SEC Filing - Euronet Worldwide, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑

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

For the quarterly period ended March 31, 2023

☐

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

For the transition period from

Commission File Number: 001-31648

EURONET WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)

Delaware		74-2806888
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
11400 Tomahawk Creek Parkway, Suite 300
Leawood,	Kansas	66211
(Address of principal executive offices)		(Zip Code)

(913) 327-4200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	EEFT	Nasdaq Global Select Market
1.375% Senior Notes due 2026	EEFT26	Nasdaq Global Market

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 o

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 o

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	þ	Accelerated filer	o
Non-accelerated filer	o	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. o

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

On May 8, 2023, Euronet Worldwide, Inc. had 49,626,760 shares of common stock outstanding.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

Table of Contents

		Page

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	1
	Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022	2
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	3
	Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2023 and 2022	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	6
	Notes to the Unaudited Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 6.	Exhibits	44
	Signatures	45

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

	As of
	March 31, 2023			December 31, 2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,065.8		$	1,131.2
ATM cash	627.2			515.6
Restricted cash	12.7			7.4
Settlement assets	1,085.5			1,442.7
Trade accounts receivable, net of credit losses of $4.2 and $4.0	204.6			270.8
Prepaid expenses and other current assets	345.7			359.0
Total current assets	3,341.5			3,726.7
Operating right of use lease assets	142.8			149.7
Property and equipment, net of accumulated depreciation of $600.8 and $576.4	332.6			336.6
Goodwill	834.3			828.3
Acquired intangible assets, net of accumulated amortization of $207.2 and $199.2	182.9			188.3
Other assets, net of accumulated amortization of $70.5 and $68.0	176.5			174.0
Total assets	$	5,010.6		$	5,403.6
LIABILITIES AND EQUITY
Current liabilities:
Settlement obligations	$	1,085.5		$	1,442.7
Trade accounts payable	175.9			222.4
Accrued expenses and other current liabilities	462.6			505.8
Current portion of operating lease liabilities	48.7			50.2
Short-term debt obligations and current maturities of long-term debt obligations	0.1			0.1
Income taxes payable	69.0			67.5
Deferred revenue	63.5			65.4
Total current liabilities	1,905.3			2,354.1
Debt obligations, net of current portion	1,642.7			1,609.1
Operating lease obligations, net of current portion	97.0			102.6
Deferred income taxes	30.8			28.4
Other long-term liabilities	62.7			65.0
Total liabilities	3,738.5			4,159.2
Equity:
Euronet Worldwide, Inc. stockholders’ equity:
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued	—			—
Common Stock, $0.02 par value. 90,000,000 shares authorized; shares issued 64,164,638 and 64,091,387	1.3			1.3
Additional paid-in-capital	1,266.6			1,251.8
Treasury stock, at cost, shares issued 14,538,472 and 14,269,645	(1,133.6		)	(1,105.8		)
Retained earnings	1,368.4			1,348.3
Accumulated other comprehensive loss	(230.2		)	(251.0		)
Total Euronet Worldwide, Inc. stockholders’ equity	1,272.5			1,244.6
Noncontrolling interests	(0.4		)	(0.2		)
Total equity	1,272.1			1,244.4
Total liabilities and equity	$	5,010.6		$	5,403.6

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except share and per share data)


		Three Months Ended March 31,
		2023			2022
Revenues	$	787.2		$	718.5
Operating expenses:
Direct operating costs, exclusive of depreciation		491.6			458.2
Salaries and benefits		141.9			126.8
Selling, general and administrative		75.2			63.8
Depreciation and amortization		32.9			33.0
Total operating expenses		741.6			681.8
Operating income		45.6			36.7
Other income (expense):
Interest income		2.6			0.1
Interest expense		(10.1	)		(6.1	)
Foreign currency exchange gain (loss), net		(1.1	)		(5.5	)
Other gains, net		—			0.2
Other expense, net		(8.6	)		(11.3	)
Income before income taxes		37.0			25.4
Income tax expense		(17.2	)		(17.2	)
Net income		19.8			8.2
Net income attributable to noncontrolling interests		0.3			—
Net income attributable to Euronet Worldwide, Inc.	$	20.1		$	8.2

Earnings per share attributable to Euronet Worldwide, Inc. stockholders:
Basic	$	0.40		$	0.16
Diluted	$	0.39		$	0.16

