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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, 2024
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: 001-31648
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 ☐
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 
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 2, 2024, Euronet Worldwide, Inc. had 45,871,136 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, 2024 and December 31, 2023 1
  Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 2
  Consolidated Statements of Comprehensive Income (loss) for the Three Months Ended March 31, 2024 and 2023 3
  Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2024 and 2023 4
  Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 5
  Notes to the Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 22
Item 3. Quantitative and Qualitative Disclosures About Market Risk 38
Item 4. Controls and Procedures 39
PART II—OTHER INFORMATION
Item 1. Legal Proceedings 39
Item 1A. Risk Factors 40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40
Item 5 Other Information 40
Item 6. Exhibits 41
Signatures 42

 



 

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(In millions, except share and per share data) 
 
As of

 
March 31,
2024

 
December 31,
2023

 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents 
$
1,236.2
 
$
1,254.2
ATM cash
599.7
 
525.2
Restricted cash
15.8
 
15.2
Settlement assets
1,413.5
 
1,681.5
Trade accounts receivable, net of credit losses of $3.5 and $3.6
407.6
 
370.6
Prepaid expenses and other current assets
254.9
 
316.0
Total current assets
3,927.7
 
4,162.7
Operating right of use lease assets
143.9
 
142.6
Property and equipment, net of accumulated depreciation of $671.2 and $656.9
324.5
 
332.1
Goodwill
848.8
 
847.5
Acquired intangible assets, net of accumulated amortization of $214.8 and $214.1
208.9
 
167.6
Other assets, net of accumulated amortization of $77.6 and $76.3
179.3
 
181.9
Convertible notes receivable 
60.5


60.0

Total assets
$
5,693.6
 
$
5,894.4
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Settlement obligations
$
1,413.5
 
$
1,681.5
Trade accounts payable
280.1
 
241.2
Accrued expenses and other current liabilities
402.3
 
439.0
Current portion of operating lease liabilities
50.3
 
50.3
Short-term debt obligations and current maturities of long-term debt obligations
675.2
 
150.3
Income taxes payable
78.1
 
81.6
Deferred revenue
57.5
 
56.7
Total current liabilities
2,957.0
 
2,700.6
Debt obligations, net of current portion
1,258.8
 
1,715.4
Operating lease obligations, net of current portion
97.7
 
95.8
Deferred income taxes
50.7
 
47.0
Other long-term liabilities
85.8
 
85.9
Total liabilities
4,450.0
 
4,644.7
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 64,467,354 and 64,376,923
1.3
 
1.3
Additional paid-in-capital
1,324.8
 
1,311.6
Treasury stock, at cost, shares issued 18,598,580 and 18,598,961
(1,488.2
)
 
(1,487.7
)
Retained earnings
1,654.1
 
1,627.9
Accumulated other comprehensive loss
(248.2
)
 
(203.2
)
Total Euronet Worldwide, Inc. stockholders’ equity
1,243.8
 
1,249.9
Noncontrolling interests
(0.2
)
 
(0.2
)
Total equity
1,243.6
 
1,249.7
Total liabilities and equity
$
5,693.6
 
$
5,894.4
 
See accompanying notes to the unaudited consolidated financial statements.


1


 

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in millions, except share and per share data)
 

Three Months Ended
March 31,
 

2024



2023

Revenues
$
857.0


$
787.2

Operating expenses:






Direct operating costs, exclusive of depreciation

533.7



491.6

Salaries and benefits

154.7



141.9

Selling, general and administrative

71.9



75.2

Depreciation and amortization

32.7



32.9

Total operating expenses

793.0



741.6

Operating income

64.0



45.6

Other income (expense):







Interest income

5.7



2.6

Interest expense

(14.9
)


(10.1
)
Foreign currency exchange loss, net

(12.5
)


(1.1
)
Other (losses) gains, net

(0.1
)



Other expense, net

(21.8
)


(8.6
)
Income before income taxes

42.2



37.0

Income tax expense

(16.0
)


(17.2
)
Net income

26.2



19.8

Net income attributable to noncontrolling interests




0.3

Net income attributable to Euronet Worldwide, Inc.
$
26.2


$
20.1

 







Earnings per share attributable to Euronet Worldwide, Inc. stockholders:







Basic
$
0.57


$
0.40

Diluted
$
0.55


$
0.39

Weighted average shares outstanding:







Basic

45,816,943



49,811,368

Diluted

48,962,583



52,974,800

 
See accompanying notes to the unaudited consolidated financial statements.
 
