EURONET WORLDWIDE, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The terms "Euronet," the "Company," "we" and "us" as used herein refer to Euronet Worldwide, Inc. and its subsidiaries. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This report contains statements that constitute forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Generally, the words "believe," "expect," "anticipate," "intend," "estimate," "will" and similar expressions identify forward-looking statements. However, the absence of these words or similar expressions does not mean the statement is not forward-looking. All statements other than statements of historical facts included in this document are forward-looking statements, including, but not limited to, statements regarding the following: • our business plans and financing plans and requirements; • trends affecting our business plans and financing plans and requirements; • the effect of the COVID-19 pandemic on our business; • trends affecting our business; • the adequacy of capital to meet our capital requirements and expansion plans; • the assumptions underlying our business plans; • our ability to repay indebtedness; • our estimated capital expenditures; • the potential outcome of loss contingencies; • our expectations regarding the closing of any pending acquisitions; • business strategy; • government regulatory action; • the expected effects of changes in laws or accounting standards; • technological advances; and • projected costs and revenues. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct. Investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may materially differ from those in the forward-looking statements as a result of various factors, including, but not limited to, the effect of the COVID-19 pandemic on our business; conditions in world financial markets and general economic conditions, including the effects in Europe of the negotiations related to the United Kingdom's departure from the European Union (E.U.), and economic conditions in specific countries and regions; technological developments affecting the market for our products and services; our ability to successfully introduce new products and services; foreign currency exchange rate fluctuations; the effects of any breach of our computer systems or those of our customers or vendors, including our financial processing networks or those of other third parties; interruptions in any of our systems or those of our vendors or other third parties; our ability to renew existing contracts at profitable rates; changes in fees payable for transactions performed for cards bearing international logos or over switching networks such as card transactions on ATMs; the impact of changes in rules imposed by international card organizations such as Visa and Mastercard on card transactions on ATMs, including reductions in ATM interchange fees, restrictions on the ability to apply direct access fees, the ability to offer DCC transactions on ATMs, and increases in fees charged on DCC transactions; the impact of changes in laws and regulations affecting the profitability of our services, including regulation of DCC transactions or ATM access fees by the E.U.; our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, consumer and data protection and the E.U.'s General Data Privacy Regulation and the Services Payment Directive ("PSD2") requirements; changes in laws and regulations affecting our business, including tax and immigration laws and any laws regulating payments, including DCC transactions; changes in our relationships with, or in fees charged by, our business partners; competition; the outcome of claims and other loss contingencies affecting Euronet; general economic, financial and market conditions and the duration and extent of any economic downturns related to the COVID-19 pandemic or future events; the cost of borrowing, availability of credit and terms of and compliance with debt covenants; renewal of sources of funding as they expire and the availability of replacement funding; the outlook for markets we serve; and those factors referred to above and as set forth and more fully described in Part I, Item 1A — Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2019 and Part II, Item 1A of this Quarterly Report on Form 10-Q. Our Annual Report on Form 10-K is available on the SEC's EDGAR website at www.sec.gov, and copies may also be obtained by contacting the Company. Any forward-looking statements made in this Form 10-Q speak only as of the date of this report. Except as required by law, we do not intend, and do not undertake any obligation, to update any forward-looking statements to reflect future events or circumstances after the date of such statements. 23 Table of Contents OVERVIEW COMPANY OVERVIEW, GEOGRAPHIC LOCATIONS AND PRINCIPAL PRODUCTS AND SERVICES Euronet is a leading electronic payments provider. We offer payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Our primary product offerings include comprehensive ATM, POS, card outsourcing, card issuing and merchant acquiring services, software solutions, electronic distribution of prepaid mobile airtime and other electronic payment products, foreign currency exchange services and global money transfer services. We operate in the following three segments: • The EFT Processing Segment, which processes transactions for a network of 41,648 ATMs and approximately 319,000 POS terminals across Europe, the Middle East, Asia Pacific, and the United States. