee, compensation committee, investment and finance committee, nominating and corporate governance committee, risk committee, and technology committee. Copies of each charter are posted on the corporate governance section of our website at www.evopayments.com. Our board of directors may establish other committees from time to time.

Committee Composition

	Audit Committee	Nominating and Corporate Governance Committee	Compensation Committee	Technology Committee	Risk Committee	Investment & Finance Committee
Mark A. Chancy
Vahe A. Dombalagian
Nikki T. Harland
John S. Garabedian
David W. Leeds*
Laura M. Miller
Stacey Panayiotou
Gregory S. Pope
Matthew W. Raino
Ray R. Sidhom

Audit Committee

Our board of directors adopted a written charter for our audit committee that complies with the rules of Nasdaq. Our audit committee is comprised of Messrs. Leeds, Chancy, Garabedian and Pope, with Mr. Leeds serving as the chairperson of the committee. Our audit committee assists our board of directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions, and is directly responsible for the approval of the services performed by our independent accountants and reviewing of their reports regarding our accounting practices and systems of internal accounting controls. Our audit committee also oversees the audit efforts of our independent accountants and takes actions as it deems necessary to satisfy itself that the accountants are independent of management. Our audit committee is also responsible for monitoring the integrity of our consolidated financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters.

Our board of directors has determined that each member of the audit committee is independent as required by Rule 10A-3 under the Exchange Act and Nasdaq listing standards. Our board of directors has determined that each of Messrs. Leeds, Chancy and Pope is an “audit committee financial expert” within the meaning of applicable SEC rules and that each member of our audit committee has the requisite financial expertise required under the applicable listing requirements of Nasdaq.

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Compensation Committee

Our compensation committee is comprised of Mr. Dombalagian, Mr. Pope and Ms. Miller, with Mr. Pope serving as the chairperson of the committee. Our compensation committee assists our board of directors in meeting its responsibilities with regard to oversight and determination of executive compensation and assesses whether our compensation structure establishes appropriate incentives for officers and employees. Our compensation committee reviews and makes recommendations to our board of directors with respect to our major compensation plans, policies and programs. In addition, our compensation committee reviews, establishes and modifies the terms and conditions of employment of our executive officers and administers our equity compensation plans.

Our board of directors has determined that each member of the compensation committee is independent as required by Nasdaq listing standards, and that Ms. Miller and Mr. Pope are “non-employee directors” as defined in Rule 16b-3 promulgated under the Exchange Act.

Investment and Finance Committee

Our investment and finance committee is comprised of Mr. Chancy, Mr. Dombalagian, Mr. Pope, Mr. Raino and Mr. Sidhom, with Mr. Dombalagian serving as the chairperson of the committee. Our investment and finance committee meets on an as-needed basis to evaluate significant acquisitions, dispositions, joint ventures, strategic alliances and other strategic transactions or investment opportunities as well as significant financing transactions and arrangements.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee is comprised of Ms. Panayiotou, Ms. Harland, Mr. Leeds and Mr. Raino, with Ms. Panayiotou serving as the chairperson of the committee. Our nominating and corporate governance committee is responsible for making recommendations to our board of directors regarding candidates for directorships and the size and composition of the board of directors. In addition, our nominating and corporate governance committee is responsible for overseeing succession planning, our corporate governance guidelines, and reporting and making recommendations to the board of directors concerning corporate governance matters. Our nominating and corporate governance committee oversees the Company’s environmental, social and governance (“ESG”) activities and disclosures, receiving reports from our ESG committee, a cross-functional management committee of the Company.

Our board of directors has determined that each member of the nominating and corporate governance committee is independent as required by Nasdaq listing standards.

Risk Committee

Our risk committee is comprised of Mr. Garabedian, Mr. Leeds and Ms. Miller, with Mr. Garabedian serving as the chairperson of the committee. Our risk committee oversees the Company’s risk management framework, including the significant programs, policies, and plans established by management to identify, assess, measure, monitor and manage the material risks facing the Company.

Technology Committee

Our technology committee is comprised of Mr. Garabedian, Ms. Miller, Ms. Panayiotou, and Mr. Raino, with Ms. Miller serving as the chairperson of the committee. Our technology committee assists our board in its oversight of risks regarding technology, information security, cybersecurity, data privacy, disaster recovery, and business

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continuity. Ms. Miller is the chair of the technology committee due to her extensive expertise of technology and cybersecurity matters.

Director Independence

Under Nasdaq rules, independent directors must comprise a majority of our board of directors. In addition, Nasdaq rules require that, subject to specified exceptions, each member of our audit, compensation and nominating and governance committees be independent. Under Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or (ii) be an affiliated person of the listed company or any of its subsidiaries.

Our board of directors undertook a review of its composition, the composition of its committees and the independence of each director and has determined that Mmes. Miller, Panayiotou, and Harland, and Messrs. Chancy, Dombalagian, Garabedian, Leeds, Pope and Raino qualify as “independent” directors in accordance with Nasdaq listing requirements. In making these determinations, our board of directors reviewed and discussed information provided by the directors with regard to each director’s business and personal activities and relationships as they may relate to us and our management. Messrs. Kelly and Sidhom are not considered independent. There are no family relationships among any of our directors or executive officers.

Director Stock Ownership Requirements

Our board of directors has implemented stock ownership guidelines for our directors to foster equity ownership and align the interests of our directors with our stockholders. Within five years of a director’s initial election to the board, our outside directors are required to beneficially own securities with a value of at least 4 times their annual cash retainer (excluding committee and chairperson fees). Each of our directors was in compliance with the stock ownership guidelines as of the Record Date.

Code of Conduct

Our board of directors has adopted a code of conduct applicable to our executive officers, directors and all other employees. A copy of that code is available on our website at www.evopayments.com. Any amendments to the code, or any waivers of its requirements, will be disclosed on our website at the above address.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (CD&A) focuses on our 2022 compensation programs, actions and outputs. These compensation decisions reflect the compensation committee’s application of our compensation philosophy, plan objectives and performance standards against financial and individual executive performance through the end of 2022.

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Named Executive Officer Compensation Design, Elements and Pay Mix

This section provides an overview of our 2022 executive compensation program, including a narrative description of the material factors necessary to understand the information disclosed regarding the compensation of our named executive officers, or NEOs, in the summary compensation table below. For 2022, our NEOs were:

Name	Position
James G. Kelly	Chief Executive Officer
Thomas E. Panther	Executive Vice President, Chief Financial Officer
Brendan F. Tansill	President, Americas
Darren Wilson	President, International
Michael L. Reidenbach	Executive Vice President, Chief Information Officer

Compensation Philosophy

Our compensation philosophy is based on the principle of pay-for-performance, with the actual compensation received by any NEO varying based on our performance. The compensation committee is comprised solely of independent directors and is responsible for determining the compensation for each of our NEOs and administering our equity compensation plans and awards. The compensation committee reviews our executive compensation program annually to ensure that we have a competitive, market-based program designed to drive our performance for the benefit of all our stockholders. Our compensation program is intended to:

● support the achievement of our financial and business objectives;

● align short-term and long-term incentives with achievement of our strategy and objectives;

● attract and retain highly qualified executives who can lead our complex, expanding global business;

● deliver an externally competitive and transparent total compensation structure;

● create an environment where performance is rewarded; and

● align the interests of our NEOs with our stockholders.

In order to achieve these results, our compensation committee believes our program must:

● provide our NEOs with total compensation opportunities at levels that are competitive for comparable positions in a highly competitive industry;

● provide variable, at-risk incentive award opportunities that are payable only if specific goals are achieved;

● provide significant upside opportunities for outstanding performance and strong shareholder value creation; and

● align the interests of our NEOs with those of our stockholders by making stock-based incentives a prominent element of our executive compensation program.

The NEO compensation program is designed considering the following factors:

● market data provided by our independent compensation consultant to ensure we offer competitive compensation to our NEOs based on experience level, individual skills, criticality of the role, individual performance and other factors;

● opportunities to award NEOs if performance significantly exceeds our established company-wide financial performance objectives; and

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● alignment with stockholders by ensuring that a core part of NEO compensation is stock based.

Our compensation committee also considers and assesses potential risk and risk mitigation factors in all our compensation programs. For 2022, our compensation committee concluded that our compensation practices are balanced, do not encourage excessive risk taking by our NEOs or other employees, and are not reasonably likely to have a material adverse effect on us.

Compensation of our NEOs is comprised of three key components: base salary, short-term cash incentive and long-term equity incentive.

	Core Component	Objective/Features
Salary	Base Salary	Base salaries provide compensation consistent with each NEO’s responsibilities, experience and performance in relation to the marketplace.
Short-Term Cash Incentive	Annual Cash Incentives	Annual short-term incentive plan rewards the achievement of short-term performance goals. For 2022, short-term incentive payments were determined based on the achievement of pre-determined financial performance goals related to adjusted EBITDA, adjusted revenue, and individual performance goals. These financial performance goals directly relate to our 2022 business plan and help drive stockholder value. Annual cash incentives serve to incent achievement of critical business goals and align the interests of our NEOs with those of our stockholders.
Long-Term Equity Incentive	Restricted Stock Units	Restricted stock units provide a strong incentive for our NEOs to enhance long-term stockholder value. The value of restricted stock units at the time of vesting directly relates to our then-current stock price.  The restricted stock units granted to NEOs in 2022 as part of our long-term incentive plan vest in equal installments on each of the first three anniversaries of the grant date (with respect to 2021 and 2022 grants) and on each of the first four anniversaries of the grant date (with respect to grants prior to the 2021 grants).  Restricted stock units serve to enhance retention, incent long-term thinking and align the interests of our NEOs with those of our stockholders.  The vesting schedule helps to ensure that executives are continuously tied to stock price performance and thinking long-term.
	Performance Stock Units	Performance stock units provide a strong incentive for our NEOs to enhance long-term stockholder value.  The performance stock units granted to NEOs in 2022 as part of our long-term incentive plan are subject to performance-based vesting conditions, with cliff vesting at the end of three-year performance cycles. The performance conditions are financial-performance based and stock-price based. Performance stock units serve to enhance retention, incent long-term thinking and align the interests of our NEOs with those of our stockholders. The performance criteria helps ensure that executives are focused on the performance of the company’s stock and on achievement of the company’s financial goals.

Below is the mix of total target compensation in 2022 for our Chief Executive Officer and the average of all other NEOs.

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Our compensation program is aligned with our short- and long-term performance and reflects best practices to ensure sound corporate governance. As illustrated above, the vast majority of our NEOs’ compensation is subject to forfeiture (“at risk”). In addition, with the exception of base salary and restricted stock units, all compensation is performance-based. NEOs are also subject to stock ownership guidelines.

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What We Do	What We Don’t Do
Strong emphasis on performance-based compensation, with a significant portion of NEO compensation tied to our performance	No repricing without stockholder approval
50% of executive officer grants are subject to forward looking performance-based conditions	No excise or other tax gross ups on change in control payments
Mix of short-term and long-term incentives	No incentives that encourage excessive risk-taking
Board-approved annual revenue, EBITDA and other targets for short-term incentive payments generally, with rigorous individual financial and non-financial performance requirements	No liberal share recycling or “net share counting” upon exercise of stock options
Double-trigger change-in-control severance benefits for executive officers	No hedging, pledging or short sales of Company stock
Robust clawback policy for incentive compensation paid to our executive officers	No guaranteed incentive awards for executives
Benchmarking against a representative peer group	No “single-trigger” change in control acceleration of equity awards
Conditional severance payments upon a release of claims and compliance with restrictive covenants
Compensation decisions for NEOs made by an independent compensation committee advised by independent compensation consultant
Meaningful stock ownership requirements for executives
Annual say-on-pay vote

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Role of the Independent Compensation Consultant

The compensation committee has retained Meridian Compensation Partners LLC, which we refer to as Meridian, as its independent compensation consultant. The compensation committee assessed the independence of Meridian and whether its work raised any conflict of interest, taking into consideration the independence factors set forth in applicable SEC and Nasdaq rules, and determined that Meridian is independent. Meridian took guidance from and reported directly to the compensation committee. Meridian advised the compensation committee on trends and issues in executive compensation and on the competitiveness of the compensation structure and levels of our NEOs during 2022. At the request of the compensation committee, Meridian performed the following services to inform the compensation committee’s decisions regarding executive compensation for 2022:

● Reviewed the Company’s peer group to provide context for the range of appropriate compensation for NEOs and compensation program designs;

● Reviewed market data and trends for our NEOs to determine whether their targeted total direct compensation opportunities were competitive with positions of a similar scope in similarly sized companies in similar industries;

● Assisted in the development of incentive design;

● Kept the compensation committee aware of executive and director compensation trends and developments; and

● Attended compensation committee meetings, as requested, to discuss these items.

All services performed by Meridian during 2022 related to executive and non-employee director compensation and related governance matters.

Market Data

The compensation committee considers the compensation programs and practices and resulting NEO compensation opportunities of selected other companies to assist it in setting our NEOs’ compensation to ensure that it remains competitive. For 2022, Meridian reviewed and refreshed our peer group, which is used to benchmark executive pay levels and to provide incentive design considerations. The companies in the peer group were chosen because (i) each company in the peer group is in the transaction, data processing or technology-enabled business, (ii) each company in the peer group is publicly traded, (iii) the peer group reflects companies with an appropriate range of revenues and market capitalizations, and (iv) we compete for talent with many of these companies.

For 2022, our peer group included the following companies:

​ Black Knight, Inc. Bottomline Technologies, Inc. Deluxe Corporation ​ Euronet Worldwide, Inc. EVERTEC, Inc. Fair Isaac Corporation FleetCor Technologies, Inc.	​ Priority Technology Holdings ​ QAD, Inc. WEX, Inc. Zendesk, Inc.
ACI Worldwide, Inc. Aspen Technology, Inc. Black Knight, Inc. Bottomline Technologies, Inc. Deluxe Corporation Ebix, Inc. Euronet Worldwide, Inc. EVERTEC, Inc. Fair Isaac Corporation FleetCor Technologies, Inc.	Information Services Group, Inc. MicroStrategy Incorporated MoneyGram International, Inc. Paya Holding Paychex, Inc. Priority Technology Holdings Progress Software Corporation QAD, Inc. WEX, Inc. Zendesk, Inc.

In connection with the compensation committee setting NEO compensation for 2022, the compensation committee reviewed data collected and analyzed by Meridian, including data related to benchmark compensation and current market trends.

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Role of Named Executive Officers

In 2022, our Chief Executive Officer developed compensation recommendations for each of the NEOs other than himself based on our performance relative to the financial objectives established for the NEOs and approved by the compensation committee, the non-financial personal objectives for each NEO, the market data supplied by Meridian, and the individual performance and contribution of each NEO. The compensation committee considered the Chief Executive Officer’s recommendations, in conjunction with the counsel of Meridian and relevant market data (including the median level of compensation for each NEO within our peer group) in determining the compensation elements for each NEO. However, the compensation committee did not target any element of compensation at a particular percentile or range based on the peer group data. Rather, the compensation committee used this information as one factor in its decision-making process and considered other elements, such as the experience, skill set, criticality and contributions of each NEO in determining actual compensation levels for such NEO. The compensation committee determined all aspects of Mr. Kelly’s compensation as Chief Executive Officer in consultation with Meridian. Mr. Kelly did not participate in the compensation committee’s determination of his compensation.

Say-on-Pay Vote

At our annual meeting of stockholders, stockholders have the opportunity to vote, on an advisory basis, to approve the compensation of our NEOs, often referred to as “say-on-pay.” At our 2022 annual meeting, approximately 80% of the votes were cast to approve executive compensation. As a result of this approval level, the compensation committee believes that stockholders broadly support our compensation policies, and the compensation committee continued to apply the same overall principles to determine the amounts and types of executive compensation for 2023.

Elements of our 2022 Compensation Program

As set by the compensation committee, the following table shows each NEO’s 2022 total target compensation, and each component of compensation:

Name	Base Salary	% of Total	Target Short-Term Cash Incentive	% of Total	Long-Term Equity Incentive(1)	% of Total	Total
James G. Kelly	700,000	9%	1,225,000	16%	5,529,000	74%	7,454,000
Darren Wilson	400,000	16%	500,000	20%	1,550,000	63%	2,450,000
Brendan F. Tansill	400,000	16%	500,000	20%	1,550,000	63%	2,450,000
Thomas E. Panther	395,000	17%	395,000	17%	1,520,000	66%	2,310,000
Michael L. Reidenbach	395,000	17%	395,000	17%	1,502,550	66%	2,292,550

(1) Includes restricted stock unit and performance stock unit awards granted in February 2022 valued at grant date fair value in accordance with FASB ASC Topic 718.