2



EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in millions)

 

Three Months Ended
March 31,

 

2024



2023

Net income
$
26.2


$
19.8

Translation adjustment

(45.0
)


20.8
Comprehensive income (loss)

(18.8
)


40.6
Comprehensive income attributable to noncontrolling interests 



0.1
Comprehensive income (loss) attributable to Euronet Worldwide, Inc.
$
(18.8
)

$
40.7
 
See accompanying notes to the unaudited consolidated financial statements.
 
3


 
 EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in millions, except share data)
  
 
 
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 income
 
 
 
 
 
 
 
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
)
 
 


Number of
Shares Outstanding


Common
Stock


Additional
Paid-in Capital


Treasury
Stock

Balance of December 31, 2023
45,777,962


1.3


1,311.6


(1,487.7 )
Net income (loss)










Other comprehensive income










Stock issued under employee stock plans
90,812





0.7


(0.5 )
Share-based compensation






12.5



Repurchase of shares










Balance as of  March 31, 2024
45,868,774


1.3


1,324.8


(1,488.2 )

 
 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 income
 
 
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


Retained Earnings


Accumulated Other
Comprehensive Loss


Noncontrolling
Interests


Total
Balance as of December 31, 2023 $ 1,627.9

$ (203.2 )
$ (0.2 )
$ 1,249.7
Net income (loss)
26.2







26.2
Other comprehensive income



(45.0 )




(45.0 )
Stock issued under employee stock plans









0.2
Share-based compensation









12.5
Repurchase of shares










Balance as of  March 31, 2024
1,654.1


(248.2 )

(0.2 )

1,243.6
 
See accompanying notes to the unaudited consolidated financial statements.
 
4



EURONET WORLDWIDE, INC. AND SUBSIDIARIES
(Unaudited, in millions)
 
 
Three Months Ended March 31,


2024
2023

Net income
$
26.2
 
$
19.8
Adjustments to reconcile net income to net cash provided by operating activities: 
 
 
 
Depreciation and amortization
32.7
 
32.9
Share-based compensation
12.5
 
14.3
Unrealized foreign exchange loss, net
12.5
 
1.1
Deferred income taxes
4.3
 
2.0
Amortization of debt issuance costs
1.0
 
1.0
Changes in working capital, net of amounts acquired:
 
Income taxes payable, net
(2.6
)
 
0.9
Trade accounts receivable, including amounts in settlement assets
76.0
 
378.3
Prepaid expenses and other current assets, including amounts in settlement assets
101.1
 
(34.6
)
Trade accounts payable, including amounts in settlement obligations
(92.7
)
 
(287.3
)
Deferred revenue
0.8
 
(2.9
)
Accrued expenses and other current liabilities, including amounts in settlement obligations
(145.1
)
 
(113.8
)
Changes in noncurrent assets and liabilities
3.3
 
(8.4
)
Net cash provided by operating activities
30.0
 
3.3
Cash flows from investing activities:
 
 
Acquisitions, net of cash acquired
(69.4
)
 
0.2
Purchases and proceeds of property and equipment
(23.8
)
 
(18.6
)
Purchases of other long-term assets
(3.3
)
 
(1.7
)
Other, net
(0.3
)
 
2.0
Net cash used in investing activities
(96.8
)
 
(18.1
)
Cash flows from financing activities:
 
 
 
Proceeds from issuance of shares
1.4
 
1.0
Repurchase of shares
(2.1
)
 
(29.2
)
Borrowings from credit agreements
2,032.9
 
1,768.3
Repayments of credit agreements 
(1,950.3
)
 
(1,744.0
)
Repayment of long-term debt obligations


(0.8
)
Repayments of capital lease obligations
(0.6
)


Other, net
 
0.3
Net cash provided by (used in) financing activities
81.3
 
(4.4
)
Effect of exchange rate changes on cash and cash equivalents and restricted cash
(47.2
)
 
(33.9
)
Decrease in cash and cash equivalents and restricted cash
(32.7
)
 
(53.1
)
Cash and cash equivalents and restricted cash at beginning of period
2,247.0
 
1,990.9
 
 


 
 


Cash and cash equivalents and restricted cash at end of period
$
2,214.3
 
$
1,937.8
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Interest paid during the period
$
9.4
 
$
5.7
Income taxes paid during the period
$
20.1
 
$
13.1

 

See accompanying notes to the unaudited consolidated financial statements.

 

5


 
EURONET WORLDWIDE, INC. AND SUBSIDIARIES

(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, point-of-sale ("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, 2023, including the notes thereto, set forth in the Company's 2023 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, 2024.
Seasonality

Euronet’s EFT Processing Segment normally experiences its heaviest demand for dynamic currency conversion ("DCC") services during the third quarter of the fiscal year, normally coinciding with the tourism season. The 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.