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, DCC, and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems. • The epay Segment, which provides distribution, processing and collection services for prepaid mobile airtime and other electronic content. We operate a network of approximately 703,000 POS terminals providing electronic processing of prepaid mobile airtime top-up services and other electronic content in Europe, the Middle East, Asia Pacific, the United States and South America. We also provide vouchers and physical gift fulfillment services in Europe. • The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, AFEX Money Express, IME and xe and global account-to-account money transfer services under the brand name xe. We offer services under the brand names Ria, AFEX Money Express and IME through a network of sending agents, Company-owned stores (primarily in North America, Europe and Malaysia) and our websites (riamoneytransfer.com and online.imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately 435,000 locations. xe is a provider of foreign currency exchange information and offers money transfer services on its currency data websites (xe.com and x-rates.com). In addition to money transfers, we also offer customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up. Through our xe brand, we offer cash management solutions and foreign currency risk management services to small-to-medium sized businesses. We have six processing centers in Europe, five in Asia Pacific and two in North America. We have 36 principal offices in Europe, 14 in Asia Pacific, 10 in North America, three in the Middle East, two in South America and one in Africa. Our executive offices are located in Leawood, Kansas, USA. With approximately 70% of our revenues denominated in currencies other than the U.S. dollar, any significant changes in foreign currency exchange rates will likely have a significant impact on our results of operations (for a further discussion, see Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019). SOURCES OF REVENUES AND CASH FLOW Euronet earns revenues and income primarily from ATM management fees, transaction fees, commissions and foreign currency exchange margin. Each operating segment’s sources of revenues are described below. EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 15 % and 20% of total consolidated revenues for the three and six months ended June 30, 2020, respectively, are derived from fees charged for transactions made by cardholders on our proprietary network of ATMs, fixed management fees and transaction fees we charge to customers for operating ATMs and processing debit and credit cards under outsourcing and cross-border acquiring agreements, foreign currency exchange margin on DCC transactions, domestic and international surcharge, foreign currency dispensing and other value added services such as advertising, prepaid telecommunication recharges, bill payment, and money transfers provided over ATMs. Revenues in this segment are also derived from cardless payment, banknote recycling, tax refund services, license fees, professional services and maintenance fees for proprietary application software and sales of related hardware. 24 Table of Contents epay Segment — Revenues in the epay Segment, which represented approximately 35 % and 32 % of total consolidated revenues for the three and six months ended June 30, 2020, respectively, are primarily derived from commissions or processing fees received from mobile phone operators for the processing and distribution of prepaid mobile airtime and commissions earned from the distribution of other electronic content, vouchers, and physical gifts. The proportion of epay Segment revenues earned from the distribution of prepaid mobile phone time compared with other electronic products has decreased over time, and digital media content now produces approximately 63% of epay Segment revenues. Other electronic content offered by this segment includes digital content such as music, games and software, as well as, other products including prepaid long distance calling card plans, prepaid Internet plans, prepaid debit cards, gift cards, vouchers, transport payments, lottery payments, bill payment, and money transfer. Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately 50% and 48% of total consolidated revenues for the three and six months ended June 30, 2020, respectively, are primarily derived from transaction fees, as well as the margin earned from purchasing foreign currency at wholesale exchange rates and selling the foreign currency to customers at retail exchange rates. We have a sending agent network in place comprised of agents, customer service representatives, Company-owned stores, primarily in North America, Europe and Malaysia, and Ria, and xe branded websites, along with a worldwide network of correspondent agents, consisting primarily of financial institutions in the transfer destination countries. Sending and correspondent agents each earn fees for cash collection and distribution services, which are recognized as direct operating costs at the time of sale. The Company offers a money transfer product called Walmart-2-Walmart Money Transfer Service which allows customers to transfer money to and from Walmart stores in the U.S. Our Ria business executes the transfers with Walmart serving as both the sending agent and payout correspondent. Ria earns a lower margin from these transactions than its traditional money transfers; however, the arrangement has added a significant number of transactions to Ria's business. The agreement with Walmart establishes Ria as the only party through which Walmart will sell U.S. domestic money transfers branded with Walmart marks. The agreement is effective until April 2023. Thereafter, it will automatically renew for subsequent one year terms unless either party provides notice to the contrary. The agreement imposes certain obligations on each party, the most significant being service level requirements by Ria and money transfer compliance requirements by Walmart. Any violation of these requirements by Ria could result in an obligation to indemnify Walmart or termination of the contract by Walmart. However, the agreement allows the parties to resolve disputes by mutual agreement without termination of the agreement. Corporate Services, Eliminations and Other — In addition to operating in our principal operating segments described above, our “Corporate Services, Eliminations and Other” category includes non-operating activity, certain inter-segment eliminations and the cost of providing corporate and other administrative services to the operating segments, including most share-based compensation expense. These services are not directly identifiable with our reportable operating segments. Opportunities and Challenges Our expansion plans and opportunities are focused on eight primary areas: • increasing the number of ATMs and cash deposit terminals in our independent ATM networks; • increasing transactions processed on our network of owned and operated ATMs and POS devices; • signing new outsourced ATM and POS terminal management contracts; • expanding value added services and other products offered by our EFT Processing Segment, including the sale of DCC, acquiring and other prepaid card services to banks and retailers; • expanding our epay processing network and portfolio of digital content; • expanding our money transfer services, cross-currency payments products and bill payment network; • expanding our cash management solutions and foreign currency risk management services; and • developing our credit and debit card outsourcing business. EFT Processing Segment — The continued expansion and development of our EFT Processing Segment business will depend on various factors including, but not necessarily limited to, the following: • the impact of competition by banks and other ATM operators and service providers in our current target markets; • the demand for our ATM outsourcing services in our current target markets; • our ability to develop products or services, including value added services, to drive increases in transactions and revenues; • the expansion of our various business lines in markets where we operate and in new markets; 25 Table of Contents • our entry into additional card acceptance and ATM management agreements with banks; • our ability to obtain required licenses in markets we intend to enter or expand services; • our ability to enter into sponsorship agreements where our licenses are not applicable; • our ability to enter into and renew ATM network cash supply agreements with financial institutions; • the availability of financing for expansion; • our ability to efficiently install ATMs contracted under newly awarded outsourcing agreements; • our ability to renew existing contracts at profitable rates; • our ability to maintain pricing at current levels or mitigate price reductions in certain markets; • the impact of changes in rules imposed by international card organizations such as Visa and Mastercard on card transactions on ATMs, including reductions in ATM interchange fees, restrictions on the ability to apply direct access fees, the ability to offer DCC transactions on ATMs, and increases in fees charged on DCC transactions; • the impact of changes in laws and regulations affecting the profitability of our services, including regulation of DCC transactions by the E.U.; • the impact of overall market trends on ATM transactions in our current target markets; • our ability to expand and sign additional customers for the cross-border merchant processing and acquiring business; • the continued development and implementation of our software products and their ability to interact with other leading products; and • the duration and severity of the COVID-19 pandemic may limit access to ATM locations, create consumer fear regarding contracting the virus by touching ATM screens, keyboards or cash, impact consumer cross-border travel habits and reduce high margin