Our annual compensation program also includes other benefits, such as limited perquisites and tax gross ups with respect to the self-employment taxes that our NEOs, other than Messrs. Panther and Wilson, were obligated to pay as a result of their status as partners in a partnership (rather than as employees of a corporation) for federal and state income tax purposes.

Base Salary

Base salaries are established to provide compensation consistent with the marketplace to attract and retain exceptional NEOs. Base salary represented 9% of our Chief Executive Officer’s total compensation target and, on average, 17% of the total compensation target for our other NEOs. It is generally the one component of compensation that does not fluctuate with either our performance or the value of our stock. Generally, this component of

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compensation is evaluated annually by the compensation committee considering, among other factors, our contractual obligations under each NEO’s employment agreement, the competitiveness of each NEO’s pay opportunity based on market data, the responsibilities, experience, complexity and criticality of each NEO’s contributions to our financial and operational success, the totality of the NEO’s individual performance and, for NEO’s other than our Chief Executive Officer, Mr. Kelly’s assessment of such NEO’s individual performance.

After an evaluation by the compensation committee of the factors described above, no NEOs received increases in their base salary for 2022 as compared to their base salary for 2021.

The following table set forth the base salaries of our NEO’s in 2022.

Name	Base Salary 2022 ($)	Base Salary 2021 ($)	% Change 2022 to 2021
James G. Kelly	700,000	700,000	0%
Darren Wilson	400,000	400,000	0%
Brendan F. Tansill	400,000	400,000	0%
Thomas E. Panther	395,000	395,000	0%
Michael L. Reidenbach	395,000	395,000	0%

In addition, Messrs. Kelly, Tansill and Reidenbach are treated as partners of a partnership (rather than employees of a corporation) for tax purposes. To equalize the tax payments for these executives relative to employees of the corporation, in 2022 we paid Messrs. Kelly, Tansill and Reidenbach a tax gross up equal to the self-employment taxes that these executives were obligated to pay as a result of their status as partners in a partnership (rather than as employees of a corporation) for federal and state income tax purposes. The self-employment tax gross ups were determined by us in a manner consistent with similar tax gross up payments made to our other senior executives, as applicable, and were paid in accordance with our general payroll practices in effect from time to time. For additional information, see “Compensation of Named Executive Officers - Summary Compensation Table.”

Short-Term Incentive Plan

Under our annual performance-based short-term incentive plan, we provide our NEOs with the opportunity to receive variable, at-risk cash payments designed to motivate and reward them to achieve a set of defined business goals and objectives established by the compensation committee.

Short-term incentive payments made to our NEOs are based on the target short-term incentive opportunity for each NEO, which is expressed as a percentage of such NEO’s base salary, with the actual payouts being determined by (i) as a threshold matter, the achievement by the Company of the adjusted EBITDA threshold required to fund the short-term incentive plan pool (as discussed below); and (ii) once and if the Company achieves such adjusted EBITDA threshold and the short-term incentive plan is funded, the attainment of company-wide financial performance objectives (as discussed below) and individual performance objectives (as discussed below). The attainment of company-wide financial performance objectives account for 80% of the NEO’s potential payout and the attainment of individual performance objectives account for the remaining 20% of the NEO’s potential payout under the short-term incentive plan.

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Target Short-Term Incentive Opportunity

For 2022, the compensation committee approved the following target short-term incentive opportunity for each NEO, expressed as a percentage of base salary:

Name	Target Short-Term Incentive Opportunity ($)	% of Base Salary
James G. Kelly	1,225,000	175%
Brendan F. Tansill	500,000	125%
Darren Wilson	500,000	125%
Thomas E. Panther	395,000	100%
Michael L. Reidenbach	395,000	100%

In determining the target 2022 short-term incentive opportunity for each NEO, the compensation committee considered our pay-for-performance compensation philosophy, the experience and expertise of, and the need to retain, the Company’s executive talent, and the data collected and analyzed by Meridian, including data related to benchmark compensation and current market trends.

Company-Wide Financial Performance Threshold for Funding the Short-Term Incentive Plan

The compensation committee reviewed our adjusted EBITDA target amount approved by the board of directors as part of our 2022 Annual Operating Plan when establishing the company-wide financial performance threshold for the funding of the 2022 short-term incentive plan.  The funding of the 2022 short-term incentive plan pool is determined based on actual Company achievement of adjusted EBITDA as compared to the adjusted EBITDA target amount.

In order for the short-term incentive plan pool to be funded, actual Company achievement of adjusted EBITDA was required to equal or exceed the threshold of 90% of the adjusted EBITDA target amount.  In the event that actual Company achievement of adjusted EBITDA is less than 90% of the adjusted EBITDA target amount, the short-term incentive plan pool will not be funded, and therefore no amounts are payable thereunder, notwithstanding any other performance criteria (absent the exercise of discretion by the compensation committee, which has the authority to adjust short-term incentive payments generally).

Actual Company achievement of adjusted EBITDA at 90% of the adjusted EBITDA target amount funds the 2022 short-term incentive plan pool at 50%.  Actual Company achievement of adjusted EBITDA between 90% and 100% of the adjusted EBITDA target amount funds the 2022 short-term incentive pool between 50% and 100%, as determined by linear interpolation (where actual Company achievement of adjusted EBITDA at 100% of the adjusted EBITDA target amount funds the 2022 short-term incentive plan pool at 100%). Actual Company achievement of adjusted EBITDA at 110% (or above) of the adjusted EBITDA target amount funds the 2022 short-term incentive plan pool at 140%.  Actual Company achievement of adjusted EBITDA between 100% and 110% of the adjusted EBITDA target amount funds the 2022 short-term incentive plan pool between 100% and 140%, as determined by linear interpolation.

For purposes of our 2022 short-term incentive plan, adjusted EBITDA is defined as net income (loss) before provision for income taxes, net interest expense, and depreciation and amortization, excluding the impact of net income attributable to non-controlling interests in consolidated entities (including related depreciation and amortization and income taxes), gain (loss) on investment in equity securities, financing costs, currency exchange impacts, and transition, acquisition and integration costs and other discretionary adjustments.

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For 2022, the adjusted EBITDA target amount approved by the board of directors was $196.4 million (i.e., 100% Company achievement of adjusted EBITDA would be $196.4 million).  Therefore, for the 2022 short-term incentive plan pool to be funded, actual Company achievement of adjusted EBITDA would need to be at least $176.7 million (90% of the target).  The Company’s actual adjusted EBITDA for the year ended December 31, 2022 was $196.9 million, or 100% of the adjusted EBITDA target amount, which funded the 2022 short-term incentive plan pool at 100%.

Performance Objectives for Payouts under the Short-Term Incentive Plan

Financial Performance Objectives. Assuming achievement of the adjusted EBITDA threshold required to fund the short-term incentive plan (as discussed above), attainment of company-wide financial performance objectives accounts for 80% of the potential payouts under the short-term incentive plan (the “Financial Payout Portion”). For 2022, the Company financial performance objectives for the Financial Payout Portion were set based on the adjusted EBITDA and revenue targets approved by the board of directors as part of our 2022 Annual Operating Plan, where (i) adjusted EBITDA constitutes 60% of the Financial Payout Portion and (ii) revenue constitutes 40% of the Financial Payout Portion.

The potential payout for each of the company-wide financial performance objectives for the Financial Payout Portion ranges from 0% to 140% of target based on actual Company performance with respect to each performance objective.  Achievement of adjusted EBITDA or revenue, respectively, at 90% of their respective targets would result in a payout for such metrics at 50% of the assigned weighted percentage for such metric.  For achievement of adjusted EBITDA or revenue, respectively, between 90% and 100% of their respective targets, the payout for such metrics is determined by linear interpolation up to 100% of the assigned weighted percentage for such metrics (where achievement of adjusted EBITDA or revenue at 100% would result in a payout of 100% of the respective assigned weighted percentages for such metrics). In the event that adjusted EBITDA or revenue, respectively, are achieved at 110% or greater of their respective targets, the payout for such metrics is capped at 140% of the respective assigned weighted percentages for such metrics.  For achievement of adjusted EBITDA or revenue, respectively, between 100% and 110% of their respective targets, the payout is determined by linear interpolation up to the payout cap of 140% of the respective assigned weighted percentages for such metrics.

With respect to the Financial Payout Portion, the following table shows the weighting of each of the performance metrics, the target goals for each of the performance metrics, actual 2022 performance results for each of the performance metrics, the percentage of actual 2022 performance relative to the target goals for each of the performance metrics, the resulting 2022 payout percentage by performance metric, and the overall achievement for the Financial Payout Portion for 2022. As described above, the overall achievement of the company-wide financial performance objectives accounts for 80% of the potential payout for each NEO under the 2022 short-term incentive plan.

Company-wide Financial Performance Objectives (in $ millions)(1)	Adjusted EBITDA	Revenue
Weighting among company-wide financial objectives:	60%	40%
Target (2022 Annual Operating Budget):	$196.4	$533.9
Actual 2022 Performance:	$196.9	$544.9
% Achieved as Compared to Target:	100.3%	102.1%
Payout Percentage by Metric	101.1%	108.2%
Overall achievement for company-wide financial objectives:	105%

(1) Certain amounts may not independently calculate due to rounding.

Individual Performance Objectives. Assuming achievement of the adjusted EBITDA threshold required to fund the short-term incentive plan (as discussed above), attainment of individual performance objectives (both specific individual-level financial and non-financial) accounts for the remaining 20% of the potential payouts under the short-term incentive plan. These objectives are set in advance in connection with our formal performance review process

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and are evaluated by the compensation committee and (for each of our NEOs other than the Chief Executive Officer) by the Chief Executive Officer. Typically, these are individual performance goals relating to leadership and strategic initiatives, professional development, specific individual-level financial performance or cost reduction goals, and employee engagement, among other objectives.

2022 Payouts to NEOs under the Short-Term Incentive Plan. After taking into account the achievement of the financial performance objectives at 105%, and the attainment of the individual performance objectives, each NEO received a short-term incentive payment equal to 100% of their target short-term incentive opportunity.

Long-Term Incentive Plan

Each year, we grant equity awards as part of our long-term incentive plan to our executive officers and other key employees. The long-term incentive plan is designed to: (i) align the interests of our NEOs with those of our stockholders, (ii) create a culture of ownership that incentivizes outstanding performance; (iii) retain NEOs and attract outstanding executive talent; and (iv) reward executives if our performance and stock value increase over the vesting period.

In determining the long-term incentive awards for each NEO, the compensation committee considered our pay-for-performance compensation philosophy, the data collected and analyzed by Meridian, including data related to benchmark compensation and current market trends, and the compensation committee’s general assessment of the Chief Executive Officer and the Chief Executive Officer’s assessment and recommendations with respect to the other NEOs. The compensation committee makes each assessment taking into consideration the quality and effectiveness of each NEO’s leadership, criticality to our operations, experience and contribution to our overall performance.

To further accomplish the Company’s emphasis on pay-for-performance and structuring our pay programs so that a substantial majority of NEO compensation is performance-based, the compensation committee approved a significant change in the structure of the NEO awards under our long-term incentive plan.  In 2022, 50% of the long-term incentive awards granted to our NEOs and to the other direct reports of the Chief Executive Officer were performance-based. The other 50% of the awards consist of time-vested restricted stock units that vest ratably over three years. The performance stock units vest based on the achievement of certain financial and stock price performance metrics. Half of the performance stock units cliff vest three years from the date of grant if the Company achieves certain annual adjusted revenue growth and annual adjusted EPS growth targets. The remaining half of the performance stock units cliff vest on March 31, 2025 following a three year performance period if the twenty trading day trailing average closing stock price for the Company’s Class A common stock meets or exceeds the threshold stock price for a twenty trading day period at any time during the three-year performance period, as set forth below:

Stock Price Threshold	Payout(1)
$34.00	100%
$36.00	150%
$38.00	200%

(1) For achievement of stock prices between the listed stock price thresholds, the percentage payout will be calculated applying linear interpolation.

In determining the appropriate mix of equity awards and vesting schedule for the long-term incentive awards granted in 2022, the compensation committee took into account competitive market practices of peer group companies, its strategy to use a combination of restricted stock units and performance stock units to provide both incentive and retentive effects, the use of various forms of equity awards to mitigate compensation, and other risks associated with any single form of equity award.  

The value of each long-term incentive award fluctuates as our stock price changes and on the achievement of adjusted company growth targets, which, together with the vesting schedule imposed by the compensation committee, aligns the interests of our NEOs with those of our stockholders.

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The table below shows the grant date fair value of the 2022 long-term incentive awards and the number of restricted stock units and performance stock units issued to each NEO. No other equity incentive awards were issued to our NEOs in 2022.

Name	RSU Value ($)	RSUs Granted	PSU Value ($)	PSUs Granted
James G. Kelly	2,764,505	116,695	2,764,480	116,694
Thomas E. Panther	759,999	32,081	760,022	32,082
Brendan F. Tansill	774,995	32,714	774,994	32,714
Darren Wilson	774,995	32,714	774,994	32,714
Michael L. Reidenbach	751,281	31,713	751,257	31,712

Benefits and Perquisites

We offer health and welfare benefits and life insurance to our named executive officers on the same basis that these benefits are offered to our other eligible employees. We also offer a 401(k) plan to our eligible U.S. employees and a pension scheme for employees based in the United Kingdom. Our NEOs participate in our 401(k) plan or pension scheme, as applicable, on the same basis as our other eligible employees.

We provide limited perquisites to our NEOs. These items can create taxable income to the executive, which we do not gross up. For additional information, see “Compensation of Named Executive Officers - Summary Compensation Table.”

Employment Agreements

We are party to an employment agreement with each of our NEOs. These employment agreements provide benefits that, we believe, are necessary to attract and retain highly-qualified executives. Each NEO has agreed not to disclose confidential information, compete with us or solicit our customers or recruit our employees for a period negotiated with each NEO ranging from twelve to thirty-six months following the termination of employment. In exchange, we offer certain limited income and benefit protections to the NEO.  In addition, certain NEOs are entitled to a tax gross up equal to the self-employment taxes that the NEO would be obligated to pay as a result of his status as a partner in a partnership (rather than as an employee of a corporation) for federal and state income tax purposes. The self-employment tax gross ups were determined by us in a manner consistent with similar tax gross up payments made to our other senior executives, as applicable, and were paid in accordance with our general payroll practices in effect from time to time.

None of the employment agreements with our NEOs provide for any gross up for excise taxes under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”).

For additional information concerning the terms of the employment agreements with each of our NEOs, see “Compensation of Named Executive Officers - Employment Agreements with Our Named Executive Officers.”

Policies and Guidelines

Policy Regarding Timing of Equity Grants

The compensation committee, in its discretion, typically makes the annual equity grant to all eligible employees shortly after the public disclosure of either our fourth quarter earnings release or the filing of our annual report, based upon the closing price of our common stock on the grant date. From time to time, our compensation committee may approve supplemental or other non-recurring grants outside of our annual compensation program.

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Anti-Hedging Policy

Our insider trading policy prohibits any of our directors, officers and employees (“Covered Persons”) from (i) purchasing, selling, and trading in publicly traded options, puts, calls, straddles, or similar derivate securities and financial instruments of the Company and its subsidiaries while in the possession of material non-public information and (ii) engaging in any transaction in which a Covered Person profits from short-term fluctuations or declines in the value of our common stock, including short-sales, derivative contracts and pledge arrangements, subject to customary exceptions set forth in such policy. In addition, we prohibit Covered Persons from engaging in transactions that hedge or offset (or are intended to hedge or offset) any decrease in the market value of the company’s equity securities granted as compensation to Covered Persons. Our policy also applies to any family member who shares a household with a Covered Person, and any entity whose investment decisions are made by (or shared with) any Covered Person.