Weighted average shares outstanding:
Basic		49,811,368			51,057,951
Diluted		52,974,800			51,716,045

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in millions)


		Three Months Ended March 31,
		2023		2022
Net income	$	19.8	$	8.2
Translation adjustment		20.8		(21.1	)
Comprehensive income (loss)		40.6		(12.9	)
Comprehensive income attributable to noncontrolling interests		0.1		—
Comprehensive income (loss) attributable to Euronet Worldwide, Inc.	$	40.7	$	(12.9	)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited, in millions, except share data)

	Number of Shares Outstanding			Common Stock	Additional Paid-in Capital			Treasury Stock
Balance as of December 31, 2021	51,147,884		$	1.3	$	1,274.1		$	(931.2	)
Net (loss) income
Other comprehensive loss
Stock issued under employee stock plans	40,173					2.0			0.1
Share-based compensation						9.8
Repurchase of shares	(639,535	)							(70.4	)
Adoption of ASU 2020-06						(74.1	)
Balance as of March 31, 2022	50,548,522			1.3		1,211.8			(1,001.5	)

	Number of Shares Outstanding		Common Stock		Additional Paid-in Capital		Treasury Stock
Balance as of December 31, 2022	49,822,707		$	1.3	$	1,251.8	$	(1,105.8	)
Net income (loss)
Other comprehensive loss
Stock issued under employee stock plans	79,859			—		0.5		0.5
Share-based compensation						14.3
Repurchase of shares	(276,400	)						(28.3	)
Balance as of March 31, 2023	49,626,166			1.3		1,266.6		(1,133.6	)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

(Unaudited, in millions)

	Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests		Total
Balance as of December 31, 2021	$	1,083.9	$	(172.6	)	$	—	$	1,255.5
Net income (loss)		8.2					—		8.2
Other comprehensive loss				(21.1	)		—		(21.1	)
Stock issued under employee stock plans									2.1
Share-based compensation									9.8
Repurchase of shares									(70.4	)
Adoption of ASU 2020-06		33.4							(40.7	)
Balance as of March 31, 2022		1,125.5		(193.7	)		—		1,143.4

	Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balance as of December 31, 2022	$	1,348.3	$	(251.0	)	$	(0.2	)	$	1,244.4
Net income (loss)		20.1					(0.3	)	19.8
Other comprehensive loss				20.8			0.1		20.9
Stock issued under employee stock plans									1.0
Share-based compensation									14.3
Repurchase of shares									(28.3		)
Balance as of March 31, 2023		1,368.4		(230.2	)		(0.4	)		1,272.1

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)


	Three Months Ended March 31,
	2023			2022
Net income	$	19.8		$	8.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	32.9			33.0
Share-based compensation	14.3			9.8
Unrealized foreign exchange loss, net	1.1			5.5
Deferred income taxes	2.0			5.4
Amortization of debt issuance costs	1.0			1.2
Changes in working capital, net of amounts acquired:
Income taxes payable, net	0.9			(10.0		)
Trade accounts receivable, including amounts in settlement assets	378.3			120.2
Prepaid expenses and other current assets, including amounts in settlement assets	(34.6		)	(25.5		)
Trade accounts payable, including amounts in settlement obligations	(287.3		)	(174.7		)
Deferred revenue	(2.9		)	(4.5		)
Accrued expenses and other current liabilities, including amounts in settlement obligations	(113.8		)	57.6
Changes in noncurrent assets and liabilities	(8.4		)	(20.5		)
Net cash provided by operating activities	3.3			5.7
Cash flows from investing activities:
Acquisitions, net of cash acquired	0.2			(331.0		)
Purchases of property and equipment	(18.6		)	(23.8		)
Purchases of other long-term assets	(1.7		)	(2.0		)
Other, net	2.0			(0.1		)
Net cash used in investing activities	(18.1		)	(356.9		)
Cash flows from financing activities:
Proceeds from issuance of shares	1.0			2.3
Repurchase of shares	(29.2		)	(70.5		)
Borrowings from revolving credit agreements	1,768.3			1,873.8
Repayments of revolving credit agreements	(1,744.0		)	(1,570.3		)
Repayments of capital lease obligations	—			1.3
Repayments of long-term debt obligations	(0.8		)	—
Other, net	0.3			(1.3		)
Net cash provided by (used in) financing activities	(4.4		)	235.3
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(33.9		)	(37.5		)
Increase (decrease) in cash and cash equivalents and restricted cash	(53.1		)	(153.4		)
Cash and cash equivalents and restricted cash at beginning of period	1,990.9			2,086.1