 
6


(2) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

In November 2023, the Financial Accounting Standards Board issued a new accounting pronouncement regarding segment reporting. The standard requires that public entities expand reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. The Company is required to adopt the new standard for its 2024 annual reporting and effective January 1, 2025 for its interim reporting, using a retrospective approach. Management is currently evaluating the potential impact that the adoption of this standard will have on the Company’s disclosures.

 

In December 2023, the Financial Accounting Standards Board issued a new accounting pronouncement regarding income tax disclosures. The standard requires that public entities disclose more consistent and detailed categories in their statutory to effective income tax rate reconciliations and further disaggregate income taxes paid by jurisdiction. The Company is required to adopt the new standard for its 2025 annual reporting, using a prospective approach. Management is currently evaluating the potential impact that the adoption of this standard will have on the Company’s disclosures.

 

(3) ACQUISITIONS

 

Acquisitions 2024


On February 1, 2024, Euronet acquired Infinitium Group, a leading regional solutions provider with Payments Authentication services, for a purchase consideration of $70.0 million cash and $5.0 million of the Company’s common stock to be paid over two installments on February 1, 2026 and 2027. The Company preliminary allocated $51.0 million of the purchase consideration to customer relationships, $5.6 million to acquired net assets, and the remaining $18.4 million to goodwill.

 

(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.

 

7


 

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,
2024
December 31,
2023
Settlement assets:
 
 
Settlement cash and cash equivalents
$
250.8
$
327.4
Settlement restricted cash
111.8
125.0
Accounts receivable, net of credit losses of $32.2 and $35.7 
868.5
1,002.1
Prepaid expenses and other current assets
182.4
227.0
Total settlement assets
$
1,413.5
$
1,681.5
Settlement obligations:
 
 
Trade account payables
$
560.5
$
708.6
Accrued expenses and other current liabilities
853.0
972.9
Total settlement obligations 
$
1,413.5
$
1,681.5

 

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,
2024

 
December 31,
2023

 
March 31,
2023

 
December 31,
2022

Cash and cash equivalents
 
$
1,236.2
 
$
1,254.2
 
$
1,065.8
 
$
1,131.2
Restricted cash
 
15.8
 
15.2
 
12.7
 
7.4
ATM cash
 
599.7
 
525.2
 
627.2
 
515.6
Settlement cash and cash equivalents
 
250.8
 
327.4
 
150.0
 
242.7
Settlement restricted cash
 
111.8
 
125.0
 
82.1
 
94.0
Cash and cash equivalents and restricted cash at end of period
 
$
2,214.3
 
$
2,247.0
 
$
1,937.8
 
$
1,990.9

 

(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.

 

8



The following table provides the computation of diluted earnings and diluted weighted average number of common shares outstanding:
 
 (in millions) Three Months Ended
March 31,

 
2024


2023

Computation of diluted earnings:



   Net income 
$
26.2

$
20.1

   Add: Interest expense from assumed conversion of convertible notes, net of tax
0.9


0.8

      Net income for diluted earnings per share calculation
$
27.1

$
20.9









Computation of diluted weighted average shares outstanding:



Basic weighted average shares outstanding
45,816,943


49,811,368

Incremental shares from assumed exercise of stock options and vesting of restricted stock units
363,822


381,614

Incremental shares from assumed conversion of convertible debt
2,781,818

2,781,818

Diluted weighted average shares outstanding 

48,962,583


52,974,800


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 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 3.3 million and 2.3 million for the three months ended March 31, 2024 and 2023.

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 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 10, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes.

Share repurchases

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. As of March 31, 2024, approximately $96.6 million in value of additional shares were available to be repurchased under this repurchase program. On September 13, 2023, 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, 2025. As of March 31, 2024, all shares were available to be repurchased under this repurchase program. Repurchases under the programs 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 adjustments of ($45.0) million for the three months ended March 31, 2024 and $20.8 million for the three months ended March 31, 2023, respectively. There were no reclassifications of foreign currency translation adjustments into the consolidated statements of income for the three months ended March 31, 2024 and 2023.