Stock Ownership Requirements

The board of directors has implemented stock ownership guidelines for our directors and executive officers to foster equity ownership and align the interests of our directors and executive officers with our stockholders. Within five years of appointment to his or her position, each outside director or executive officer must hold securities in compliance with the threshold specified in our policy. Specifically, our Chief Executive Officer is required to beneficially own securities having a value of at least five times his base salary, all other executive officers are required to beneficially own securities having a value of at least two times their base salary, and our outside directors are required to beneficially own securities having a value of at least four times their annual cash retainer (excluding committee and chairperson fees). Each of our executive officers and directors was in compliance with the stock ownership guidelines as of the Record Date.

Clawback Policy

The board of directors has adopted a clawback policy, pursuant to which we may recoup all or any portion of the value of any incentive compensation provided to any current or former executive officer (or, in some cases, certain other employees) in the event that our financial statements are restated due to material noncompliance with any financial reporting requirement under the securities laws. The clawback policy expressly applies to all incentive compensation awards made after May 25, 2018, including any bonus or short-term or long-term incentive awards, in each case where the bonuses or awards are based in whole or in part on the achievement of financial results.

Tax Considerations

Section 162(m) of the Code places a limit of $1,000,000 on the amount of compensation that we may deduct in any one year with respect to any one of our NEOs. Prior to enactment of the Tax Cuts and Jobs Act of 2017, qualifying “performance-based” compensation was not subject to the deduction limit if certain requirements were met. However, the exemption from Section 162(m)’s deduction limit for performance-based compensation was repealed, effective for taxable years beginning after December 31, 2017, such that all compensation paid to our NEOs in excess of $1 million will not be deductible. To maintain flexibility in compensating our NEOs, the compensation committee reserves the right to use its judgment to authorize compensation payments that may be subject to the deduction limit when the compensation committee believes that such payments are appropriate.

Report of Compensation Committee Members

The members of the compensation committee have reviewed and discussed the foregoing section entitled “Compensation Discussion and Analysis” with management. Based on such review and discussion, the compensation committee members recommended to the board of directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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COMPENSATION COMMITTEE

Gregory S. Pope (Chair)
Vahe A. Dombalagian
Laura M. Miller

Compensation of Named Executive Officers

Summary Compensation Table

The following table sets forth information regarding compensation earned by our named executive officers during fiscal 2022, 2021 and 2020.

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)(1)	Option Awards ($)	Non-equity incentive plan compensation ($)(2)	All other compensation ($)(3)	Total ($)
James G. Kelly	2022	700,000	-	5,528,985	-	1,225,000	194,456(4)	7,648,441
Chief Executive Officer	2021	700,000	-	2,910,002	2,910,001	1,060,500	91,068	7,671,571
	2020	471,154	-	2,375,005	2,375,004	338,333	76,888	5,636,384
Tom Panther	2022	395,000	-	1,520,021	-	395,000	77,311	2,387,333
Chief Financial Officer	2021	379,212	-	959,995	639,997	299,213	61,463	2,339,880
	2020	252,404	-	499,988	500,002	153,125	47,192	1,452,711
Brendan Tansill	2022	400,000	-	1,549,989	-	500,000	97,388	2,547,377
President - Americas	2021	400,000	-	980,999	653,997	404,000	89,036	2,528,032
	2020	269,231	-	664,990	664,999	163,333	78,785	1,841,338
Darren Wilson	2022	400,000	-	1,549,989	-	541,381	25,507	2,516,877
President – International	2021	400,000	-	980,999	653,997	404,000	25,781	2,464,777
	2020	269,231	-	664,990	664,999	163,333	22,705	1,785,258
Michael Reidenbach	2022	395,000	-	1,502,538	-	395,000	75,942	2,368,480
Executive Vice President and Chief Information Officer	2021	395,000	-	948,971	632,646	299,213	69,971	2,345,800
	2020	265,865	-	664,990	664,999	161,292	60,406	1,817,552

(1) Represents the aggregate grant date fair value of restricted stock units under the long-term incentive plan, computed in accordance with FASB ASC Topic 718. For additional information about this value and these awards, see “Compensation Discussion and Analysis - Elements of Our 2022 Compensation Program - Long-Term Incentive Plan” and note 22 to our audited financial statements for the fiscal year ended December 31, 2022 included in our annual report on Form 10-K filed with the SEC.

(2) Represents amounts earned under the 2022 short-term incentive plan based on the Company’s achievement of annual financial performance goals and the attainment by our NEOs of individual performance objectives. For additional information, see “Compensation Discussion and Analysis - Elements of Our 2022 Compensation Program - Short-Term Incentive Plan.”

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(3) Amounts in this column for 2022 are detailed in the table below:

Name	Tax gross up ($)(a)	401(k) Match/pension ($)(b)(c)	Life insurance ($)	Disability insurance ($)	Medical ($)(c)	Financial planning services ($)	Other Compensation ($)	Total all other compensation ($)
James G. Kelly	18,390	9,150	1,374	6,610	50,662	13,270	95,000	194,456
Thomas E. Panther	-	9,150	186	4,029	50,676	13,270	-	77,311
Brendan F. Tansill	14,040	9,150	366	4,083	52,554	17,195	-	97,388
Darren Wilson(d)	-	20,000	1,338	2,748	1,421	-	-	25,507
Michael L. Reidenbach	13,967	9,150	1,374	6,610	33,785	11,055	-	75,942

(a) Additional amount equal to gross up for the self-employment taxes that Messrs. Kelly, Tansill and Reidenbach were obligated to pay as a result of their status as partners in a partnership (rather than as employees of a corporation) for federal income tax purposes.

(b) Matching 401(k) contribution for Messrs. Kelly, Panther, Tansill and Reidenbach and pension contribution for Mr. Wilson.

(c) Our NEOs are eligible to participate in other health and welfare programs that are available to substantially all full-time, salaried employees, including our 401(k) plan. In addition, Messrs. Kelly, Panther, Tansill and Reidenbach participated in a supplemental healthcare insurance plan paid for by us

(d) Mr. Wilson’s 2022 base salary and all other compensation were paid in British pounds sterling and converted to U.S. dollars.

(4) Mr. Kelly received a $95,000 accelerated payment in December 2022 of a portion of his 2023 compensation for tax planning reasons.

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Grants of Plan-Based Awards in 2022

The following table provides information concerning grants of plan-based awards during 2022 to the NEOs.

Name	Grant Date	Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)			All other Stock Awards: Number of Shares of Stock or Units(2) (#)	Grant Date Fair Value of RSU and PSU Awards(3) ($)
		Threshold ($)	Target ($)	Maximum ($)
James G. Kelly
Cash	12/16/2022	612,500	1,225,000	1,617,000
RSU	2/24/2022				116,695	2,764,505
PSU	2/24/2022				116,694	2,764,480
Tom Panther
Cash	12/16/2022	197,500	395,000	521,400
RSU	2/24/2022				32,081	759,999
PSU	2/24/2022				32,082	760,022
Brendan Tansill
Cash	12/16/2022	250,000	500,000	660,000
RSU	2/24/2022				32,714	774,995
PSU	2/24/2022				32,714	774,994
Darren Wilson
Cash	12/16/2022	250,000	500,000	660,000
RSU	2/24/2022				32,714	774,995
PSU	2/24/2022				32,714	774,994
Michael Reidenbach
Cash	12/16/2022	197,500	395,000	521,400
RSU	2/24/2022				31,713	751,281
PSU	2/24/2022				31,712	751,257

(1) Reflects the threshold, target and maximum annual cash incentive opportunities under our 2022 short-term incentive plan. At the time of the filing of this proxy statement, the actual results of our short-term incentive plan were finalized, and our NEOs received the amounts set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

(2) Reflects the number of stock units granted.

(3) Reflects the aggregate grant date fair value of equity awards, calculated in accordance with FASB ASC Topic 718, excluding the estimated effect of forfeitures.

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Outstanding Equity Awards at Fiscal 2022 Year End

The following table provides information about the outstanding equity awards held by our NEOs as of December 31, 2022.

Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested(1) ($)
Jim Kelly	2/24/2022	-	-		-	-	233,389(2)	7,897,883.76
	2/26/2021	95,798	191,597(3)		25.46	2/26/2031	76,198(3)	2,578,540.32
	2/28/2020	146,425	146,426(4)		25.28	2/28/2030	46,974(4)	1,589,600.16
	3/14/2019	199,234	66,412(5)		26.01	3/14/2029	24,030(5)	813,175.20
	5/22/2018	413,441	-(6)		16.00	5/22/2028	-(6)	-
Tom Panther	2/24/2022	-	-		-	-	64,163(2)	2,171,275.92
	2/26/2021	22,111	44,223(3)		25.46	2/26/2031	25,138(3)	850,669.92
	2/28/2020	30,826	30,827(4)		25.28	2/28/2030	9,889(4)	334,643.76
	11/18/2019	59,833	19,945(7)		27.28	11/18/2029	6,874(7)	232,616.16
Brendan Tansill	2/24/2022	-	-		-	-	65,428(2)	2,214,083.52
	2/26/2021	22,595	45,190(3)		25.46	2/26/2031	25,688(3)	869,281.92
	2/28/2020	40,999	40,999(4)		25.28	2/28/2030	13,153(4)	445,097.52
	3/14/2019	55,785	18,596(5)		26.01	3/14/2029	6,729(5)	227,709.36
	5/22/2018	155,648	-(6)		16.00	5/22/2028	-(6)	-
Darren Wilson	2/24/2022	-	-		-	-	65,428(2)	2,214,083.52
	2/26/2021	22,595	45,190(3)		25.46	2/26/2031	25,688(3)	869,281.92
	2/28/2020	40,999	40,999(4)		25.28	2/28/2030	13,153(4)	445,097.52
	3/14/2019	55,785	18,596(5)		26.01	3/14/2029	6,729(5)	227,709.36
	5/22/2018	204,288	-(6)		16.00	5/22/2028	-(6)	-
Michael Reidenbach	2/24/2022	-	-		-	-	63,425(2)	2,146,302.00
	2/26/2021	21,857	43,715(3)		25.46	2/26/2031	24,849(3)	840,890.16
	2/28/2020	40,999	40,999(4)		25.28	2/28/2030	13,153(4)	445,097.52
	3/14/2019	51,801	17,267(5)		26.01	3/14/2029	6,248(5)	211,432.32
	5/22/2018	126,464	-(6)		16.00	5/22/2028	-(6)	-

(1) Based on the closing market price of our Class A common stock on December 30, 2022 of $33.84, as reported on the Nasdaq.

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(2) These amounts include RSUs and PSUs, as described in the Compensation Discussion and Analysis. The RSU award will vest in three substantially equal installments on February 24, 2023, 2024, and 2025.

(3) The award will vest in two substantially equal installments on February 26, 2023 and 2024. As described in the Compensation Discussion and Analysis, Mr. Kelly’s stock options are subject to both the time-based vesting requirements and a performance-based vesting condition tied to the Company’s stock price. The performance-based vesting condition was achieved in 2022.

(4) The award will vest in two substantially equal installments on February 28, 2023 and 2024.

(5) The award will vest on March 14, 2023.

(6) The award fully vested on May 22, 2022.

(7) The award will vest on November 18, 2023.

Option Exercises and Stock Vested in 2022

The table below sets forth information concerning the exercise of stock options and vesting of restricted stock units for each NEO during 2022.

Re
	Option Awards		​ ​Restricted Stock Unit Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)	Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)(1)
James G. Kelly	0	-	109,465	2,581,096.24
Thomas E. Panther	0	-	24,386	660,588.30
Brendan F. Tansill	0	-	35,126	828,205.04
Darren Wilson	0	-	37,932	891,508.40
Michael L. Reidenbach	0	-	32,543	769,142.81

(1) Value realized is calculated by multiplying the number of shares vested by the closing price of our stock on the date of vesting.

Employment Agreements with Our Named Executive Officers

We originally entered into written employment agreements with each of Messrs. Kelly, Reidenbach and Tansill in 2012 and with Mr. Wilson in 2015. Effective as of April 1, 2018, each of Messrs. Kelly, Reidenbach and Tansill’s employment agreements were amended and restated, and we entered into an amendment to Mr. Wilson’s employment agreement. We entered into a written employment agreement with Mr. Panther in November 2019. Effective February 18, 2022, each of Mr. Kelly, Mr. Tansill, and Mr. Panther’s employment agreements were further amended, and Mr. Wilson’s employment agreement was amended and restated.  These employment agreements, including any amendments thereto, were negotiated on an arms-length basis.

Mr. Kelly’s Employment Agreement

Mr. Kelly’s employment agreement, as amended, does not provide for an initial term of employment. Mr. Kelly’s employment may be terminated (i) by us, upon cause (as defined in the agreement); (ii) upon Mr. Kelly’s death or thirty days after disability (as defined in the agreement); (iii) at Mr. Kelly’s election, without good reason (as defined in the agreement) on not less than ninety days’ prior written notice; (iv) by us, without cause, upon not less than ninety days’ prior written notice; or (v) at Mr. Kelly’s election for good reason. The annual base salary set forth in the agreement is $700,000. As a result of the February 18, 2022 amendment, the agreement also provides for accelerated vesting of his unvested equity in the event (i) he retires after he has attained the age of sixty and completed at least ten years of service with the Company so long as he has provided at least six months’ prior notice (provided, however, that performance stock units for incomplete performance periods shall only vest at the discretion of the compensation committee); (ii) the Company elects to terminate his employment without cause (as defined in the agreement) and he has

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attained the age of sixty and completed at least ten years of service with the Company, or (iii) he elects to terminate his employment for good reason (as defined in the agreement).  In addition, Mr. Kelly will receive a tax gross up equal to the self-employment taxes that Mr. Kelly is obligated to pay as a result of his status as a partner in a partnership (rather than as an employee of a corporation) for federal and state income tax purposes. The self-employment tax gross up will be determined by us in a manner consistent with similar tax gross up payments made to our other senior executives, as applicable, and will be payable in accordance with our general payroll practices in effect from time to time.

Mr. Kelly is also eligible to participate in all employee benefit plans, programs and policies maintained by us from time to time. The agreement also provides for severance benefits in the event of his termination by us without cause or a termination by him for good reason, subject to his compliance with certain confidentiality, non-compete, non-solicitation and non-disparagement obligations and the execution of a general release of claims. For more information see “- Potential Payments upon Termination or Change in Control.”

Mr. Panther’s Employment Agreement

Mr. Panther’s employment agreement does not provide for an initial term of employment. Mr. Panther’s employment may be terminated (i) by us, upon cause (as defined in the agreement); (ii) upon Mr. Panther’s death or thirty days after disability (as defined in the agreement); (iii) at Mr. Panther’s election, without good reason (as defined in the agreement) on not less than ninety days’ prior written notice; (iv) by us, without cause, upon not less than ninety days’ prior written notice; or (v) at Mr. Panther’s election for good reason. The annual base salary set forth in the agreement is $375,000.  Mr. Panther’s base salary was increased from $375,000 to $395,000 in April 2021. As a result of the February 18, 2022 amendment, the agreement also provides for accelerated vesting of his unvested equity in the event (i) he retires after he has attained the age of sixty and completed at least ten years of service with the Company so long as he has provided at least six months’ prior notice (provided, however, that performance stock units for incomplete performance periods shall only vest at the discretion of the compensation committee); (ii) the Company elects to terminate his employment without cause (as defined in the agreement) and he has attained the age of sixty and completed at least ten years of service with the Company, or (iii) he elects to terminate his employment for good reason (as defined in the agreement).

The agreement provides that Mr. Panther is eligible to participate in all employee benefit plans, programs and policies maintained by us from time to time. The agreement also provides for severance benefits in the event of his termination by us without cause or a termination by him for good reason. For more information see “- Potential Payments upon Termination or Change in Control.”

Mr. Reidenbach’s Employment Agreement

Mr. Reidenbach’s employment agreement, as amended, does not provide for an initial term of employment. Mr. Reidenbach’s employment may be terminated (i) by us, upon cause (as defined in the agreement); (ii) upon Mr. Reidenbach’s death or thirty days after disability (as defined in the agreement); (iii) at Mr. Reidenbach’s election, without good reason (as defined in the agreement) on not less than ninety days’ prior written notice; (iv) by us, without cause, upon not less than ninety days’ prior written notice; or (v) at Mr. Reidenbach’s election for good reason. The annual base salary set forth in the agreement is $395,000. Mr. Reidenbach’s employment agreement provides for accelerated vesting of all unvested equity awards in the event he elects to retire after the date when the sum of his age and his length of service with us meets or exceeds seventy. In addition, Mr. Reidenbach will receive a tax gross up equal to the self-employment taxes that Mr. Reidenbach is obligated to pay as a result of his status as a partner in a partnership (rather than as an employee of a corporation) for federal and state income tax purposes.