Cash and cash equivalents and restricted cash at end of period	$	1,937.8		$	1,932.7

Supplemental disclosure of cash flow information:
Interest paid during the period	$	5.7		$	3.6
Income taxes paid during the period	$	13.1		$	23.8

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL

Organization

Euronet Worldwide, Inc. (the "Company" or "Euronet") was established as a Delaware corporation on December 13, 1996 and succeeded Euronet Holding N.V. as the group holding company, which was founded and established in 1994. Euronet is a leading electronic payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive ATM, POS, card outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment products, and international payment services.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the consolidated financial position and the results of operations, comprehensive income, changes in equity and cash flows for the interim periods. The unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2022, including the notes thereto, set forth in the Company's 2022 Annual Report on Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include computing income taxes, estimating the useful lives and potential impairment of long-lived assets and goodwill, as well as allocating the purchase price to assets acquired and liabilities assumed in acquisitions and revenue recognition. Actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2023.

Seasonality

Euronet’s EFT Processing Segment normally experiences its heaviest demand for DCC services during the third quarter of the fiscal year, normally coinciding with the tourism season. Epay Segment is normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Also, epay sells large loyalty rewards campaigns to retailers, which could be deployed in any given quarter and will impact the activity in that quarter accordingly. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year.

(2) RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS

In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital. Under this ASU, certain debt instruments with embedded conversion features will be accounted for as a single liability measured at its amortized cost. Additionally, this ASU eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments. The Company adopted this standard on January 1, 2022 using the modified retrospective approach, which resulted in the Company's Convertible Senior Notes Due 2049 being recognized as a single liability. As a result of the adoption of this standard, the Company recorded a $99.7 million decrease to additional paid-in capital, a $56.8 million decrease in debt discounts and a $42.9 million increase in retained earnings. The adoption of this standard also impacted the Company's deferred tax liability by decreasing the Company's deferred tax liability by $15.0 million, decreasing retained earnings by $10.6 million, and increasing additional paid-in capital by $25.6 million. Additionally, the elimination of the treasury stock method increased the number of dilutive shares used in the diluted earnings per share calculation, if dilutive, by 2.8 million shares.

(3) ACQUISITIONS

In accordance with ASC 805, the Company allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired based on fair values. Any excess purchase price over those fair values is recorded as goodwill. The fair value assigned to intangible assets acquired is supported by valuations using estimates and assumptions provided by management. For certain large acquisitions, management engages an appraiser to assist in the valuation process.

On March 15, 2022, the Company completed the acquisition of the Merchant Acquiring Business of Piraeus Bank ("PBMA"). The acquisition includes 205,000 POS terminals at 170,000 merchants throughout Greece, as well as Piraeus Bank’s online merchant acquiring business and expands Euronet’s omnichannel payments strategy where the Company uses its proprietary technology to provide cash, card-based acquiring solutions, alternative payment acquiring, online acquiring, tokenized payment services and other payment products. Additionally, the acquisition includes a long-term commercial framework agreement between Piraeus Bank and Euronet which includes collaborative product distribution, processing and customer referrals.

The purchase price was €317.8 million, or approximately $350.6 million, which includes $331 million cash paid at closing, $4.4 million cash paid for surplus working capital and $15.2 million of estimated contingent consideration for a ten-year earn out contingent on performance targets outlined in the commercial framework agreement. The contingent consideration is related to a percentage of the net fee income received during the ten-year period of the commercial framework agreement and there is no contractual maximum amount of consideration under this agreement.

The acquisition has been accounted for as a business combination in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment.

The following table presents the final fair value that was allocated to PBMA's Euronet Merchant Services' (EMS) assets and liabilities based upon fair values as determined by the Company. The valuation process to determine the fair values is complete. For the year ended December 31, 2022, the Company made measurement period adjustments to reflect facts and circumstances in existence as of the effective time of the acquisition. These adjustments primarily included an adjustment to the accrued expenses and other current liabilities related to the surplus working capital of $4.4 million and some other immaterial adjustments.