cross-border transactions. We consistently evaluate and add prospects to our list of potential ATM outsource customers. However, we cannot predict the increase or decrease in the number of ATMs we manage under outsourcing agreements because this depends largely on the willingness of banks to enter into outsourcing contracts with us. Due to the thorough internal reviews and extensive negotiations conducted by existing and prospective banking customers in choosing outsource vendors, the process of entering into or renewing outsourcing agreements can take several months. The process is further complicated by the legal and regulatory considerations of local countries. These agreements tend to cover large numbers of ATMs, so significant increases and decreases in our pool of managed ATMs could result from the acquisition or termination of one or more of these management contracts. Therefore, the timing of both current and new contract revenues is uncertain and unpredictable. Software products are an integral part of our product lines, and our investment in research, development, delivery and customer support reflects our ongoing commitment to an expanded customer base. epay Segment — The continued expansion and development of the epay Segment business will depend on various factors, including, but not necessarily limited to, the following: • our ability to maintain and renew existing agreements, and to negotiate new agreements in additional markets with mobile operators, digital content providers, agent financial institutions and retailers; • our ability to use existing expertise and relationships with mobile operators, digital content providers and retailers to our advantage; • the continued use of third-party providers such as ourselves to supply electronic processing solutions for existing and additional digital content; • the development of mobile phone networks in the markets in which we do business and the increase in the number of mobile phone users; • the overall pace of growth in the prepaid mobile phone and digital content market, including consumer shifts between prepaid and postpaid services; • our market share of the retail distribution capacity; • the development of new technologies that may compete with POS distribution of prepaid mobile airtime and other products; 26 Table of Contents • the level of commission that is paid to the various intermediaries in the electronic payment distribution chain; • our ability to fully recover monies collected by retailers; • our ability to add new and differentiated products in addition to those offered by mobile operators; • our ability to develop and effectively market additional value added services; • our ability to take advantage of cross-selling opportunities with our EFT Processing and Money Transfer Segments, including providing money transfer services through our distribution network; • the availability of financing for further expansion; and • the duration and severity of the COVID-19 pandemic may limit access to POS merchant locations, our ability to maintain and grow our relationships with digital content providers that are experiencing increased demand due to the COVID-19 pandemic, and increase our credit risk as many of our merchants are temporarily closed as nonessential services. In all of the markets in which we operate, we are experiencing significant competition which will impact the rate at which we may be able to grow organically. Competition among prepaid mobile airtime and electronic content distributors results in the increase of commissions paid to retailers and increases in retailer attrition rates. To grow, we must capture market share from other prepaid mobile airtime and electronic content distributors, offer a superior product offering and demonstrate the value of a global network. In certain markets in which we operate, many of the factors that may contribute to rapid growth (growth in electronic content, expansion of our network of retailers and access to products of mobile operators and other content providers) remain present. 27 Table of Contents Money Transfer Segment — The continued expansion and development of our Money Transfer Segment business will depend on various factors, including, but not necessarily limited to, the following: • the continued growth in worker migration and employment opportunities; • the mitigation of economic and political factors that have had an adverse impact on money transfer volumes, such as changes in the economic sectors in which immigrants work and the developments in immigration policies in the countries in which we operate; • the continuation of the trend of increased use of electronic money transfer and bill payment services among high-income individuals, immigrant workers and the unbanked population in our markets; • our ability to maintain our agent and correspondent networks; • our ability to offer our products and services or develop new products and services at competitive prices to drive increases in transactions; • the development of new technologies that may compete with our money transfer network, and our ability to acquire, develop and implement new technologies; • the expansion of