The self-employment tax gross up will be determined by us in a manner consistent with similar tax gross up payments made to our other senior executives, as applicable, and will be payable in accordance with our general payroll practices in effect from time to time.

The agreement provides that Mr. Reidenbach is eligible to participate in all employee benefit plans, programs and policies maintained by us from time to time. The agreement also provides for severance benefits in the event of his termination by us without cause or a termination by him for good reason. For more information see “- Potential Payments upon Termination or Change in Control.”

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Mr. Tansill’s Employment Agreement

Mr. Tansill’s employment agreement, as amended, does not provide for an initial term of employment. Mr. Tansill’s employment may be terminated (i) by us, upon cause (as defined in the agreement); (ii) upon Mr. Tansill’s death or thirty days after disability (as defined in the agreement); (iii) at Mr. Tansill’s election, without good reason (as defined in the agreement) on not less than ninety days’ prior written notice; (iv) by us, without cause, upon not less than ninety days’ prior written notice; or (v) at Mr. Tansill’s election for good reason. The annual base salary set forth in the agreement is $400,000. As a result of the February 18, 2022 amendment, the agreement also provides for accelerated vesting of his unvested equity in the event (i) he retires after he has attained the age of sixty and completed at least ten years of service with the Company so long as he has provided at least six months’ prior notice (provided, however, that performance stock units for incomplete performance periods shall only vest at the discretion of the compensation committee); (ii) the Company elects to terminate his employment without cause (as defined in the agreement) and he has attained the age of sixty and completed at least ten years of service with the Company, or (iii) he elects to terminate his employment for good reason (as defined in the agreement).  In addition, Mr. Tansill will receive a tax gross up equal to the self-employment taxes that Mr. Tansill is obligated to pay as a result of his status as a partner in a partnership (rather than as an employee of a corporation) for federal and state income tax purposes. The self-employment tax gross up will be determined by us in a manner consistent with similar tax gross up payments made to our other senior executives, as applicable, and will be payable in accordance with our general payroll practices in effect from time to time.

The agreement provides that Mr. Tansill is eligible to participate in all employee benefit plans, programs and policies maintained by us from time to time. The agreement also provides for severance benefits in the event of his termination by us without cause or a termination by him for good reason. For more information see “- Potential Payments upon Termination or Change in Control.”

Mr. Wilson’s Employment Agreement

Mr. Wilson’s employment agreement was amended and restated effective February 18, 2022 to align his agreement more closely with the employment agreements of the U.S.-based NEOs.  Mr. Wilson’s employment agreement does not provide for an initial term of employment, and may be terminated by either party on not less than ninety days’ prior written notice. The annual base salary set forth in the amended agreement is £300,000. As a result of the February 18, 2022 amendment and restatement, the agreement also provides for accelerated vesting of his unvested equity in the event (i) he retires after he has attained the age of sixty and completed at least ten years of service with the Company so long as he has provided at least six months’ prior notice (provided, however, that performance stock units for incomplete performance periods shall only vest at the discretion of the compensation committee); (ii) the Company elects to terminate his employment without cause (as defined in the agreement) and he has attained the age of sixty and completed at least ten years of service with the Company, or (iii) he elects to terminate his employment for good reason (as defined in the agreement).

The agreement provides that Mr. Wilson is eligible to participate in all employee benefit plans, programs and policies maintained by us from time to time for UK-based employees. The agreement also provides for severance benefits in the event of his termination by us or a termination by him under certain circumstances as detailed below. For more information see “- Potential Payments upon Termination or Change in Control.”

Potential Payments upon Termination or Change in Control

Termination and Resignation under Employment Agreements. The employment agreements with each of our NEOs provide for the payment of certain severance benefits upon termination. For each NEO if the NEO’s employment is terminated by us without “cause” or if the NEO resigns for “good reason,” the NEO will be entitled to the following in addition to any accrued and unpaid compensation through the date of termination:

● A severance benefit consisting of (i) $3.5 million in the case of Mr. Kelly (payable in monthly installments over 24 months), (ii) three times base salary and self-employment tax gross up in the case of Mr. Reidenbach (payable in monthly installments over 18 months), (iii) two times base salary in the case of Mr. Panther (payable in monthly installments over 12 months), (iv) one times base salary and self-employment tax gross up in the case of Mr. Tansill (payable in monthly installments over 12

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months), and (v) one times base salary in the case of Mr. Wilson (payable in monthly installments over 12 months).

● A one-time payment approximating the cost of health care coverage under our then-existing plans of $100,000 in the case of Mr. Kelly, $75,000 in the case of Mr. Reidenbach, $50,000 in the case of Messrs. Panther and Tansill, and £36,000 in the case of Mr. Wilson.

Both severance and one-time health care payments are subject to the NEO executing a release of claims in our favor and continuing to comply with all applicable restrictive covenants contained in the employment agreement.

Under each of the NEO’s employment agreements, “good reason” generally means the occurrence of any of the following events without such NEO’s prior written consent: (i) a material change in or diminution of the position, responsibilities or working conditions of the NEO’s employment as of the effective date, including any change in our reporting structure in which the NEO no longer reports directly to the Chief Executive Officer (or, in the case of Mr. Kelly, the chairman of our board of directors), (ii) a relocation of the NEO’s principal office, or (iii) any reduction in the NEO’s base salary or target percentage under the short-term incentive plan.

Under each of the NEO’s employment agreements, “cause” generally means the occurrence of (i) a material breach of any of the NEO’s obligations under such employment agreement which the NEO fails to cure within thirty days, (ii) any material act of fraud, misappropriation, embezzlement or similar dishonest or wrongful act in performing such NEO’s duties for us, (iii) use of illegal drugs or alcohol to an extent which interferes with the performance of the NEO’s duties, (iv) repeated failure (other than any such failure resulting from incapacity due to physical or mental disability) to devote proper time and attention to our business as required under the terms of such employment agreement after a written demand for proper time and attention is delivered to such NEO by the board of directors, (v) material and repeated failure (other than any such failure resulting from incapacity due to physical or mental disability) to carry out the directions, instructions, policies, rules, regulations or decisions of the board of directors after a written notice of such failure is delivered to the NEO by the board of directors which specifically identifies the failure, or (vi) conviction of a felony or any crime involving moral turpitude.

In the event we terminate Mr. Wilson’s employment on less than three months’ prior notice, we are required to pay Mr. Wilson an amount under his employment agreement equal to his base salary for the part of the period of notice not worked.

None of the NEOs are entitled to a tax gross up in connection with Section 280G of the Code and none are entitled to enhanced severance protection in the case of a change in control.

Treatment of Outstanding Equity Awards. The terms of the restricted stock units, performance stock units, and options to purchase shares of Class A common stock granted to our NEOs as equity awards under the EVO Payments, Inc. 2018 Omnibus Incentive Stock Plan (“2018 Plan”) provide for accelerated vesting only upon certain events.

In the event of termination as a result of death or disability: (i) with respect to restricted stock units or options, the NEO will become vested in the number of restricted stock units or options, as applicable (rounded up to the nearest whole number) that would have become vested as of the next anniversary of the grant date following such NEO’s death or disability, and (ii) with respect to performance stock units, (A) the NEO will become vested in the number of performance stock units subject to financial metrics based on actual performance for completed performance periods and target performance for incomplete performance periods, and (B) the NEO will become vested in the number of performance stock units subject to stock price thresholds based on actual performance through such NEO’s termination date.

If a change in control (as defined in the 2018 Plan) occurs, and the acquiring corporation either assumes the restricted stock units, performance stock units, or options (as applicable), or provides substitute replacement awards (as defined in the 2018 Plan), the restricted stock units, performance stock units, and options will not vest upon the change in control; however, in the event that within 24 months following a change in control, the NEO’s employment is terminated without cause or the NEO terminates employment with good reason, then (i) the unvested restricted stock units and options will become fully vested, (ii) unvested performance stock units subject to financial metrics will vest based on actual performance for completed performance periods and the greater of target or actual performance

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for incomplete performance periods; and (iii) unvested performance units subject to stock price thresholds will vest based on the greater of target or actual performance through such NEO’s termination date.  

If a change in control occurs and the acquiring corporation does not assume the restricted stock units, performance stock units, or options or provide substitute replacement awards, (i) the unvested restricted stock units and options will accelerate and become fully vested; and (ii) the unvested performance stock units shall not vest, but shall convert to time-based restricted stock units as follows: (A) the performance stock units subject to financial metrics will convert to time-based restricted stock based on (x) actual performance for completed performance periods, (y) target performance for partially completed performance periods (or greater than target performance in the compensation committee’s discretion based on actual performance for such partially completed performance period), and (z) target performance for incomplete performance periods, and (B) performance stock units subject to stock price thresholds will convert to time-based restricted stock units based on the greater of target or actual performance through the date of the change in control (provided, however, that in each case under (ii) above, that if within 24 months following a change in control, the NEO’s employment is terminated without cause or the NEO terminates employment with good reason, then such newly converted time-vested restricted stock units will become fully vested).

The terms of the restricted stock units, performance stock units, and options granted to our NEOs do not provide for accelerated vesting in the event that an NEO’s employment is terminated by the Company without cause, other than (i) in the event of a change in control or death or disability (as described above), or (ii) subsequent to the amendment to the executive employment agreements entered into in February 2022 in the case of our NEOs other than Mr. Reidenbach, in the event such NEO has attained the age of sixty and completed at least ten years of service with the Company, in which case the NEO’s awards that are subject solely to time-vesting will immediately and fully vest, the NEO’s awards that are subject to performance-based vesting conditions in respect of completed performance periods will immediately and fully vest to the extent achieved, and the NEO’s awards that are subject to performance-based vesting conditions for which the applicable performance periods are incomplete as of the termination date will vest at the discretion of the compensation committee

The February 2022 employment agreements amendments for NEOs other than Mr. Reidenbach also provide for accelerated vesting in the event that (i) the NEO terminates employment with good reason, in which case the NEO’s awards that are subject solely to time-vesting will immediately and fully vest, the NEO’s awards that are subject to performance-based vesting conditions in respect of completed performance periods will immediately and fully vest to the extent achieved, and the NEO’s awards that are subject to performance-based vesting conditions for which the applicable performance periods are incomplete as of the termination date will immediately and fully vest based on target performance; and (ii) the NEO terminates employment without good reason, but only in the event such NEO has attained the age of sixty and completed at least ten years of service with the Company (and has provided at least six months’ advance notice), in which case, the NEO’s awards that are subject solely to time-vesting will immediately and fully vest, the NEO’s awards that are subject to performance-based vesting conditions in respect of completed performance periods will immediately and fully vest to the extent achieved, and the NEO’s awards that are subject to performance-based vesting conditions for which the applicable performance periods are incomplete as of the termination date will vest at the discretion of the compensation committee.

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Potential Payments Table. The following table quantifies the potential cash or estimated equivalent cash value of amounts that would be payable to each of our NEOs under various termination scenarios assuming the event occurred on December 31, 2022.  For a description of the specific arrangements negotiated in connection with the proposed merger (the "Merger") between the Company and Falcon Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Global Payments Inc., a Georgia Corporation, see the Definitive Proxy Statement related to a merger or acquisition filed by the Company with the SEC on September 22, 2022.

	Termination Without Cause; Resignation for Good Reason (Absent a Change in Control) ($)	Termination Without Cause; Resignation for Good Reason (Following Change in Control) ($)	Death or Disability ($)
James G. Kelly
Cash Severance(1)	3,536,780	3,536,780
Restricted Stock Acceleration	8,930,274	8,930,274	4,213,554
Performance Stock Acceleration	3,948,925	3,948,925
Stock Option Acceleration	3,378,995	3,378,995	1,949,496
Health Coverage payments	100,000	100,000
Total	19,894,974	19,894,974	6,163,050
Tom Panther
Cash Severance	790,000	790,000
Restricted Stock Acceleration	2,503,551	2,503,551	1,187,107
Performance Stock Acceleration	1,085,655	1,085,655
Stock Option Acceleration	765,307	765,307	448,065
Health Coverage payments	50,000	50,000
Total	5,194,513	5,194,513	1,635,172
Brendan Tansill
Cash Severance(1)	414,040	414,040
Restricted Stock Acceleration	2,649,131	2,649,131	1,253,874
Performance Stock Acceleration	1,107,042	1,107,042
Stock Option Acceleration	875,250	875,250	510,424
Health Coverage payments	50,000	50,000
Total	5,095,462	5,095,462	1,764,298
Darren Wilson
Cash Severance	453,750	453,750
Restricted Stock Acceleration	2,649,131	2,649,131	1,253,874
Performance Stock Acceleration	1,107,042	1,107,042
Stock Option Acceleration	875,250	875,250	510,424
Health Coverage payments	43,560	43,560
Total	5,128,733	5,128,733	1,764,298
Michael Reidenbach
Cash Severance(1)	1,205,951	1,205,951
Restricted Stock Acceleration	2,570,588	2,570,588	1,212,115
Performance Stock Acceleration	1,073,134	1,073,134
Stock Option Acceleration	852,484	852,484	493,834
Health Coverage payments	75,000	75,000
Total	5,777,157	5,777,157	1,705,949

(1) Includes self-employment tax gross up.

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CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median of the annual total compensation of our employees (excluding the Chief Executive Officer) and the annual total compensation of James G. Kelly, our Chief Executive Officer. The pay ratio included in this information is calculated in a manner consistent with Item 402(u) of Regulation S-K. Because the SEC rules permit public companies to adopt different methodologies, to apply certain exclusions and to make reasonable estimates and assumptions to determine an estimate of their pay ratio, the estimated ratio reported below may not be comparable to the ratio reported by other public companies with different employee populations and compensation practices.

For 2022, our last completed fiscal year:

● The annual total compensation of the median employee was $64,025; and

● The annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table presented earlier in this Proxy Statement, was $7,648,441.

Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of the median employee was 119 to 1.

To determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments and estimates that we used were as follows:

● We selected December 31, 2022 as the date upon which we would identify the “median employee.”

● We determined that, as of December 31, 2022, we had approximately 2,300 employees working for us and our consolidated subsidiaries.

● As permitted under SEC rules, we eliminated a total of 116 global employees (approximately 5% of our total population) from the data set. A list of the excluded employees and their country of residency is provided in the table below.

Country	# of Employees	Country	# of Employees
Chile	56	Malta	11
Gibraltar	25	Czech Republic	19
Greece	5

● To determine our “median employee” from our adjusted employee population, we used a consistently applied compensation definition and chose “Total Direct Compensation (actual).”

● For non-US employees, currency values were adjusted using a purchasing power parity (PPP) conversion factor in conjunction with foreign exchange rate. PPP factors are from 2020, the most recent available from the World Bank as of the time the calculation was performed. Foreign exchange rates used were as of December 31, 2022.

● Using this methodology, we determined that the “median employee” was a full-time employee located in the US, with Total Direct Compensation (actual) for the 12-month period ending December 31, 2022 in the amount of $58,298.

● With respect to the annual total compensation of the “median employee,” we identified and calculated the elements of such employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $64,025 (inclusive of the value of employer-provided health and welfare benefits).

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With respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column of the Summary Compensation Table.

Director Compensation

Our non-employee director compensation plan is designed to attract, retain and compensate highly-qualified directors by providing them with competitive compensation and an equity interest in our Company to align their interests with those of our stockholders. In lieu of per-meeting fees, we pay annual cash and stock award retainers to our non-employee directors that are not affiliated with Blueapple, Inc. (“Blueapple”), a Delaware corporation which is controlled by entities affiliated with our founder and Chairman of our board of directors, Rafik R. Sidhom, or MDP. Other than Mr. Sidhom, we do not pay additional compensation to directors who are also our employees for their service as a director, nor do we provide compensation to directors affiliated with MDP. Our nominating and corporate governance committee periodically reviews our non-employee director compensation plan and makes recommendations as necessary to our full board of directors.