(in millions)	As of March 15, 2022
Other current assets	$	1.8
Settlement assets		77.6
Property and equipment		5.7
Intangible assets		122.5
Total assets acquired	$	207.6

Trade accounts payable	$	(2.1	)
Settlement liabilities		(65.9	)
Accrued expenses and other current liabilities		(1.3	)
Deferred revenue		(0.3	)
Other long-term liabilities		(0.1	)
Total liabilities assumed	$	(69.7	)

Goodwill		212.7

Net assets acquired	$	350.6

The fair value measurements of intangible assets were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy. Level 3 inputs include discount rates that would be used by a market participant in valuing these assets, projections of revenues and cash flows, and customer attrition rates, among others.

The Company acquired a customer relationship intangible asset with a fair value of $112.2 million that is being amortized on a straight-line basis over 15 years and a contract related intangible asset of $10.3 million that is being amortized on a straight-line basis over 10 years.

Goodwill, with a value of $212.7 million, arising from the acquisition was included in the EFT Processing Segment. The factors that make up goodwill include synergies from combining PBMA operations and intangible assets that do not qualify for separate recognition. Goodwill and intangible assets associated with this acquisition are deductible for tax purposes.

The results of PBMA operations are included in the Company's consolidated results of operation, as part of the EFT Processing business segment, beginning on March 16, 2022. For the period beginning on the acquisition date through December 31, 2022, PBMA had $88.8 million in revenue. PBMA had $23.6 million in revenue in the first quarter 2023. The PBMA business is impacted by higher transaction volumes during the tourism season in the second and third quarters.

(4) SETTLEMENT ASSETS AND OBLIGATIONS

Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled prepaid transactions. The Company records corresponding settlement obligations relating to accounts payable. Settlement assets consist of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. The settlement cash held at the Company is primarily generated from the monies remitted by consumers through Company agents and financial institutions in payment of the face value of the payment service or foreign currency purchased and the related fees charged to purchase the currency. The Company uses its cash and cash equivalents to pay the face value of the payment service product upon presentation by the recipient. Cash received by Company agents and merchants generally becomes available to us within two weeks after initial receipt by the business partner. Receivables from business partners represent funds collected by such business partners that are in transit to us.

Settlement obligations consist of accrued expenses for money transfers, content providers, and EFT customer deposits and accounts payable to agents and content providers. Money transfer accrued expenses represent amounts to be paid to transferees when they request funds. Most agents typically settle with transferees first then obtain reimbursement from us. Money order accrued expenses represent amounts not yet presented for payment. Due to the agent funding and settlement process, accrued expenses to agents represent amounts due to agents for money transfers that have not been settled with transferees.

	As of
(in millions)	March 31, 2023		December 31, 2022
Settlement assets:
Settlement cash and cash equivalents	$	150.0	$	242.7
Settlement restricted cash	82.1		94.0
Accounts receivable, net of credit losses of $36.9 and $33.0	584.9		887.6
Prepaid expenses and other current assets	268.5		218.4
Total settlement assets	$	1,085.5	$	1,442.7
Settlement obligations:
Trade account payables	$	422.5	$	655.1
Accrued expenses and other current liabilities	663.0		787.6
Total settlement obligations	$	1,085.5	$	1,442.7

The table below reconciles cash and cash equivalents, restricted cash, ATM cash, settlement cash and cash equivalents, and settlement restricted cash as presented within "Cash and cash equivalents and restricted cash" in the Consolidated Statement of Cash Flows.

	As of
(in millions)	March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2021
Cash and cash equivalents	$	1,065.8	$	1,131.2	$	986.5	$	1,260.5
Restricted cash	12.7		7.4		5.9		3.7
ATM cash	627.2		515.6		644.4		543.4
Settlement cash and cash equivalents	150.0		242.7		245.5		203.6
Settlement restricted cash	82.1		94.0		50.4		74.9
Cash and cash equivalents and restricted cash at end of period	$	1,937.8	$	1,990.9	$	1,932.7	$	2,086.1

(5) STOCKHOLDERS' EQUITY

Earnings (Loss) Per Share

Basic earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for the potential dilution of options to purchase the Company’s common stock, assumed vesting of restricted stock units and the assumed conversion of the Company’s convertible debt, if such conversion would be dilutive.