9


 

(6) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

 

A summary of acquired intangible assets and goodwill activity for the three months ended March 31, 2024 is presented below:
(in millions)
 
Acquired
Intangible
Assets
 
Goodwill
 
Total
Intangible
Assets
Balance as of December 31, 2023
 
$
167.6
 
$
847.5
 
$
1,015.1
Increases (decreases):
 
 
 
 
 
 
Acquisition
 
51.0
 
18.4
 
69.4
Amortization
 
(5.5
)
 
 
(5.5
)
Foreign currency exchange rate changes
 
(4.2
)
 
(17.1
)
 
(21.3
)
Balance as of March 31, 2024
 
$
208.9
 
$
848.8
 
$
1,057.7

 

Of the total goodwill balance of $848.8 million as of March 31, 2024$382.4 million relates to the Money Transfer Segment, $342.9 million relates to the EFT Processing Segment and the remaining $123.5 million relates to the epay SegmentEstimated amortization expense on acquired intangible assets with finite lives as of March 31, 2024, is expected to total $12.4 million for the remainder of 2024, $14.3 million for 2025, $14.0 million for 2026, $12.7 million for 2027, $12.3 million for 2028 and $12.3 million for 2029.

 

(7) CONVERTIBLE NOTES RECEIVABLE

 

The Company loaned a total of $60.0 million to Koin Mobile, LLC and Marker Trax, LLC under two promissory notes (the "Notes"), which were fully executed on October 19, 2023. Under the terms of the Notes, interest will accrue on the Notes at 2% per annum and all unpaid principal and interest will be due and payable on October 18, 2028 if not converted earlier as discussed below. The Company has a security interest in all of the assets of Koin Mobile, LLC and Marker Trax, LLC. The outstanding principal and accrued interest were $60.0 million and $0.5 million at March 31, 2024, respectively. 

 

The Notes are convertible into preferred equity of Koin Mobile, LLC and Marker Trax, LLC at the option of the Company upon the occurrence of certain events including a qualified equity financing, change in control, achievement of profitability or at the option of the Company at maturity, as defined in the Notes.

 

(8) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

Accrued expenses and other current liabilities consist of the following:
 
 
As of
(in millions)
 
March 31,
2024
 
December 31, 2023
Accrued expenses
 
$
297.7
 
$
254.8
Derivative liabilities
 
26.3
 
39.1
Other tax payables
19.1

69.1

Accrued payroll expenses
57.6
74.4
Current portion of capital lease obligations
 
1.6
 
1.6
Total
 
$
402.3
 
$
439.0

 

(9) DEFERRED REVENUES

 

The Company records deferred revenues when cash payments are received or due in advance of the Company's performance. The increase in the deferred revenue balance for the three months ended March 31, 2024 is the result of $71.4 million of revenues recognized, offset by $70.6 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations.

 

10



(10) DEBT OBLIGATIONS

 

Debt obligations consist of the following:

 

  
 
As of

(in millions)
 
March 31, 2024

 
December 31, 2023

Credit Facility:
 
 
 
 
Revolving credit agreement
 
$
619.5
 
$
536.9
Notes:
 
 
 
 
0.75% Convertible Notes, unsecured, due 2049
 
525.0
 
525.0





1.375% Senior Notes, due 2026
 
646.9
 
662.2





Uncommitted credit agreements

150.0

150.0








Other obligations
 
0.2
 
0.3









Total debt obligations
 
1,941.6
 
1,874.4
Unamortized debt issuance costs
 
(7.6
)
 
(8.7
)
Carrying value of debt
 
1,934.0
 
1,865.7
Short-term debt obligations and current maturities of long-term debt obligations 
 
(675.2
)
 
(150.3
)
Long-term debt obligations
 
$
1,258.8
 
$
1,715.4

 

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, 2024.


11



Convertible Notes

 

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, 2024, the conversion threshold was not met. Contractual interest expense for the Convertible Notes was $1.0 million for the three months ended March 31, 2024 and 2023 respectively.

 

1.375% Senior Notes due 2026

 

On May 22, 2019, the Company completed the sale of 600.0 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, 2024, the Company has outstanding 600.0 million ($646.9 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.
 
Uncommitted Credit Agreements

 

On June 26, 2023, the Company entered into an Uncommitted Loan Agreement for $150 million, fully drawn and outstanding at March 31, 2024, for the sole purpose of providing vault cash for ATMs, that expires no later than June 21, 2024. The loan is a Prime rate loan, a Bloomberg Short-term Bank Yield ("BSBY") rate loan plus 0.95or bears interest at the rate agreed to by the Bank and the Company at the time such loan is made. The weighted-average interest rate from the loan inception date to March 31, 2024 was 6.31%.

 

12


 
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, 2024 and December 31, 2023, borrowings under these arrangements were $0.2 million and $0.3 million, respectively.

 

Debt Issuance Costs

 

As of March 31, 2024, the Company had unamortized debt issuance costs of $2.9 million for the Credit Facility, $2.1 million for the Convertible Notes and $2.6 million for the Senior Notes that will be amortized through October 2027, March 2025 and May 2026,  respectively.