Mr. Sidhom receives $250,000 for his service as Chairman of our board of directors. Each of our independent directors not affiliated with Blueapple or MDP - currently Mmes. Miller, Panayiotou, and Harland, and Messrs. Chancy, Garabedian, Leeds and Pope - receive an annual cash retainer fee of $100,000 (pro-rated for partial periods for new directors). In addition, independent directors (except for committee chairs) who serve on our audit committee, compensation committee, nominating and corporate governance committee, risk committee, and technology committee are each entitled to annual committee fees of $12,500, $10,000, $5,000, $10,000 and $5,000, respectively. Chairpersons of the audit committee, compensation committee, nominating and corporate governance committee, risk committee, and technology committee are each entitled to annual committee chair fees of $20,000, $17,500, $10,000, $17,500 and $10,000, respectively. Independent directors who serve on our investment and finance committee are not compensated as that committee meets on an ad hoc basis as needed.

On an annual basis, each of our independent directors not affiliated with Blueapple and MDP receive a grant of restricted stock units which cliff vest on the first anniversary of the date of grant.  The grant date value of the grant of restricted stock units for 2022 was $150,000.  The number of restricted stock units granted is based on the closing sale price of our Class A common stock as reported by Nasdaq on the grant date.

2022 Director Compensation Table

The following table provides information regarding the compensation paid to our directors that receive compensation (other than the Chief Executive Officer) for the fiscal year ended December 31, 2022.

Name	Fees earned or paid in cash for 2022 service ($)(1)	Stock awards ($)(2)(3)	All other Compensation ($)(4)	Total ($)
Mark A. Chancy	115,000	150,000	—	265,000
David W. Leeds	132,500	150,000	—	282,500
John S. Garabedian	130,000	150,000	—	280,000
Nikki T. Harland(5)	77,500	150,000	—	227,500
Laura M. Miller	128,750	150,000	—	278,750
Gregory S. Pope	126,250	150,000	—	276,250
Rafik R. Sidhom	250,000	—	33,784	283,784
Stacey V. Panayiotou	107,500	150,000	—	257,500

(1) Represents annual cash retainers, committee fees and chairmanship fees earned during 2022.

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(2) Represents the aggregate grant date fair value of each award of restricted stock units granted during the fiscal year computed in accordance with Financial Accounting Standards Board Accounting Standards Codification 718. For additional information, see note 22 to our audited financial statements for the fiscal year ended December 31, 2022 included in our annual report on Form 10-K filed with the SEC.

(3) As of December 31, 2022, each of Mr. Chancy, Mr. Leeds, Mr. Garabedian, Ms. Miller, Mr. Pope and Ms. Panayiotou held 6,332 unvested restricted stock units and Ms. Harland held 6,714 unvested restricted stock units.

(4) Represents Mr. Sidhom’s participation in certain of our health and welfare programs that are available to executive class employees and Mr. Sidhom’s participation in a supplemental healthcare insurance plan paid for by the Company.

(5) Pro-rated for partial periods as a new director.

Compensation Committee Interlocks and Insider Participation

From January through June 2022, Messrs. Dombalagian, Garabedian, Pope and Raino were members of the compensation committee. From July through December 20222, Messrs. Dombalagian and Pope and Ms. Miller were members of the compensation committee.  During fiscal year 2022, all members of the compensation committee were independent directors, and no member was an employee or former employee of our Company.

None of our executive officers serves as a member of the board of directors or compensation committee of any entity, other than our Company, that has one or more executive officers serving as a member of our board of directors or compensation committee.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following tables set forth information relating to the beneficial ownership of our Class A common stock, Class D common stock and Series A convertible preferred stock as of February 15, 2023:

● each of our directors and named executive officers;

● each person, or group of affiliated persons, known by us to beneficially own more than 5% of our outstanding shares of Class A common stock, Class D common stock, Series A convertible preferred stock and LLC Interests; and

● all of our directors and executive officers as a group.

As described in “Certain Relationships and Related Party Transactions,” each Continuing LLC Owner (as defined below) is entitled to have their LLC Interests purchased or redeemed for cash equal to the market value of the applicable number of our shares of Class A common stock. “Continuing LLC Owners” refers collectively to the remaining holders of LLC Interests (other than EVO Payments, Inc.), which includes Blueapple, MDP, certain of our executive officers and current and former employees.

The number of shares beneficially owned by each entity, person, director or executive officer is determined in accordance with SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days of February 15, 2023 through the exercise of any stock option, warrants or other rights. Except as otherwise indicated, and subject to applicable community property laws, we believe, based on information furnished to us, that the persons named in the table have sole voting and investment power with respect to all shares of common stock and LLC Interests held by that person.

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Applicable percentage ownership is based on 48,436,226 shares of our Class A common stock, 3,741,074 shares of Class D common stock and 152,250 shares of our Series A convertible preferred stock outstanding as of February 15, 2023. In computing the number of shares beneficially owned by an individual or entity and the percentage ownership of that person, shares of common stock subject to options, or other rights held by such person that are currently exercisable or will become exercisable within 60 days of February 15, 2023 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person. Unless otherwise indicated below, the address for each beneficial owner listed is c/o EVO Payments, Inc., Ten Glenlake Parkway, South Tower, Suite 950, Atlanta, Georgia 30328.

Beneficial ownership in EVO Payments, Inc.

	Class A common stock		Class D common stock		Series A convertible preferred stock
Name of beneficial owner	Number	%	Number	%	Number	%	Combined Voting Power
5% Stockholders
Madison Dearborn Partners, LLC(1)	304,138	*	1,559,840	41.7%	152,250	100.0%	20.8%
Brown Advisory Incorporated(2)	4,167,339	8.6%	-	-	-	-	6.6%
The Vanguard Group(3)	4,741,825	9.8%	-	-	-	-	7.5%
BlackRock, Inc.(4)	3,366,871	7.0%	-	-	-	-	5.3%
Directors and Named Executive Officers
Rafik R. Sidhom(2)	-	-	-	-	-	-	-
Mark A. Chancy	21,187	*	-	-	-	-	*
Vahe A. Dombalagian(1)	304,138	*	1,559,840	41.7%	152,250	100.0%	20.8%
Nikki T. Harland	6,714	-	-	-	-	-
John S. Garabedian	54,607	*	-	-	-	-	*
David W. Leeds	37,190	*	-	-	-	-	*
Laura M. Miller	20,573	*	-	-	-	-	*
Stacey Valy Panayiotou	11,019	-	-	-	-	-	*
Gregory S. Pope	108,805	*	-	-	-	-	*
Matthew W. Raino(1)	304,138	*	1,559,840	41.7%	152,250	100%	20.8%
James G. Kelly(6)	1,176,387	2.4%	1,014,618	27.1%	-	-	3.4%
Thomas E. Panther(7)	165,017	*	-	-	-	-	*
Michael L. Reidenbach(8)	322,008	*	272,563	7.3%	-	-	*
Brendan F. Tansill(9)	365,210	*	127,142	3.4%	-	-	*
Darren Wilson(10)	404,661	*	-	-	-	-	*
All executive officers and directors as a group (19 persons)(11)	3,417,711	6.7%	2,987,323	79.9%	152,250	100%	27%

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Beneficial Ownership in EVO Investco, LLC

	LLC Interests beneficially owned
Name of beneficial owner	Number	%
5% Stockholders
Blueapple, Inc.(5)	32,163,538	38.1%
Madison Dearborn Partners, LLC(1)	1,559,840	1.9%
Directors and Named Executive Officers
Rafik R. Sidhom(5)	32,163,538	38.1%
Mark A. Chancy	-	-
Vahe A. Dombalagian(1)	1,559,840	1.9%
Nikki T. Harland	-	-
John S. Garabedian	-	-
David W. Leeds	-	-
Laura M. Miller	-	-
Stacey Valy Panayiotou	-	-
Gregory S. Pope	-	-
Matthew W. Raino(1)	1,559,840	1.9%
James G. Kelly(6)	1,014,618	1.2%
Thomas E. Panther(7)	-	-
Michael L. Reidenbach(8)	272,563	*
Brendan F. Tansill(9)	127,142	*
Darren Wilson(10)	-	-
All executive officers and directors as a group (19 persons)(11)	35,150,861	41.7%

*Indicates beneficial ownership of less than 1%.

(1) Consists of 304,138 shares of Class A common stock held by Madison Dearborn Capital Partners VI-C, L.P. (“MDCP VI-C”), 1,559,840 shares of Class D common stock and an equal number of LLC Interests held by MDCP Cardservices, LLC (“MDCP Cardservices”) and 152,250 shares of Series A Convertible Preferred Stock held by MDCP Cardservices II, LLC. Madison Dearborn Capital Partners VI-B, L.P. (“MDCP VI-B”) may be deemed to share beneficial ownership of the securities held by MDCP Cardservices, as its controlling member. Madison Dearborn Partners VI-A&C, L.P. (“MDP VI-A&C”), as the general partner of MDCP VI-C, may be deemed the beneficial owner of the securities beneficially owned by MDCP VI-C. Madison Dearborn Partners, LLC (“MDP LLC”), as the general partner of each of MDP VI-B and MDP VI-A&C may be deemed to share beneficial ownership of the reported securities. As the sole members of the limited partner committees of MDP VI-B and MDP VI-A&C, which have the power, acting by unanimous vote, to vote or dispose of the securities beneficially owned by MDP VI-B and MDP VI-A&C, respectively, Paul J. Finnegan and Samuel M. Mencoff may be deemed to have shared voting and investment power over such securities. Two members of our board of directors, Vahe A. Dombalagian and Matthew W. Raino, are Managing Directors of MDP LLC. Each of the foregoing entities and persons disclaims beneficial ownership of the reported securities except to the extent of his or its pecuniary interest therein. The address for the MDP entities and persons is c/o Madison Dearborn Partners, LLC, 70 W. Madison Street, Suite 4600, Chicago, Illinois 60602.

(2) Based on information obtained from a Schedule 13G filed with the SEC on February 9, 2023 by Brown Advisory Incorporated (“BAI”) on behalf of itself and its subsidiary, Brown Advisory LLC (“BALLC”). BAI reported that, as of December 31, 2022, BAI and BALLC had sole voting power with respect to 3,603,363 and 3,580,096 shares of our Class A common stock, respectively, and shared dispositive power with respect to 6,350,304 and 4,144,072 shares of our Class A common stock, respectively. The address of each of the foregoing is 901 South Bond Street, Suite #400, Baltimore, Maryland 21231.

(3) Based on information obtained from a Schedule 13G filed with the SEC on February 9, 2023 by The Vanguard Group (“Vanguard”) on behalf of itself and its wholly owned subsidiaries, Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. Vanguard reported that as of December 31, 2021, it had shared voting power

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with respect to 80,204 shares of our Class A common stock, sole dispositive power with respect to 4,621,648 shares of our Class A common stock and shared dispositive power with respect to 120,177 shares of our Class A common stock, and that the shares are beneficially owned by Vanguard and its wholly owned subsidiaries identified above. The address of each of the foregoing is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

(4) Based on information obtained from a Schedule 13G filed with the SEC on February 7, 2023 by BlackRock, Inc. (“Blackrock”) on behalf of itself and its wholly owned subsidiaries, Aperio Group, LLC,  BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd.,  BlackRock Asset Management Schweiz AG,  BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock Fund Advisors and BlackRock Fund Managers Ltd. BlackRock reported that as of December 31, 2022, it had sole voting power with respect to 3,308,351 shares of our Class A common stock and sole dispositive power with respect to 3,366,871 shares of our Class A common stock, and that the shares are beneficially owned by BlackRock and its wholly owned subsidiaries identified above. The address of each of the foregoing is 55 East 52nd Street, New York, New York 10055.

(5) Blueapple is controlled by its majority stockholder, Rafik R. Sidhom, who is our founder and chairman of our board of directors. Mr. Sidhom may be deemed to share beneficial ownership of the reported securities. Mr. Sidhom disclaims beneficial ownership of the reported securities except to the extent of his pecuniary interest therein. The address for Blueapple and Mr. Sidhom is 515 Broadhollow Road, Melville, New York 11747.

(6) Includes 863,535 shares of Class D common stock and an equal number of LLC Interests held by the James G. Kelly Grantor Trust Dated January 12, 2012. John Kelly, Mr. Kelly’s son, is the trustee of the James G. Kelly Grantor Trust Dated January 12, 2012. Includes shares of Class A common stock underlying 854,898 stock options that are currently exercisable, as well as, 38,898 restricted stock units that will vest on February 24, 2023, 38,099 restricted stock units and 95,798 stock options that will vest on February 26, 2023, 23,487 restricted stock units and 73,213 stock options that will vest on February 28, 2023, and 24,030 restricted stock units and 66,412 stock options that will vest on March 14, 2023.

(7) Includes shares of Class A common stock underlying 112,770 stock options that are currently exercisable, as well as, 10,693 restricted stock units that will vest on February 24, 2023, 12,569 restricted stock units and 22,111 stock options that will vest on February 26, 2023, and 4,944 restricted stock units and 15,413 stock options that will vest on February 28, 2023.

(8) Includes shares of Class A common stock underlying 241,121 stock options that are currently exercisable, as well as, 10,571 restricted stock units that will vest on February 24, 2023, 12,424 restricted stock units and 21,857 stock options that will vest on February 26, 2023, 6,576 restricted stock units and 20,499 stock options that will vest on February 28, 2023, and 6,248 restricted stock units and 17,267 stock options that will vest on March 14, 2023.

(9) Includes shares of Class A common stock underlying 275,027 stock options that are currently exercisable, as well as, 10,904 restricted stock units that will vest on February 24, 2023, 12,844 restricted stock units and 20,499 stock options that will vest on February 26, 2023, 6,576 restricted stock units and 20,499 stock options that will vest on February 28, 2023, and 6,729 restricted stock units and 18,596 stock options that will vest on March 14, 2023.

(10) Includes shares of Class A common stock underlying 323,667 stock options that are currently exercisable, as well as, 10,904 restricted stock units that will vest on February 24, 2023, 12,844 restricted stock units and 22,595 stock options that will vest on February 26, 2023, 6,576 restricted stock units and 20,499 stock options that will vest on February 28, 2023, and 6,729 restricted stock units and 18,596 stock options that will vest on March 14, 2023.

(11) Includes shares of Class A common stock underlying 2,098,353 stock options that are currently exercisable, as well as, 140,794 restricted stock units that will vest on February 24, 2023, 102,627 restricted stock units and 214,172

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stock options that will vest on February 26, 2023, 55,944 restricted stock units and 177,612 stock options that will vest on February 28, 2023, 6,714 restricted stock units that will vest on March 1, 2023, and 49,744 restricted stock units and 139,893 stock options that will vest on March 14, 2023.

Equity Compensation Plan Information

The Company provides share-based compensation awards to its employees under the Amended and Restated 2018 Omnibus Incentive Stock Plan (the “Amended and Restated 2018 Plan”). The original Omnibus Equity Incentive Plan (the “2018 Plan”) was adopted in conjunction with the Company’s IPO and became effective on May 22, 2018. In February 2020, the Company adopted the Amended and Restated 2018 Plan, which was approved by the Company’s stockholders at the Company’s 2020 annual meeting of stockholders held in June 2020. The Amended and Restated 2018 Plan amended and restated the 2018 Plan in its entirety and increased the number of shares of the Company’s Class A common stock available for grant and issuance under the 2018 Plan from 7,792,162 shares to 15,142,162 shares. The Amended and Restated 2018 Plan was further amended in November 2021 solely to clarify certain provisions in anticipation of the implementation of the Company’s performance-based equity awards. The Amended and Restated 2018 Plan provides for accelerated vesting under certain conditions.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plan approved by security holders:
Amended and Restated 2018 Plan	7,405,188	$22.50	4,902,347
Equity compensation plans not approved by security holders	0	0	0
Total	7,405,188(1)	$22.50(2)

(1) Includes an aggregate of 1,644,163 shares of common stock issuable in settlement of outstanding awards of RSUs, 604,748 shares of common stock issuable in settlement of outstanding awards of PSUs, and 5,156,277 shares of common stock issuable upon exercise of outstanding stock options. The number of shares to be issued in respect of outstanding performance-based awards assumes that the maximum level of performance applicable to awards will be achieved.