The following table provides the computation of diluted earnings and diluted weighted average number of common shares outstanding:

		Three Months Ended March 31,
		2023		2022
Computation of diluted earnings:
Net income (loss)	$	20.1	$	8.2
Add: Interest expense from assumed conversion of convertible notes, net of tax		0.8		—
Net income (loss) for diluted earnings per share calculation	$	20.9	$	8.2

Computation of diluted weighted average shares outstanding:
Basic weighted average shares outstanding		49,811,368		51,057,951
Incremental shares from assumed exercise of stock options and vesting of restricted stock units		381,614		658,094
Incremental shares from assumed conversion of convertible debt		2,781,818		—
Diluted weighted average shares outstanding		52,974,800		51,716,045

The table includes all stock options and restricted stock units that are dilutive to the Company's weighted average common shares outstanding during the period. The calculation of diluted earnings (loss) per share excludes stock options or shares of restricted stock units that are anti-dilutive to the Company's weighted average common shares outstanding of approximately 2.3 million and 2.2 million for the three months ended March 31, 2023 and 2022, respectively.

Euronet issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. The Convertible Notes currently have a settlement feature requiring us upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of Euronet's common stock or a combination thereof, at the Company's option. The Company has stated its intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium; however, after adopting ASU 2020-06, 2.8 million incremental shares assumed for conversion of convertible notes is required to be included in the dilutive earnings per share calculation, if dilutive, regardless of whether the market price trigger has been met. Therefore, the Convertible Notes were included in the calculation of diluted earnings (loss) per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price of $188.73 per share. See Note 9, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes.

Share repurchases

On December 8, 2021, the Company put a repurchase program in place to repurchase up to $300 million in value, but not more than 5.0 million shares of common stock through December 8, 2023. On September 13, 2022, the Company put a repurchase program in place to repurchase up to $350 million in value, but not more than 7.0 million shares of common stock through September 13, 2024. Under the repurchase programs we repurchased $28.3 million and $70.4 million of stock, for the three months ended March 31, 2023 and 2022, respectively. Repurchases under the current program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded foreign currency translation result of $20.8 million and ($21.1) million for the three months ended March 31, 2023 and 2022, respectively. There were no reclassifications of foreign currency translation adjustments into the consolidated statements of income for the three months ended March 31, 2023 and 2022.

(6) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

A summary of acquired intangible assets and goodwill activity for the three months ended March 31, 2023 is presented below:


(in millions)	Acquired Intangible Assets			Goodwill			Total Intangible Assets
Balance as of December 31, 2022	$	188.3		$	828.3		$	1,016.6
Increases (decreases):
Acquisition	—			(0.2		)	(0.2		)
Amortization	(6.9		)	—			(6.9		)
Foreign currency exchange rate changes	1.5			6.2			7.7
Balance as of March 31, 2023	$	182.9		$	834.3		$	1,017.2

Of the total goodwill balance of $834.3 million as of March 31, 2023, $385.1 million relates to the Money Transfer Segment, $325.0 million relates to the EFT Processing Segment and the remaining $124.2 million relates to the epay Segment. Estimated amortization expense on acquired intangible assets with finite lives as of March 31, 2023, is expected to total $21.3 million for the remainder of 2023, $17.1 million for 2024, $14.3 million for 2025, $14.0 million for 2026, $12.8 million for 2027 and $12.4 million for 2028.

(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:


	As of
(in millions)	March 31, 2023		December 31, 2022
Accrued expenses	$	276.0	$	311.9
Derivative liabilities	41.9		42.3
Other tax payables	86.1		80.6
Accrued payroll expenses	56.0		68.0
Current portion of capital lease obligations	2.6		3.0
Total	$	462.6	$	505.8

(8) DEFERRED REVENUES

The Company records deferred revenues when cash payments are received or due in advance of the Company's performance. The decrease in the deferred revenue balance for the three months ended March 31, 2023 is the result of $49.1 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, offset by $51.0 million of revenues recognized.