  

(11) 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 815primarily 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 $400.8 million and $393.3 million as of March 31, 2024 and December 31, 2023, respectively. The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds sterling, euros 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 $490.1 million and $563.1 million as of March 31, 2024 and December 31, 2023, respectively, primarily in euro.

 

13



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 $20.9 million for the three months ended March 31, 2024, respectively, and $20.1 million for the same period in 2023, 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 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 as of March 31, 2024 and December 31, 2023 was $1.1 billion and $1.1 billion, respectively. 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, 2024
 
December 31, 2023
 
Balance Sheet Location
 
March 31, 2024
 
December 31, 2023
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current assets
 
$
27.5

 
$
50.0

 
Other current liabilities
 
$
(26.3
)
 
$
(39.1
)
 
The following tables summarize the gross and net fair value of derivative assets and liabilities as of March 31, 2024 and December 31, 2023 (in millions):
 
Offsetting of Derivative Assets
As of March 31, 2024
 
Gross Amounts of Recognized Assets
 
Gross Amounts Offset in the Consolidated Balance Sheet
 
Net Amounts Presented in the Consolidated Balance Sheet
 
Derivatives Not Offset in the Consolidated Balance Sheet
 
Net Amounts
Derivatives subject to a master netting arrangement or similar agreement
 
$
27.5

 
$

 
$
27.5

 
$
(14.2
)
 
$
13.3

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2023
 
 
 
 
 
 
 
 
 
 
Derivatives subject to a master netting arrangement or similar agreement
 
$
50.0

 
$

 
$
50.0

 
$
(19.9
)
 
$
30.1


14


 

Offsetting of Derivative Liabilities
As of March 31, 2024
 
Gross Amounts of Recognized Liabilities
 
Gross Amounts Offset in the Consolidated Balance Sheet
 
Net Amounts Presented in the Consolidated Balance Sheet
 
Derivatives Not Offset in the Consolidated Balance Sheet
 
Net Amounts
Derivatives subject to a master netting arrangement or similar agreement
 
$
(26.3
)
 
$

 
$
(26.3
)
 
$
19.4

 
$
(6.9
)
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2023
 
 
 
 
 
 
 
 
 
 
Derivatives subject to a master netting arrangement or similar agreement
 
$
(39.1
)
 
$

 
$
(39.1
)
 
$
26.3

 
$
(12.8
)
 
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, 2024 and 2023:
 
 
 
 
 
Amount of (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)
 
 
2024
 
2023

Foreign currency exchange contracts - Ria Operations
 
Foreign currency exchange (loss), net
 
$
(1.7
)
 
$
(1.6
)

 

(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 12, Fair Value Measurements, for the determination of the fair values of derivatives.
  
(12) 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.

 

15



 

The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis:
 
 
 
 
As of March 31, 2024
(in millions)
 
Balance Sheet Classification
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current assets
 
$

 
$
27.5

 
$

 
$
27.5

Liabilities
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current liabilities
 
$

 
$
(26.3
)
 
$

 
$
(26.3
)

 

 
 
 
 
As of December 31, 2023
(in millions)
 
Balance Sheet Classification
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current assets
 
$

 
$
50.0

 
$

 
$
50.0

Liabilities
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
 
Other current liabilities
 
$

 
$
(39.1
)
 
$

 
$
(39.1
)
 
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, 2024 was based on the Secured Overnight Financing Rate ("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, 2024, the fair values of the Convertible Notes and Senior Notes were $538.0 million and $609.0 million, respectively, with carrying values of $525.0 million and $646.9 million, respectively.

(13) 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 processes 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 and deposit 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.

 

16



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, 2024 and 2023:
 
 
 
For the Three months ended March 31, 2024
(in millions)
 
EFT
Processing
 
epay
 
Money
Transfer
 
Corporate Services,
Eliminations
and Other
 
Consolidated
Total revenues
 
$
217.2
 
$
257.1
 
$
384.6
 
$
(1.9
)
 
$
857.0
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Direct operating costs, exclusive of depreciation
 
131.1
 
195.1
 
209.4
 
(1.9
)
 
533.7
Salaries and benefits
 
31.8
 
24.1
 
80.7
 
18.1
 
154.7
Selling, general and administrative
 
9.2
 
9.6
 
50.0
 
3.1
 
71.9
Depreciation and amortization
 
23.6
 
1.7
 
7.3
 
0.1
 
32.7
Total operating expenses
 
195.7
 
230.5
 
347.4
 
19.4
 
793.0
Operating income (loss) 
 
$
21.5
 
$
26.6
 
$
37.2
 
$
(21.3
)