(2) Weighted-average exercise price of outstanding options; excludes RSUs and PSUs because these awards have no exercise price.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Our board of directors has adopted a written statement of policy regarding transactions with related persons, which we refer to as our related person policy. Our related person policy requires that a “related person” (as defined in Item 404(a) of Regulation S-K) must promptly disclose to our general counsel or, to the extent we do not have a general counsel, to our chief executive officer any “related person transaction” (defined as any transaction that is anticipated would be

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reportable by us under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) and all material facts with respect thereto. The general counsel or chief executive officer, as applicable, will then promptly communicate that information to our board of directors. No related person transaction will be executed without the approval or ratification of our board of directors or any committee of the board of directors consisting exclusively of disinterested directors. It is our policy that directors interested in a related person transaction will recuse themselves from any vote of a related person transaction in which they have an interest. Our policy does not specify the standards to be applied by our board of directors or the committees of the board of directors in determining whether or not to approve or ratify a related person transaction, but we anticipate that these determinations will be made in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation.

The following is a description of transactions since January 1, 2022 to which we have been a party, in which the amount involved exceeds $120,000, and in which any of our directors, executive officers or holders of more than 5% of our Class A common stock and Class D common stock, and Series A convertible preferred stock or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest.

Merger with Global Payments Inc.

As previously disclosed, on August 1, 2022, we entered into the Merger Agreement with Global Payments and Merger Sub, pursuant to which Merger Sub will merge with and into EVO, Inc. with EVO, Inc. surviving as a wholly-owned subsidiary of Global Payments. The terms of the Merger Agreement are described in the Company’s Current Report on Form 8-K, filed with the SEC on August 2, 2022, which description is incorporated herein by reference.

EVO LLC Agreement

In connection with the IPO, we and the Continuing LLC Owners entered into the to the amended and restated limited liability company agreement for EVO LLC (the “EVO LLC Agreement”).

Appointment as manager. Under the EVO LLC Agreement, we became a member and the sole manager of EVO LLC. As the sole manager, we are able to control all of the day-to-day business affairs and decision-making of EVO LLC without the approval of any other member. As such, we, through our officers and directors, will be responsible for all operational and administrative decisions of EVO LLC and the day-to-day management of EVO LLC’s business. Pursuant to the terms of the EVO LLC Agreement, we cannot, under any circumstances, be removed as the sole manager of EVO LLC except by our election.

Compensation. We are not entitled to compensation for our services as manager. We are entitled to reimbursement by EVO LLC for fees and expenses incurred on behalf of EVO LLC, including all expenses associated with maintaining our corporate existence.

Distributions. The EVO LLC Agreement requires “tax distributions” to be made by EVO LLC to its members, as that term is defined in the agreement, except to the extent such distributions would render EVO LLC insolvent or are otherwise prohibited by law, our senior secured credit facility pursuant to our credit agreement dated as of November 1, 2021 (our “Senior Secured Credit Facilities”) or any of our future debt agreements. Tax distributions will be made as and when members are required to make estimated payments or file tax returns, which we expect will be approximately on a quarterly basis, to each member of EVO LLC, including us, based on such member’s allocable share of the taxable income of EVO LLC and an assumed tax rate that will be determined by us. For this purpose, the taxable income of EVO LLC, and the members’ allocable share of such taxable income, will be determined without regard to any tax basis adjustments that are personal to any member, including as a result from our deemed or actual purchase of an LLC Interest from the Continuing LLC Owners (as described below under “- Tax Receivable Agreement”). The assumed tax rate that we expect to use for purposes of determining tax distributions from EVO LLC to its members will be the highest combined federal, state, and local tax rate that may potentially apply to any one of EVO LLC’s members (currently 48.42% of taxable income), regardless of the actual final tax liability of any such member. We expect EVO LLC may make distributions out of distributable cash periodically to enable us to cover our operating expenses and other obligations, including our obligations under the TRA, as well as to make dividend payments, if any, to the holders of our Class A common stock, except to the extent such distributions would

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render EVO LLC insolvent or are otherwise prohibited by law, our Senior Secured Credit Facilities or any of our future debt agreements.

Transfer restrictions. The EVO LLC Agreement generally does not permit transfers of LLC Interests by members, subject to certain limited exceptions. Any transferee of LLC Interests must assume, by operation of law or written agreement, all of the obligations of a transferring member with respect to the transferred units, even if the transferee is not admitted as a member of EVO LLC.

Common unit sale and exchange rights. The EVO LLC Agreement provides certain sale and exchange rights to the Continuing LLC Owners that entitles each Continuing LLC Owner to have all or a portion of its LLC Interests purchased by us or exchanged for Class A common stock, as applicable, or redeemed by EVO LLC.

Pursuant to the EVO LLC Agreement, upon receipt of a sale notice from Blueapple with respect to its LLC Interests, we will use our commercially reasonable best efforts to pursue a public offering of shares of our Class A common stock and use the net proceeds therefrom to purchase LLC Interests from Blueapple. We may elect, at our option (determined solely by our independent directors (within the meaning of the rules of Nasdaq) who are disinterested), to cause EVO LLC to instead redeem the applicable LLC Interests for cash; provided that Blueapple consents to any election by us to cause EVO LLC to redeem the LLC Interests. Blueapple is not entitled to deliver more than four sale notices in the aggregate that are ultimately settled as purchases of LLC Interests from the net proceeds of a public offering of Class A common stock during any twelve-month period. Any public offerings conducted by MDP pursuant to the exercise of its registration rights pursuant to the Registration Rights Agreement where we register shares to purchase LLC Interests from Blueapple also count as sale notices for purposes of this limitation.

Each Continuing LLC Owner (other than Blueapple) has an exchange right providing that, upon receipt of an exchange notice from such Continuing LLC Owner, we will exchange the applicable LLC Interests for newly issued shares of our Class A common stock on a one-for-one basis pursuant to the Exchange Agreement. Upon our receipt of such an exchange notice, we may elect at our option (determined solely by our independent directors (within the meaning of the rules of Nasdaq) who are disinterested), to cause EVO LLC to instead redeem the applicable LLC Interests for cash; provided that such Continuing LLC Owner consents to any election by us to cause EVO LLC to redeem the LLC Interests. In the event that a Continuing LLC Owner does not consent to an election by us to cause EVO LLC to redeem the LLC Interests, we are required to exchange the applicable LLC Interests for newly issued shares of Class A common stock.

Any LLC Interests purchased from Blueapple following the completion of a public offering of shares of our Class A common stock will be purchased for cash at a price per LLC Interest equal to the price per share of such Class A common stock sold (after deducting underwriting discounts and commissions) in the offering. Any LLC Interests redeemed by EVO LLC from any Continuing LLC Owner will be redeemed at a price per LLC Interest equal to a volume-weighted average market price of one share of our Class A common stock for each LLC Interest (subject to customary adjustments, including for stock splits, stock dividends and reclassifications).

If we elect to cause EVO LLC to redeem LLC Interests in lieu of pursuing a public offering or exchanging LLC Interests for newly issued shares of our Class A common stock, we will offer the other Continuing LLC Owners the right to have their respective LLC Interest redeemed in an amount up to such person’s pro rata share of the aggregate LLC Interests to be redeemed. We are not be required to redeem any LLC Interest from Blueapple or any other Continuing LLC Owner in response to a sale notice from Blueapple if we elect to pursue, but are unable to complete, a public offering of shares of our Class A common stock.

Each Continuing LLC Owner’s exchange rights are subject to certain customary limitations, including the absence of any liens or encumbrances on such LLC Interest to be purchased or redeemed. The settlement of a purchase of LLC Interests from Blueapple is subject to the consummation of a public offering generating sufficient net proceeds to us to purchase the applicable LLC Interests, subject to customary cutback provisions. Any Continuing LLC Owner (other than Blueapple) may condition the settlement of any exchange of LLC Interests from such Continuing LLC Owner on the closing of an underwritten offering of the shares of our Class A common stock to be issued in connection with the settlement.

Pursuant to the Registration Rights Agreement described below, MDP has customary registration rights, and all Continuing LLC Owners (other than Blueapple) have customary piggyback registration rights, including piggyback

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rights with respect to any public offering conducted in response to our receipt of a sale notice from Blueapple. Pursuant to the EVO LLC Agreement, Blueapple also has the right, in connection with any public offering we conduct (including any offering conducted as a result of an exercise by MDP of its registration rights), to request that we use our commercially reasonable best efforts to include shares of our Class A common stock as part of such public offering and use the net proceeds therefrom to purchase a like amount of its LLC Interests. Our requirement to pursue public offerings and purchase of LLC Interests from Blueapple for cash in connection with any offering is subject to customary cutback provisions typical for registration rights agreements.

In addition, we agree under the Registration Right Agreement to maintain a registration statement with respect to the issuance of the Class A common stock to be issued upon exchange of any outstanding LLC Interests pursuant to the exchange rights described above.

Any time we purchase LLC Interests from any Continuing LLC Owner, our ownership of LLC Interests will increase. Whether by purchase or redemption, we are obligated to ensure that at all times the number of LLC Interests that we own equals the number of our outstanding shares of Class A common stock (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities).

In connection with any purchase or redemption of LLC Interests from a Continuing LLC Owner, the Continuing LLC Owner is required to surrender a number of shares of our Class D common stock registered in the name of such Continuing LLC Owner, which we will cancel for no consideration on a one-for-one basis with the number of LLC Interests purchased or redeemed.

Maintenance of one-to-one ratio between shares of Class A common stock and LLC Interests. The EVO LLC Agreement requires EVO LLC to take all actions with respect to its LLC Interests, including reclassifications, distributions, divisions or recapitalizations, to maintain at all times a one-to-one ratio between the number of LLC Interests owned by us and the number of shares of our Class A common stock outstanding. This ratio requirement disregards (i) shares of our Class A common stock under unvested options issued by us, (ii) treasury stock, (iii) preferred stock or other debt or equity securities (including warrants, options or rights) issued by us that are convertible into or exercisable or exchangeable for shares of Class A common stock, except to the extent we have contributed the net proceeds from such other securities, including any exercise or purchase price payable upon conversion, exercise or exchange thereof, to the equity capital of EVO LLC, and (iv) prior to their conversion, any shares of Class A common stock issuable upon conversion of our Series A convertible preferred stock. In addition, this Class A common stock ratio requirement disregards all LLC Interests at any time held by any other person, including the Continuing LLC Owners. If we issue, transfer or deliver from treasury stock or purchase shares of Class A common stock in a transaction not contemplated by the EVO LLC Agreement, we as manager have the authority to take all actions such that, after giving effect to all such issuances, transfers, deliveries or purchases, the number of outstanding LLC Interests we own equals, on a one-for-one basis, the number of outstanding shares of Class A common stock. If we issue, transfer or deliver from treasury stock or purchase or redeem any of our Series A convertible preferred stock in a transaction not contemplated by the EVO LLC Agreement, we as manager have the authority to take all actions such that, after giving effect to all such issuances, transfers, deliveries purchases or redemptions, we hold (in the case of any issuance, transfer or delivery) or cease to hold (in the case of any purchase or redemption) equity interests in EVO LLC which (in our good faith determination) are in the aggregate substantially equivalent to our Series A convertible preferred stock so issued, transferred, delivered, purchased or redeemed. EVO LLC is prohibited from undertaking any subdivision (by any split of units, distribution of units, reclassification, recapitalization or similar event) or combination (by reverse split of units, reclassification, recapitalization or similar event) of the LLC Interest that is not accompanied by an identical subdivision or combination of our Class A common stock to maintain at all times a one-to-one ratio between the number of LLC Interests owned by us and the number of outstanding shares of our Class A common stock, subject to exceptions.

Issuance of LLC Interests upon exercise of options or issuance of other equity compensation. Upon the exercise of options issued by us, or the issuance of other types of equity compensation by us (such as the issuance of restricted or non-restricted stock, payment of bonuses in stock or settlement of stock appreciation rights in stock), we have the right to acquire from EVO LLC a number of LLC Interests equal to the number of our shares of Class A common stock being issued in connection with the exercise of such options or issuance of other types of equity compensation. When we issue shares of Class A common stock in settlement of stock options granted to persons that are not officers or employees of EVO LLC or its subsidiaries, we will make, or be deemed to make, a capital contribution in EVO

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LLC equal to the aggregate value of such shares of Class A common stock and EVO LLC will issue to us a number of LLC Interests equal to the number of shares we issued. When we issue shares of Class A common stock in settlement of stock options granted to persons that are officers or employees of EVO LLC or its subsidiaries, then we will be deemed to have sold directly to the person exercising such award a portion of the value of each share of Class A common stock equal to the exercise price per share, and we will be deemed to have sold directly to EVO LLC (or the applicable subsidiary of EVO LLC) the difference between the exercise price and market price per share for each such share of Class A common stock. In cases where we grant other types of equity compensation to employees of EVO LLC or its subsidiaries, on each applicable vesting date we will be deemed to have sold to EVO LLC (or such subsidiary) the number of vested shares at a price equal to the market price per share, EVO LLC (or such subsidiary) will deliver the shares to the applicable person, and we will be deemed to have made a capital contribution in EVO LLC equal to the purchase price for such shares in exchange for an equal number of LLC Interests.

Dissolution. The EVO LLC Agreement provides that the unanimous consent of all members holding voting units is required to voluntarily dissolve EVO LLC. In addition to a voluntary dissolution, EVO LLC will be dissolved upon the entry of a decree of judicial dissolution or other circumstances in accordance with Delaware law. Upon a dissolution event, the proceeds of a liquidation will be distributed in the following order: (1) first, to pay the expenses of winding up EVO LLC; (2) second, to pay debts and liabilities owed to creditors of EVO LLC, other than members; (3) third, to pay debts and liabilities owed to members; (4) fourth, to the holders of the convertible preferred units in an amount with respect to each such unit equal to the greater of (a) the sum of the liquidation preference applicable to such unit and any dividends that will have accumulated unpaid on a share of our Series A convertible preferred stock and (b) the amount that would have been received if the preferred units had been converted to LLC Interests on the date of such payment, and (5) fifth, to the members pro-rata in accordance with their respective percentage ownership interests in EVO LLC (as determined based on the number of LLC Interests held by a member relative to the aggregate number of all outstanding LLC Interests).

Amendment. The EVO LLC Agreement provides that it may be amended or modified by us as the manager. However, no amendment or modification, whether by merger, consolidation or otherwise, (1) to the amendment provisions of the EVO LLC Agreement may be made without the prior written consent of each member of EVO LLC, (2) to any of the terms and conditions of the EVO LLC Agreement that expressly require the approval or action of certain persons may be made without obtaining the consent of the requisite number or specified percentage of such persons who are entitled to approve or take action on such matter, and (3) to any of the terms and conditions of the EVO LLC Agreement may be made without the prior written consent of any member of EVO LLC to the extent such amendment or modification adversely affects the rights or powers of such member or imposes additional obligations on such member.

Indemnification. The EVO LLC Agreement provides for indemnification by EVO LLC of the manager, members and officers of EVO LLC and EVO LLC’s subsidiaries or affiliates. Under the EVO LLC Agreement, EVO LLC also agrees, subject to certain limitations, to indemnify the Continuing LLC Owners against losses, claims, actions, damages, liabilities and expenses related to any public offering of shares of our Class A common stock where we use the net proceeds therefrom to purchase LLC Interests from the Continuing LLC Owners.

Tax Receivable Agreement

For purposes of this discussion of the tax receivable agreement dated as of May 25, 2018 (the “TRA”), the Continuing LLC Owners include the MDP affiliate who owns the call option and the MDP affiliate that owns the LLC Interests subject to the call option described above. We used all of the net proceeds from the IPO to purchase LLC Interests directly from EVO LLC. We expect to obtain an increase in our share of the tax basis of the assets of EVO LLC from future purchases or redemptions of LLC Interests that result from Continuing LLC Owners exercising their rights to have LLC Interests purchased by us or redeemed by EVO LLC, which we intend to treat, to the extent the law allows, as our direct purchase of LLC Interests from a Continuing LLC Owner for U.S. federal income and other applicable tax purposes (such basis increases, the “Basis Adjustments”). Any Basis Adjustment will have the effect of reducing the amounts that we would otherwise pay in the future to various tax authorities, to the extent we would otherwise have had net taxable income on which we would have been required to pay income tax. The Basis

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Adjustments may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets.