(9) DEBT OBLIGATIONS

Debt obligations consist of the following:

	As of
(in millions)	March 31, 2023			December 31, 2022
Credit Facility:
Revolving credit agreement	$	479.1		$	454.8
Convertible Debt:
0.75% convertible notes, unsecured, due 2049	525.0			525.0

1.375% Senior Notes, due 2026	650.3			642.1

Other obligations	0.2			0.2

Total debt obligations	1,654.6			1,622.1
Unamortized debt issuance costs	(11.8		)	(12.9		)
Carrying value of debt	1,642.8			1,609.2
Short-term debt obligations and current maturities of long-term debt obligations	(0.1		)	(0.1		)
Long-term debt obligations	$	1,642.7		$	1,609.1

Credit Facility

On October 24, 2022, the Company amended its revolving credit agreement (the “Credit Facility”) to increase the facility from $1.03 billion to $1.25 billion and to extend the expiration to October 24, 2027.

The revolving credit facility contains a sublimit of up to $250 million, with $150 million committed, for the issuance of letters of credit and a $75 million sublimit for U.S. dollar swingline loans and a $75 million sublimit for swingline loans in euros or British pounds sterling. The Credit Facility allows for borrowings in British pounds sterling, euro and U.S. dollars. Subject to certain conditions, the Company has the option to increase the credit facility by up to an additional $500 million by requesting additional commitments from existing or new lenders. Fees and interest on borrowings vary based upon the Company's corporate credit rating and will be based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over a secured overnight financing rate, as defined in the agreement, with a margin, including the facility fee, ranging from 1.00% to 1.625% or the base rate, as selected by the Company. The applicable margin for borrowings under the credit facility, based on the Company's current credit rating is 1.25% including the facility fee.

The Agreement contains customary affirmative and negative covenants, events of default and financial covenants, including (all as defined in the Credit Facility): (i) a Consolidated Total Leverage Ratio, depending on certain circumstances defined in the Credit Facility, not to exceed a range between 3.5 to 1.0 and 4.5 to 1.0; and (ii) a Consolidated Interest Coverage Ratio of not less than 3.0 to 1.0. Subject to meeting certain customary covenants (as defined in the Credit Facility), the Company is permitted to repurchase common stock and debt. The Company was in compliance with all debt covenants as of March 31, 2023.

Convertible Debt

On March 18, 2019, the Company completed the sale of $525.0 million of Convertible Senior Notes ("Convertible Notes"). The Convertible Notes mature in March 2049 unless redeemed or converted prior to such date, and are convertible into shares of Euronet common stock at a conversion price of approximately $188.73 per share if certain conditions are met (relating to the closing price of Euronet common stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require the Company to purchase their notes on each of March 15, 2025, March 15, 2029, March 15, 2034, March 15, 2039 and March 15, 2044 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In connection with the issuance of the Convertible Notes, the Company recorded $12.8 million in debt issuance costs, which are being amortized through March 1, 2025.

The Company may redeem for cash all or any portion of the Convertible Notes, at its option, (i) if the closing sale price of the Company's Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption and (ii) on or after March 20, 2025 and prior to the maturity date, regardless of the foregoing sale price condition, in each case at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes. In addition, if a fundamental change, as defined in the Indenture, occurs prior to the maturity date, holders may require the Company to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of March 31, 2023 the conversion threshold was not met. On January 1, 2022, the Company adopted ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in-capital. ASU 2020-06 amended the accounting for convertible instruments with ASC Topic 470 Debt. Contractual interest expense for the Convertible Notes was $1.0 million for the quarters ended March 31, 2022 and 2023, Accretion expense is no longer applicable after January 1, 2022 due to adoption of ASU 2020-06.

1.375% Senior Notes due 2026

On May 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of Senior Notes that are due in May 2026 (the “Senior Notes”). The Senior Notes accrue interest at a rate of 1.375% per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of March 31, 2023, the Company has outstanding €600 million ($650.3 million) principal amount of the Senior Notes. In addition, the Company may redeem some or all of these notes on or after February 22, 2026 at their principal amount plus any accrued and unpaid interest.

Other obligations

Certain of the Company's subsidiaries have available lines of credit and overdraft credit facilities that generally provide for short-term borrowings that are used from time to time for working capital purposes. As of March 31, 2023 and December 31, 2022, borrowings under these arrangements were $0.2 million and $0.2 million, respectively.

