Euronet Announces Third Quarter Results
Euronet Announces Third Quarter Results
November 1, 2000 at 12:00 AM EST
The Network Services Division posted a strong performance with third quarter revenues of $9.6 million, up 36% over revenues of $7.0 million for the same period of 1999. This represents an 8% increase over second quarter 2000 revenues of $8.9 million. The Software Division’s third quarter revenues increased by 12% over the second quarter, from $4.0 million to $4.5 million.
The operating results include a number of non-recurring items that reflect a shift in emphasis from a divisional structure to an integrated model focused on secure electronic financial transaction processing. These items, which total a net $10.8 million, are reported as operating expenses and include an $11.2 million write-down of intangible assets associated with the December 1998 acquisition of Arkansas Systems, Inc. (“Arksys”) and a write-down of approximately $800,000 of ATM assets acquired in 1999 and 2000 in two independent network purchases. A non-recurring gain of approximately $1.2 million has been recorded as a component of direct operating costs as the result of a change in importation regulations in Hungary.
“We recognize that many of our customers prefer outsourcing asset management and transaction processing instead of actually owning software,” said Michael Brown, Euronet’s Chairman and CEO. “Our acquisition of Arksys was essential in order to enable us to provide customers customized, secure financial transaction processing software and add new functionality to our network. Today, our customers want to see innovative ideas for customer retentive products. We have invested in wireless banking and mobile operator solutions, which are key to future software revenues and new outsourcing opportunities.”
The operating loss for this quarter was $16.9 million (this figure, as adjusted to exclude the above-mentioned non-recurring items, would be $6.1 million), as compared to $5.6 million in Q3 1999 and $6.3 million in Q2 2000. Negative EBITDA adjusted for non-recurring items was $3.5 million, as compared to negative $3.1 million in Q3 1999 and negative $3.6 million in Q2 2000. The Company’s net loss was $15.8 million for the third quarter of 2000, as compared to $10.5 million in Q2 2000 and $9.9 million in Q3 1999.
“We are very pleased with the performance of our Network Services Division,” said Brown. “Our transactions on a year-to-date basis are up 70%; our revenues up over 45%. This would not have been possible if we did not own our software platform. Our year-to-date adjusted EBITDA for the Network Services Division has gone from negative $5.9 million in 1999 to positive $300,000. We see this improvement continuing and believe our new wireless and mobile recharge products will contribute to this trend as our customers add these new technologies.”
The number of ATMs owned or operated by Euronet Services increased by 42% over the past year, from 1,817 ATMs at September 30, 1999 to 2,573 ATMs at the end of this quarter. Quarterly transactions on the network increased by 47%, from 9.4 million in Q3 1999 to 13.8 million in Q3 2000. Transactions for the year to date September 30, 2000 have already exceeded full year 1999 with the strongest quarter yet to come.
Although the Software Division’s sales backlog has increased to $3.7 million compared to $3.4 million at June 30, 2000 (which compares to a backlog of $2.6 million as of September 30, 1999), Euronet foresees softer recognized revenue from this division for the fourth quarter of 2000. “We have found that software sales in our customer sectors are cyclical and generally slow down during the fourth quarter,” said Brown. “Our outsourcing service solutions revenues should help mitigate the effect of these softer sales during this period.”
Euronet Services will host an analyst conference call on Tuesday, October 31, 2000 at 10 a.m. US Eastern Standard time to further discuss these results. The conference call will be broadcast on the Internet, and can be accessed at www.vcall.com.
Euronet Services is a global leader in providing secure electronic financial transactions. The Company provides a range of fully integrated software and financial network service solutions to an array of businesses, including banks, retailers and mobile phone operators. The Company enables these businesses to provide their customers with access to secure financial transactions from ATMs, POS terminals, Internet PCs, telephones, mobile phones and other mobile devices. With corporate headquarters in Leawood, Kansas, USA, and European headquarters in Budapest, Hungary, Euronet Services employs over 450 people in 20 locations. Additional information is available at the Company’s web site at www.euronetworldwide.com.
Any statements contained in this news release which concern the Company’s or management's intentions, expectations, or are predictions of future performance, are forward-looking statements. Euronet's actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors, including: technological developments affecting the market for the Company’s products and services; foreign exchange fluctuations; and changes in laws and regulations affecting the Company's business. These risks and other risks are described in the Company's periodic filings with the Securities and Exchange Commission, including but not limited to Euronet's Form 10-K for the period ended December 31, 1999 and Forms 10-Q for the periods ended March 31, and June 30, 2000. Copies of these filings may be obtained by contacting the Company or the SEC.