In connection with the transactions described above, we entered into the TRA with the Continuing LLC Owners that provides for the payment by us to such persons of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of the transactions described above, including increases in the tax basis of the assets of EVO LLC attributable to payments made under the TRA and deductions attributable to imputed interest payments pursuant to the TRA. EVO LLC intends to have in effect an election under Section 754 of the Code effective for each taxable year in which a purchase or redemption of LLC Interests for cash occurs. These tax benefit payments are not conditioned upon one or more of the Continuing LLC Owners maintaining a continued ownership interest in either EVO LLC or us. The Continuing LLC Owners’ rights under the TRA are assignable to permitted transferees of their LLC Interests (other than EVO LLC or us as transferee pursuant to a purchase or redemption of LLC Interests). We will benefit from the remaining 15% of the tax benefits, if any, that we may actually realize.

The actual Basis Adjustments, as well as any amounts paid to the Continuing LLC Owners under the TRA will vary depending on a number of factors, including:

● the timing of any subsequent purchases or redemptions - for instance, the Basis Adjustments resulting from a purchase or redemption of LLC Interests will depend on the fair market value of LLC Interests at the time of purchase or redemption. Thus, the Basis Adjustment will vary because of fluctuations in fair market value;

● price of purchases or redemptions - in the case of purchases, the price of shares of our Class A common stock at the time of initial purchases or subsequent purchases, after deducting underwriting discounts and commissions, and in the case of redemptions, the price of shares of our Class A common stock at the time of redemptions, the Basis Adjustments, as well as any related increase in any tax deductions, is directly related to the price of shares of our common stock at the time of the initial purchases or subsequent purchases or redemptions;

● nature of acquisition of LLC Interests - if an acquisition of LLC Interests is not taxable for any reason, increased tax deductions will not be available. Moreover, taxable acquisitions can lead to different payments under the TRA depending on whether they constitute purchases by EVO Payments, Inc. or redemptions by EVO LLC; and

● the amount and timing of tax benefits - the TRA generally requires us to pay 85% of the tax benefits as and when those benefits are treated as realized under the terms of the TRA. If we do not have taxable income, we generally will not be required (absent a change in control or other circumstances requiring an early termination payment) to make payments under the TRA for that taxable year because no tax benefits will have been actually realized. However, any tax benefits that do not result in realized tax benefits in a given taxable year will likely generate tax attributes that may be utilized to generate tax benefits in previous or future taxable years. The utilization of any such tax attributes will result in payments under the TRA.

For purposes of the TRA, cash tax savings in income tax and franchise tax in lieu of income tax will be computed by comparing our actual income and franchise tax liability to the amount of such taxes that we would have been required to pay had there been no Basis Adjustments and had the TRA not been entered into. The amount of state and local taxes that would have been paid in that case will be determined using an estimated rate of tax that approximates the overall state and local tax rate that would have been applied. The TRA generally applies to each of our taxable years, beginning with the first taxable year ending after the consummation of the IPO. There is no maximum term for the TRA; however, the TRA may be terminated by us pursuant to an early termination procedure that requires us to pay the Continuing LLC Owners an agreed upon amount equal to the estimated present value of the remaining payments to be made under the agreement (calculated with certain assumptions).

The payment obligations under the TRA are obligations of EVO Payments, Inc. and not of EVO LLC. Although the actual timing and amount of any payments that may be made under the TRA will vary, we expect that the payments

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to the Continuing LLC Owners could be substantial. Any payments made by us to the Continuing LLC Owners under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us or to EVO LLC and, to the extent that we are unable to make payments under the TRA for any reason, the unpaid amounts will be deferred and will accrue interest until paid by us. We anticipate funding payments under the TRA from cash flow from operations of our subsidiaries, available cash and available borrowings under our credit facility.

The TRA provides that if certain mergers, asset sales, other forms of business combination, or other changes of control were to occur, or that if, at any time, we elect an early termination of the TRA, then the TRA will terminate and our obligations, or our successor’s obligations, under the TRA would accelerate and become due and payable, based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA. We may elect to completely terminate the TRA early only with the written approval of a majority of our “independent directors” (within the meaning of Rule 10A-3 promulgated under the Exchange Act and the corresponding rules of Nasdaq). The Continuing LLC Owners that are members of our board, are not “independent directors” for this purpose and will not have the ability to cause us to elect an early termination of the TRA.

Decisions made by us in the course of running our business, such as with respect to mergers, asset sales, tax planning, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by a Continuing LLC Owner under the TRA. For example, the earlier disposition of assets following an exchange or acquisition transaction will generally accelerate payments under the TRA and increase the present value of such payments.

As a result of a change in control or our election to terminate the TRA early, (1) we could be required to make cash payments to the Continuing LLC Owners that are greater than the specified percentage of the actual benefits we ultimately realize in respect of the tax benefits that are subject to the TRA, and (2) we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the TRA, based on certain assumptions, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits. In these situations, our obligations under the TRA could have a material adverse effect on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control. There can be no assurance that we will be able to finance our obligations under the TRA.

Payments under the TRA are based on tax reporting positions that we take. We will not be reimbursed for any cash payments previously made to the Continuing LLC Owners pursuant to the TRA if any tax benefits initially claimed by us are subsequently challenged by a taxing authority and ultimately disallowed. Instead, any excess cash payments made by us to a Continuing LLC Owner will be netted against any future cash payments that we might otherwise be required to make to that Continuing LLC Owner under the terms of the TRA. However, a challenge to any tax benefit initially claimed by us might not arise for a number of years following the initial time of such payment or, even if challenged early, such excess payments may be greater than future cash payments that could be offset under the TRA. As a result, it is possible that we could make cash payments under the TRA that are substantially greater than our actual cash tax savings.

We have full responsibility for, and sole discretion over, all EVO Payments, Inc. tax matters, including the filing and amendment of all tax returns and claims for refund and defense of all tax contests, subject to certain participation and approval rights held by the Continuing LLC Owners.

Under the TRA, we are required to provide the Continuing LLC Owners with a schedule showing the calculation of payments that are due under the TRA with respect to each taxable year with respect to which a payment obligation arises within 90 days after filing our U.S. federal income tax return for such taxable year. This calculation will be based upon the advice of our tax advisors. Payments under the TRA are generally made to the Continuing LLC Owners within five business days after this schedule becomes final pursuant to the procedures set forth in the TRA, although interest on such payments will begin to accrue at a rate of LIBOR plus 100 basis points from the due date (without extensions) of such tax return. Any late payments that may be made under the TRA will continue to accrue interest at LIBOR plus 500 basis points until such payments are made, generally including any late payments that we may subsequently make because we did not have enough available cash to satisfy our payment obligations at the time at which they originally arose.

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As discussed above, actual amounts of payments under the TRA and the timing of such payments will vary and will be determined based on a number of factors, including the timing and nature of future acquisitions of LLC Interests, the price of Class A common stock at the time of each purchase or redemption, the extent to which such purchases or redemptions are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable and the timing and amount of any subsequent asset dispositions. Thus, it is likely that future transactions or events could increase or decrease the actual tax benefits realized and the corresponding payments under the TRA as compared to the estimates set forth above. Payments under the TRA are not conditioned on the Continuing LLC Owners’ continued ownership of us.

On August 1, 2022, EVO, Inc. entered into the Merger Agreement with Global Payments and Merger Sub. In connection with the execution and delivery of the Merger Agreement, EVO, Inc., EVO, LLC, and certain other parties to the TRA entered into Amendment No. 1 to the Tax Receivable Agreement (the “TRA Amendment”), pursuant to which such parties agreed to certain terms with respect to the treatment of the TRA upon the consummation of the Merger. In the event the Merger Agreement is terminated, the TRA Amendment will no longer be of any force and effect.

Exchange Agreement

In connection with the completion of the IPO, we entered into the Exchange Agreement with the Continuing LLC Owners (other than Blueapple) providing for the exchange of Class A common stock for LLC Interests in accordance with the exchange rights described in “- EVO LLC Agreement - Common unit sale and exchange rights.”

In addition to the exchange rights described above, an affiliate of MDP is the holder of a call option that provides the holder the option to directly or indirectly purchase, from MDCP VI-C, LLC Interests. Pursuant to the Exchange Agreement, the affiliate has the right to require a purchase and simultaneous exercise of all or a portion of the call option by us. The aggregate value of the consideration paid by us to acquire any LLC Interests pursuant to the call option (i.e., the sum of the call option purchase price and the call option exercise price) will be the same as if we had acquired the relevant LLC Interests directly pursuant to the sale and exchange mechanics under the Exchange Agreement and may be paid in either cash or in shares of Class A common stock at our option; provided that if the call option holder does not consent to the receipt of shares of Class A common stock, the request for us to purchase and exercise the call option will be deemed withdrawn.

In connection with the execution and delivery of the Merger Agreement, certain Continuing LLC Owners have agreed to exchange their LLC Interests for shares of Class A common stock subject to, and effective immediately prior to, the closing of the Merger.  

Registration Rights Agreement

In connection with the completion of the IPO, we entered into the Registration Rights Agreement, which was amended on April 21, 2020 in connection with the issuance of our Series A convertible preferred stock. The agreement provides MDP with customary demand registration rights that require us to register shares of Class A common stock held by it, including any Class A common stock received upon our exchange of its LLC Interests or conversion of the Series A convertible preferred stock. MDP may exercise these registration rights at any time following the expiration of any related lock-up period. MDP is not entitled to demand registration of shares of Class A common stock it holds or receives in exchange for LLC Interests more than four times during any twelve-month period. The delivery of any sale notice by Blueapple pursuant to the EVO LLC Agreement settled by our undertaking a public offering in which MDP participates also counts as a demand registration for purposes of this limitation.

All Continuing LLC Owners (other than Blueapple) also received customary piggyback registration rights with respect to any public offering by us, including the right to participate on a pro rata basis in any public offering we conduct in response to our receipt of a sale notice from Blueapple.

Director Nomination Agreement

In connection with the IPO, we and MDP entered into a director nomination agreement. This agreement was subsequently amended and restated in connection with MDP’s investment in our Series A convertible preferred stock. As amended and restated, the director nomination agreement provides MDP with the right to designate two of our

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directors until MDP no longer holds at least 15% of the voting power of our outstanding voting stock and one of our directors until MDP no longer holds at least 5% of the voting power of our outstanding voting stock. MDP is entitled to designate the replacement of any of its board designees should a designee’s service terminate prior to the end of the director’s term, regardless of MDP’s voting power at the time.

We are required, to the extent permitted by applicable law, to take all necessary action to cause our board of directors and the nominating and corporate governance committee to include such designees in the slate of director nominees for election by our stockholders. MDP’s current designees are Matthew W. Raino, a Group II director, and Vahe A. Dombalagian, a Group III director. Pursuant to the director nomination agreement, we also agreed not to, without MDP’s prior consent, take any action to (1) increase the size of our board of directors to more than nine, (2) declassify our board of directors or (3) amend our bylaws to provide for a voting standard in the election of directors other than plurality voting.  In 2021, MDP provided its consent to increase the size of our board of directors from nine to ten directors, and subsequently from ten to 11 directors.

Payment Processing and Other Services

We provide certain professional and other services to Blueapple. The expense related to these services was $0.2 million for the year ended December 31, 2022.

We conduct business through two wholly owned subsidiaries and one unconsolidated investee under ISO agreements with a relative of our founder and chairman pursuant to which the relative of our founder and chairman provides certain marketing services and equipment in exchange for a commission based on the volume of transactions processed for merchants acquired by the relative of our founder and chairman. We paid less than $0.1 million in 2022 under these arrangements.

Related party commission expense incurred with our unconsolidated investees amounted to $11.7 million for the year ended December 31, 2022. The sale of equipment and services to these entities amounted to less than $0.1 million for the year ended December 31, 2022.

Indemnification of Directors and Officers

We entered into indemnification agreements with each of our directors and executive officers. These agreements require us to indemnify these individuals to the fullest extent permitted under the Delaware General Corporation Law (the “DGCL”) against expenses, losses and liabilities that may arise in connection with actual or threatened proceedings, in which they are involved by reason of their service to us and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

Our bylaws also provide that we will indemnify our directors and officers to the fullest extent permitted by the DGCL, and our certificate of incorporation provides that our directors will not be liable for monetary damages for breach of fiduciary duty to the fullest extent permitted by the DGCL.

Other Related Party Transactions

We lease office space located at 515 Broadhollow Road in Melville, New York for $0.1 million per month from 515 Broadhollow, LLC. 515 Broadhollow, LLC is majority-owned, directly and indirectly, by Mr. Sidhom. We believe these rental payments reflect market-based rents that we would pay for comparable office space.

In connection with the IPO, we entered into a chairman and consulting agreement with Mr. Sidhom that requires us to nominate Mr. Sidhom for election as a director at each stockholder meeting until the earliest of the termination of the chairman and consulting agreement, the first time Mr. Sidhom no longer serves on our board of directors or whenever Mr. Sidhom, together with certain trusts with which he is affiliated, no longer hold at least 15% of the outstanding LLC interests. The agreement also provides that Mr. Sidhom will consult with our company for a period of three years following his departure as Chairman of our board of directors. The chairman and consulting agreement provides for annual compensation of $250,000 and health benefits, and also contain customary restrictive covenants in favor of our company.

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NFP is our benefit broker and 401(k) manager. NFP is a portfolio company of MDP, and one of our executive officers maintains a minority ownership interest in NFP. For the year ended December 31, 2022, we paid $1.1 million in commission and other expenses to NFP.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth the fees paid to Deloitte & Touche LLP for professional services rendered with respect to fiscal years ended December 31, 2022 and 2021:

	2022			2021
Audit fees		$	3,913,173		$	3,538,833
Audit-related fees			80,000			40,000
Tax fees			1,214,023			1,113,830
All other fees			-			4,117
Total		$	5,207,196		$	4,696,780

All of the fees set forth in the table above for 2022 and 2021 were pre-approved by the audit committee in accordance with the procedures described below.

Audit Fees

The audit fees listed above for 2022 and 2021 were billed in connection with the integrated audit of our annual consolidated financial statements and our internal controls over financial reporting, the reviews of our interim condensed consolidated financial statements included in our quarterly reports on Form 10-Q and the statutory audits of foreign subsidiary financial statements.

Audit-Related Fees

The audit-related fees listed above for 2022 and 2021 were billed in connection with the examination of one of our settlement accounts. The audit-related fees in 2022 include fees for our Form S-3 registration statement.

Tax Fees

The tax fees listed above were billed for tax compliance, planning, and advice for services rendered in 2022 and 2021.

Other Fees

The other fees listed above for 2021 were related to our subscription of a research tool offered by Deloitte & Touche LLP.

Pre-Approval Policy for Services Performed by Independent Registered Public Accounting Firm

The audit committee has responsibility for the appointment, compensation, and oversight of the work of our independent registered public accounting firm. As part of this responsibility, the audit committee must pre-approve all permissible services to be performed by the independent registered public accounting firm.

The audit committee has adopted an auditor pre-approval policy that sets forth the procedures and conditions pursuant to which pre-approval may be given for services performed by the independent registered public accounting firm. Under the policy, the audit committee must give prior approval for any amount or type of service within four categories — audit services, audit-related services, tax services, or, to the extent permitted by law, other services — 

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that the independent registered public accounting firm provides. Prior to the annual engagement, the audit committee may grant general pre-approval for independent registered public accounting firm services within these four categories at maximum pre-approved fee levels. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval and, in those instances, such service will require separate pre-approval by the audit committee if it is to be provided by the independent registered public accounting firm. For any pre-approval, the audit committee will consider whether such services are consistent with the SEC’s rules on auditor independence, whether the auditor is best-positioned to provide the most cost-effective and efficient service and whether the service might enhance our ability to manage or control risk or improve audit quality. The audit committee may delegate to one or more of its members authority to approve a request for pre-approval, provided the member reports any approval so given to the audit committee at its next scheduled meeting.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1. Consolidated Financial Statements

Our consolidated financial statements are included in Part II, Item 8, “Financial Statements and Supplementary Data.”

2. Financial Statement Schedules

Schedules I and II to our consolidated financial statements are included in Part II, Item 8, “Financial Statements and Supplementary Data.”