Debt Issuance Costs

As of March 31, 2023, the Company had unamortized debt issuance costs of $3.7 million for the Credit Facility, $4.3 million for the Convertible Notes and $3.8 million for the Senior Notes that will be amortized through October 2023, March 2025 and May 2026, respectively.

(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. Dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) certain foreign currency denominated other asset and liability positions. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC 815, primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates are reflected concurrently in earnings for both the derivative instrument and the transaction and have an offsetting effect.

Foreign currency exchange contracts - Ria Operations and Corporate

In the United States, the Company uses short-duration foreign currency forward contracts, generally with maturities up to 14 days, to offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction and its settlement. Due to the short duration of these contracts and the Company’s credit profile, the Company is generally not required to post collateral with respect to these foreign currency forward contracts. Most derivative contracts executed with counterparties in the U.S. are governed by an International Swaps and Derivatives Association agreement that includes standard netting arrangements; therefore, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity. The Company had foreign currency forward contracts outstanding in the U.S. with a notional value of $397.0 million and $398.6 million as of March 31, 2023 and December 31, 2022, respectively. The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds sterling, euro and Mexican pesos.

In addition, the Company uses forward contracts, typically with maturities from a few days to less than one year, to offset foreign exchange rate fluctuations on certain short-term borrowings that are payable in currencies other than the U.S dollar. The Company had foreign currency forward contracts outstanding with a notional value of $271.2 million and $228.4 million as of March 31, 2023 and December 31, 2022, respectively, primarily in euro.

Foreign currency exchange contracts - xe Operations

xe writes derivative instruments, primarily foreign currency forward contracts and cross-currency swaps, mostly with counterparties comprised of individuals and small-to-medium size businesses and derives a currency margin from this activity as part of its operations. xe aggregates its foreign currency exposures arising from customer contracts and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from xe's total portfolio of positions were $20.1 million and $22.5 million for the three months ended March 31, 2023 and 2022, respectively. All of the derivative contracts used in the Company's xe operations are economic hedges and are not designated as hedges under ASC 815. The duration of these derivative contracts is generally less than one year.

The fair value of xe's total portfolio of positions can change significantly from period to period based on, among other factors, market movements and changes in customer contract positions. xe manages counterparty credit risk (the risk that counterparties will default and not make payments according to the terms of the agreements) on an individual counterparty basis. It mitigates this risk by entering into contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. xe does not expect any significant losses from counterparty defaults.

The aggregate equivalent U.S. dollar notional amount of foreign currency derivative customer contracts held by the Company in its xe operations was approximately $1.0 billion as of March 31, 2023 and December 31, 2022. The significant majority of customer contracts are written in major currencies such as the euro, U.S. dollar, British pounds sterling, Australian dollar and New Zealand dollar.

Balance Sheet Presentation

The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the dates below:

	Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
(in millions)	Balance Sheet Location	March 31, 2023		December 31, 2022		Balance Sheet Location	March 31, 2023			December 31, 2022
Derivatives not designated as hedging instruments
Foreign currency exchange contracts	Other current assets	$	56.2	$	50.3	Other current liabilities	$	(41.9	)	$	(42.3	)

The following tables summarize the gross and net fair value of derivative assets and liabilities as of March 31, 2023 and December 31, 2022 (in millions):

Offsetting of Derivative Assets

							Gross Amounts Not Offset in the Consolidated Balance Sheet
As of March 31, 2023	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet		Financial Instruments			Cash Collateral Received			Net Amounts
Derivatives subject to a master netting arrangement or similar agreement	$	56.2	$	—	$	56.2	$	(24.0	)	$	(3.8	)	$	28.4

As of December 31, 2022
Derivatives subject to a master netting arrangement or similar agreement	$	50.3	$	—	$	50.3	$	(27.9	)	$	(4.1	)	$	18.3

Offsetting of Derivative Liabilities

									Gross Amounts Not Offset in the Consolidated Balance Sheet
As of March 31, 2023	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet			Financial Instruments		Cash Collateral Paid		Net Amounts
Derivatives subject to a master netting arrangement or similar agreement	$	(41.9	)	$	—	$	(41.9	)	$	24.0	$	2.3	$	(15.6	)

As of December 31, 2022
Derivatives subject to a master netting arrangement or similar agreement	$	(42.3	)	$	—	$	(42.3	)	$	27.9	$	4.2	$	(10.2	)

See Note 11, Fair Value Measurements, for the determination of the fair values of derivatives.