3. Exhibits

aaw
Exhibit
No.	Description
2.1	Agreement and Plan of Merger, dated August 1, 2022, by and among EVO Payments, Inc., Global Payments Inc. and Falcon Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 2, 2022).
3.1	Amended and Restated Certificate of Incorporation of EVO Payments, Inc. (incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q filed with the Commission on August 10, 2018).
3.2	Certificate of Designations of Series A Convertible Preferred Stock of EVO Payments, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Commission on April 22, 2020).
3.3	Amended and Restated Bylaws of EVO Payments, Inc., effective as of May 25, 2018 (incorporated by reference to Exhibit 3.2 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).
4.1	Specimen Stock Certificate for Class A Common Stock of EVO Payments, Inc. (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).
4.2	Description of Capital Stock.
10.1	Tax Receivable Agreement, dated as of May 25, 2018, by and among EVO Payments, Inc., EVO Investco, LLC and the members of EVO Investco, LLC from time to time party thereto (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the Commission on August 10, 2018).

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10.2	LLC Agreement of EVO Investco, LLC, dated as of May 22, 2018, by and among EVO Investco, LLC and its members (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed with the Commission on August 10, 2018).
10.3	First Amendment to the Second Amended and Restated Limited Liability Company Agreement of EVO Investco, LLC, effective as of April 21, 2020, by and among EVO Payments, Inc., EVO Investco, LLC and its members (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on April 22, 2020).
10.4	Registration Rights Agreement, dated as of May 22, 2018, by and among EVO Payments, Inc., each of the persons listed on Schedules I and II thereto, such other persons that from time to time become parties thereto and Blueapple, Inc. (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q filed with the Commission on August 10, 2018).
10.5	First Amendment to Registration Rights Agreement, effective as of April 21, 2020, by and among EVO Payments, Inc. and each of the undersigned stockholders of the Company (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Commission on April 22, 2020) (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Commission on April 22, 2020).
10.6	Exchange Agreement, dated as of May 22, 2018, by and among EVO Investco, LLC, EVO Payments, Inc., the holders of common units in EVO Investco, LLC and shares of Class C common stock or Class D common stock of EVO Payments, Inc. and the Call Option Holder, as defined therein, from time to time party thereto (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q filed with the Commission on August 10, 2018).
10.7	Amendment Number One to Exchange Agreement, dated as of November 5, 2018, by and among EVO Investco, LLC, EVO Payments, Inc., the holders of common units in EVO Investco, LLC and shares of Class C common stock or Class D common stock of EVO Payments, Inc. and the Call Option Holder, as defined therein, from time to time party thereto (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the Commission on November 8, 2018).
10.8	Amended & Restated Director Nomination Agreement, dated as of April 21, 2020, by and among EVO Payments, Inc., Madison Dearborn Partners, LLC, Madison Dearborn Partners VI-A&C, L.P., Madison Dearborn Capital Partners VI-C, L.P., Madison Dearborn Partners VI-B, L.P., Madison Dearborn Capital Partners VI-B, L.P., Madison Dearborn Capital Partners VI Executive-B, L.P., MDCP VI-C Cardservices Splitter, L.P., MDCP Cardservices LLC, MDCP VI-C Cardservices Blocker Corp., Madison Dearborn Capital Partners VI-A, L.P. and Madison Dearborn Capital Partners VI Executive-A, L.P (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the Commission on April 22, 2020).
10.9	First Lien Credit Agreement, dated as of December 22, 2016, among EVO Payments International, LLC, as borrower, the subsidiaries of the borrower identified therein, as guarantors, SunTrust Bank, as Administrative Agent, Swingline Lender and Issuing Bank, the lenders from time to time party thereto and Citibank, N.A. and Regions Bank, as Co-Syndication Agents (incorporated by reference to Exhibit 10.14 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).
10.10	Incremental Amendment Agreement, dated as of October 24, 2017, among EVO Payments International, LLC as borrower, the subsidiaries of the borrower identified therein, as guarantors, SunTrust Bank, as Administrative Agent, Swingline Lender, and Issuing Bank, the lenders from time to time party thereto, and Citibank N.A. and Regions Bank as Co-Syndication Agents (incorporated by reference to Exhibit 10.15 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).
10.11	Second Incremental Amendment Agreement, dated as of April 3, 2018, among EVO Payments International, LLC as borrower, the subsidiaries of the borrower identified therein, as guarantors, SunTrust Bank, as Administrative Agent, Swingline Lender, and Issuing Bank, the lenders from time to time party thereto and Citibank, N.A. and Regions Bank as Co-Syndication Agents (incorporated by reference to Exhibit 10.16 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).

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10.12	First Repricing Amendment to First Lien Credit Agreement, dated as of December 22, 2017, among EVO Payments International, LLC, as borrower, the subsidiaries of the borrower identified therein, as guarantors, SunTrust Bank, as Administrative Agent, Swingline Lender and Issuing Bank, the lenders from time to time party thereto and Citibank, N.A. and Regions Bank, as Co-Syndication Agents (incorporated by reference to Exhibit 10.17 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).
10.13	Restatement Agreement to First Lien Credit Agreement, dated as of June 14, 2018, among EVO Payments International, LLC, as borrower, the subsidiaries of the borrower identified therein, as guarantors, SunTrust Bank, as Existing Administrative Agent, Citibank, N.A., as a closing documentation agent and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on June 14, 2018).
10.14	Second Lien Credit Agreement, dated as of December 22, 2016, among EVO Payments International, LLC, as borrower, the subsidiaries of the borrower identified therein, as guarantors, SunTrust Bank, as Administrative Agent, Swingline Lender and Issuing Bank, the lenders from time to time party thereto and Citibank, N.A. and Regions Bank, as Co-Syndication Agents (incorporated by reference to Exhibit 10.18 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).
10.15	First Amendment to First Lien Credit Agreement, dated as of December 22, 2017, among EVO Payments International, LLC, as borrower, the subsidiaries of the borrower identified therein, as guarantors, SunTrust Bank, as Administrative Agent, Swingline Lender and Issuing Bank, the lenders from time to time party thereto and Citibank, N.A. and Regions Bank, as Co-Syndication Agents (incorporated by reference to Exhibit 10.19 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).
10.16	Limited Waiver to Amended and Restated First Lien Credit Agreement, dated May 5, 2020, by and among EVO Payments International, LLC, as borrower, Citibank, N.A., as administrative agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q filed with the Commission on May 8, 2020).
10.17	Amended and Restated Employment Agreement, dated April 1, 2018, by and between EVO Investco, LLC and James G. Kelly (incorporated by reference to Exhibit 10.20 to our Registration Statement on Form S-1 filed with the Commission on April 25, 2018).#
10.18	Employment Agreement, as amended, dated January 1, 2015, by and between EVO Payments International UK Ltd and Darren Wilson (incorporated by reference to Exhibit 10.21 to our Registration Statement on Form S-1 filed with the Commission on April 25, 2018).#
10.19	Employment Agreement, dated November 18, 2019, by and between EVO Payments, Inc. and Thomas E. Panther (incorporated by reference to Exhibit 10.32 to our Annual Report on Form 10-K filed with the Commission on February 27, 2020).#
10.20	Amended and Restated Employment Agreement, dated April 1, 2018, by and between EVO Investco, LLC and Brendan F. Tansill (incorporated by reference to Exhibit 10.22 to our Registration Statement on Form S-1 filed with the Commission on April 25, 2018).#
10.21	Amended and Restated Employment Agreement, dated June 18, 2012, by and between EVO Investco, LLC and Michael L. Reidenbach (incorporated by reference to Exhibit 10.34 to our Annual Report on Form 10-K filed with the Commission on February 27, 2020).#
10.22	Form of Indemnification Agreement for Executive Officers and Directors (incorporated by reference to Exhibit 10.23 to our Registration Statement on Form S-1/A filed with the Commission on May 21, 2018).#
10.23	EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to our Registration Statement on Form S-8 filed with the Commission on May 23, 2018).#

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10.24	Form of Restricted Stock Award for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.25 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).#
10.25	Form of Time-Based Restricted Stock Unit Award for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (Cash Settled (incorporated by reference to Exhibit 10.26 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).#
10.26	Form of Time-Based Restricted Stock Unit Award for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (Share Settled) (incorporated by reference to Exhibit 10.27 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).#
10.27	Form of Performance-Based Restricted Stock Unit for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.28 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).#
10.28	Form of Stock Option Award for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.29 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).#
10.29	Form of Nonqualified Stock Option Award for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.30 to our Registration Statement on Form S-1/A filed with the Commission on May 7, 2018).#
10.30	Form of Restricted Stock Award for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (with change in control vesting provisions) (incorporated by reference to Exhibit 10.31 to our Registration Statement on Form S-1/A filed with the Commission on May 21, 2018).#
10.31	Form of Time-Based Restricted Stock Unit Award for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (share settled, with change in control vesting provisions) (incorporated by reference to Exhibit 10.32 to our Registration Statement on Form S-1/A filed with the Commission on May 21, 2018).#
10.32	Form of Nonqualified Stock Option Award for EVO Payments, Inc. 2018 Omnibus Equity Incentive Plan (with change in control vesting provisions) (incorporated by reference to Exhibit 10.33 to our Registration Statement on Form S-1/A filed with the Commission on May 21, 2018).#
10.33	EVO Payments, Inc. Amended and Restated 2018 Omnibus Incentive Stock Plan (incorporated by reference to Exhibit 99.1 to our Form S-8 Registration Statement filed with the Commission on June 12, 2020).#
10.34	EVO Investco, LLC Unit Appreciation Equity Plan (incorporated by reference to Exhibit 10.34 to our Registration Statement on Form S-1/A filed with the Commission on May 21, 2018).#
10.35	Assignment and Assumption Agreement of EVO Investco, LLC Unit Appreciation Equity Plan, dated as of May 25, 2018, by and between EVO Investco, LLC and EVO Payments, Inc. (incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q filed with the Commission on August 10, 2018).#
10.36	Form of Conversion to Restricted Stock Award under EVO Investco, LLC Unit Appreciation Equity Plan (incorporated by reference to Exhibit 10.36 to our Registration Statement on Form S-1/A filed with the Commission on May 21, 2018).#
10.37	Chairman and Consulting Agreement, dated as of May 25, 2018, by and between Rafik R. Sidhom and EVO Payments, Inc. (incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q filed with the Commission on August 10, 2018).
10.38	First Amendment to Chairman and Consulting Agreement, effective as of April 21, 2020, by and between EVO Payments, Inc. and Rafik R. Sidhom (incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q filed with the Commission on May 8, 2020).

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10.39	Investment Agreement, dated March 29, 2020, by and among EVO Payments, Inc. and Madison Dearborn Capital Partners VI-A, L.P., Madison Dearborn Capital Partners VI Executive-A, L.P. and Madison Dearborn Capital Partners VI-C, L.P. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on March 30, 2020).
10.40	Amendment to Amended & Restated Employment Agreement, effective as of February 24, 2021, by and between EVO Investco, LLC and Michael L. Reidenbach (incorporated by reference to Exhibit 10.40 to our Annual Report on Form 10-K filed with the Commission on February 25, 2021).#
10.41	Form of Performance-Based Stock Option Agreement (2021 Chief Executive Officer) for EVO Payments, Inc. Amended and Restated 2018 Omnibus Incentive Stock Plan (incorporated by reference to Exhibit 10.41 to our Annual Report on Form 10-K filed with the Commission on February 25, 2021).#
10.42	Second Restatement Agreement to Amended and Restated Credit Agreement, among EVO Payments International, LLC, as borrower, the subsidiaries of the borrower identified therein, as guarantors, Citibank, N.A., as the existing administrative agent, Truist Bank, as the successor administrative agent, and the lenders from time to time party thereto (including the Second Amended and Restated Credit Agreement attached as Exhibit A thereto) (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed with the Commission on November 3, 2021).
10.43	EVO Payments, Inc. Amended and Restated 2018 Omnibus Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the Commission on November 3, 2021).#
10.44	Form of Performance-Based Stock Unit Award Agreement for EVO Payments, Inc. Amended and Restated 2018 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.44 to our Annual Report on Form 10-K filed with the Commission on February 23, 2022).#
10.45	Form of Performance-Based Stock Unit Award Agreement (stock price performance thresholds) for EVO Payments, Inc. Amended and Restated 2018 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.45 to our Annual Report on Form 10-K filed with the Commission on February 23, 2022).#
10.46	Amendment to Employment Agreement, effective as of February 18, 2022, by and between EVO Payments, Inc. and Thomas E. Panther (incorporated by reference to Exhibit 10.46 to our Annual Report on Form 10-K filed with the Commission on February 23, 2022).#
10.47	Amendment to Amended and Restated Employment Agreement, effective as of February 18, 2022, by and between EVO Investco, LLC and Brendan F. Tansill (incorporated by reference to Exhibit 10.47 to our Annual Report on Form 10-K filed with the Commission on February 23, 2022).#
10.48	Amendment to Amended and Restated Employment Agreement, effective as of February 18, 2022, by and between EVO Investco, LLC and James G. Kelly (incorporated by reference to Exhibit 10.48 to our Annual Report on Form 10-K filed with the Commission on February 23, 2022).#
10.49	Amendment and Restated Employment Agreement, effective as of February 23, 2022, by and between EVO Payments International UK Ltd. and Darren Wilson (incorporated by reference to Exhibit 10.49 to our Annual Report on Form 10-K filed with the Commission on February 23, 2022).#
10.50	Voting Agreement, dated as of August 1, 2022, by and among EVO Payments, Inc., Global Payments Inc., Falcon Merger Sub Inc., James G. Kelly and the James G. Kelly Grantor Trust Dated January 12, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 2, 2022).

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10.51	Voting Agreement, dated as of August 1, 2022, by and among EVO Payments, Inc., Global Payments Inc., Falcon Merger Sub Inc., MDCP Cardservices II LLC, Madison Dearborn Capital Partners VI-C, L.P. and MDCP Cardservices LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 2, 2022).
10.52	Common Unit Purchase Agreement, dated as of August 1, 2022, by and between Global Payments Inc., EVO Payments, Inc. and Blueapple, Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 2, 2022).
10.53	Amendment No. 1 to the Tax Receivable Agreement, dated as of August 1, 2022, by and among EVO Payments, Inc., OpCo, Blueapple, Inc., Madison Dearborn Capital Partners VI-B, L.P., Madison Dearborn Capital Partners VI Executive-B, L.P., Madison Dearborn Capital Partners VI-C, L.P. and MDCP Cardservices LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on August 2, 2022).
21.1	List of Subsidiaries of EVO Payments, Inc.
23.1	Consent of Deloitte & Touche LLP as to EVO Payments, Inc.
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a).
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a).
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

#          Indicates management contract or compensatory plan.

ITEM 16. FORM 10-K SUMMARY

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Name	Title	Date
/S/ JAMES G. KELLY	Chief Executive Officer and Director	February 22, 2023
James G. Kelly	(principal executive officer)
/S/ THOMAS E. PANTHER	Executive Vice President, Chief Financial Officer	February 22, 2023
Thomas E. Panther	(principal financial officer)
/S/ ANTHONY J. RADESCA	Senior Vice President, Chief Accounting Officer	February 22, 2023
Anthony J. Radesca	(principal accounting officer)
/S/ RAFIK R. SIDHOM	Chairman of the Board and Director	February 22, 2023
Rafik R. Sidhom
/S/ MARK A. CHANCY	Director	February 22, 2023
Mark A. Chancy
/S/ VAHE A. DOMBALAGIAN	Director	February 22, 2023
Vahe A. Dombalagian
/S/ NIKKI T. HARLAND	Director	February 22, 2023
Nikki T. Harland
/S/ JOHN S. GARABEDIAN	Director	February 22, 2023
John S. Garabedian
/S/ DAVID W. LEEDS	Director	February 22, 2023
David W. Leeds
/S/ LAURA M. MILLER	Director	February 22, 2023
Laura M. Miller
/S/ STACEY VALY PANAYIOTOU	Director	February 22, 2023
Stacey Valy Panayiotou
/S/ GREGORY S. POPE	Director	February 22, 2023
Gregory S. Pope
/S/ MATTHEW W. RAINO	Director	February 22, 2023
Matthew W. Raino

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