Income Statement Presentation

The following table summarizes the location and amount of losses on derivatives in the Consolidated Statements of Income for the three months ended March 31, 2023 and 2022:

		Amount of Gain (Loss) Recognized in Income on Derivative Contracts (a)
	Location of Gain (Loss) Recognized in Income on Derivative Contracts	Three Months Ended March 31,
(in millions)		2023			2022
Foreign currency exchange contracts - Ria Operations	Foreign currency exchange gain (loss), net	$	(1.6	)	$	(0.1	)

(a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its xe operations. These derivative contracts are excluded from this table as they are part of the broader disclosure of foreign currency exchange revenues for this business discussed above.

See Note 11, Fair Value Measurements, for the determination of the fair values of derivatives.

(11) FAIR VALUE MEASUREMENTS

Fair value measurements used in the unaudited consolidated financial statements are based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the inputs that market participants would use in pricing.

The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis:

		As of March 31, 2023
(in millions)	Balance Sheet Classification	Level 1		Level 2			Level 3		Total
Assets
Foreign currency exchange contracts	Other current assets	$	—	$	56.2		$	—	$	56.2
Liabilities
Foreign currency exchange contracts	Other current liabilities	$	—	$	(41.9	)	$	—	$	(41.9	)

		As of December 31, 2022
(in millions)	Balance Sheet Classification	Level 1		Level 2			Level 3		Total
Assets
Foreign currency exchange contracts	Other current assets	$	—	$	50.3		$	—	$	50.3
Liabilities
Foreign currency exchange contracts	Other current liabilities	$	—	$	(42.3	)	$	—	$	(42.3	)

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term debt obligations approximate fair values due to their short maturities. The carrying values of the Company’s revolving credit agreements approximate fair values because interest as of March 31, 2023 was based on SOFR that resets at various intervals of less than one year. The Company estimates the fair value of the Convertible Notes and Senior Notes using quoted prices in inactive markets for identical liabilities (Level 2). As of March 31, 2023, the fair values of the Convertible Notes and Senior Notes were $539.9 million and $583.2 million, respectively, with carrying values of $525.0 million and $650.3 million, respectively.

(12) SEGMENT INFORMATION

Our reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting ("ASC 280"). The Company currently operates in the following three reportable operating segments:

1) Through the EFT Processing Segment, the Company process transactions for a network of ATMs and POS terminals across Europe, the Middle East, Africa, Asia Pacific and the United States. Euronet provides comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit, debit and prepaid card outsourcing, dynamic currency conversion, domestic and international surcharges and other value added services. Through this segment, the Company also offers a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.

2) Through the epay Segment, Euronet provides distribution, processing and collection services for electronic payment products, and prepaid mobile airtime through a network of POS terminals in Europe, the Middle East, Asia Pacific, South America and North America. The epay Segment also provides vouchers and physical gift fulfillment services in Europe.

3) Through the Money Transfer Segment, Euronet provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, IME, AFEX, and xe, and global account-to-account money transfer services under the brand name xe. The Company offers services under the brand names Ria and IME through a network of sending agents, Company-owned stores, Company-owned websites, and mobile applications, disbursing money transfers through a worldwide correspondent network. xe is a provider of foreign currency exchange information and offers money transfer services on its currency data websites. The Company also offers customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up. Furthermore, xe provides cash management solutions and foreign currency risk management services to small-to-medium sized businesses.

In addition, the Company accounts for non-operating activity, share-based compensation expense, certain intersegment eliminations and the costs of providing corporate and other administrative services in the administrative division, "Corporate Services, Eliminations and Other." These services are not directly identifiable with the Company’s reportable operating segments.

The following tables present the Company's reportable segment results for the three months ended March 31, 2023 and 2022:

	For the Three Months Ended March 31, 2023
(in millions)	EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated
Total revenues	$	192.2	$	237.4	$	359.4	$	(1.8	)	$	787.2
Operating expenses:
Direct operating costs, exclusive of depreciation	119.0		178.1		196.3		(1.8		)	491.6
Salaries and benefits	27.5		21.4		74.3		18.7			141.9
Selling, general and administrative	16.1		8.8