our services in markets where we operate and in new markets; • our ability to strengthen our brands; • our ability to fund working capital requirements; • our ability to recover from agents funds collected from customers and our ability to recover advances made to correspondents; • our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate; • our ability to take advantage of cross-selling opportunities with our epay Segment, including providing prepaid services through our stores and agents worldwide; • our ability to leverage our banking and merchant/retailer relationships to expand money transfer corridors to Europe, Asia and Africa, including high growth corridors to Central and Eastern European countries; • the availability of financing for further expansion; • the ability to maintain banking relationships necessary for us to service our customers; • our ability to successfully expand our agent network in Europe using our payment institution licenses under the Second Payment Services Directive ("PSD2") and using our various licenses in the United States; • our ability to provide additional value-added products under the xe brand; and • the duration and severity of the COVID-19 pandemic impact on worker migration and employment opportunities, the ability of our customers to access agent network locations due to government ordered business closures, and the potential for an increase in credit risk and customer agent receivable defaults. For all segments, our continued expansion may involve additional acquisitions that could divert our resources and management time and require integration of new assets with our existing networks and services. Our ability to effectively manage our growth has required us to expand our operating systems and employee base, particularly at the management level, which has added incremental operating costs. An inability to continue to effectively manage expansion could have a material adverse effect on our business, growth, financial condition or results of operations. Inadequate technology and resources would impair our ability to maintain current processing technology and efficiencies, as well as deliver new and innovative services to compete in the marketplace. 28 Table of Contents SEGMENT SUMMARY RESULTS OF OPERATIONS Revenues and operating income by segment for the three and six months ended June 30, 2020 and 2019 are summarized in the tables below: Revenues for the Three Months Ended June 30, Year-over-Year Change Revenues for the Six Months Ended June 30, Year-over-Year Change (dollar amounts in thousands) 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent EFT Processing $ 78,488 $ 231,946 $ (153,458) (66) % $ 224,313 $ 377,649 $ (153,336) (41) % epay 187,563 184,160 3,403 2 % 360,474 360,274 200 0 % Money Transfer 262,863 276,783 (13,920) (5) % 529,097 533,364 (4,267) (1) % Total 528,914 692,889 (163,975) (24) % 1,113,884 1,271,287 (157,403) (12) % Corporate services, eliminations and other (1,111) ( 1,022 ) (89) 9 % (2,174) (1,911) (263) 14 % Total $ 527,803 $ 691,867 $ (164,064) (24) % $ 1,111,710 $ 1,269,376 $ (157,666) (12) % Operating Income (Expense) for the Three Months Ended June 30, Year-over-Year Change Operating Income (Expense) for the Six Months Ended June 30, Year-over-Year Change (dollar amounts in thousands) 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent EFT Processing $ (56,576) $ 76,516 $ (133,092) (174) % $ (51,641) $ 93,284 $ (144,925) (155) % epay 18,030 17,555 475 3 % 34,488 35,554 (1,066) (3) % Money Transfer (55,227) 35,346 (90,573) (256) % (32,919) 66,120 (99,039) (150) % Total (93,773) 129,417 (223,190) (172) % (50,072) 194,958 (245,030) (126) % Corporate services, eliminations and other (7,498) ( 11,520 ) 4,022 (35) % (19,597) (20,967) 1,370 (7) % Total $ (101,271) $ 117,897 $ (219,168) (186) % $ (69,669) $ 173,991 $ (243,660) (140) % Impact of changes in foreign currency exchange rates Our revenues and local expenses are recorded in the functional currencies of our operating entities, and then are translated into U.S. dollars for reporting purposes; therefore, amounts we earn outside the U.S. are negatively impacted by a stronger U.S. dollar and positively impacted by a weaker U.S. dollar. If significant, in our discussion we will refer to the impact of fluctuations in foreign currency exchange rates in our comparison of operating segment results. To provide further perspective on the impact of foreign currency exchange rates, the following table shows the changes in values relative to the U.S. dollar of the currencies of the countries in which we have our most significant operations: Average Translation Rate Three Months Ended June 30, Average Translation Rate Six Months Ended June 30, Currency (dollars per foreign currency) 2020 2019 Decrease Percent 2020 2019 Decrease Percent Australian dollar $ 0.6570 $ 0.7002 (6) % $ 0.6577 $ 0.7064 (7) % British pounds sterling $ 1.2406 $ 1.2851 (3) % $ 1.2606 $ 1.2938 (3) % euro $ 1.1010 $ 1.1236 (2) % $ 1.1017 $ 1.1295 (2) % Hungarian forint $ 0.0031 $ 0.0035 (11) % $ 0.0032 $ 0.0035 (9) % Indian rupee $ 0.0132 $ 0.0144 (8) % $ 0.0135 $ 0.0143 (6) % Malaysian ringgit $ 0.2316 $ 0.2412 (4) % $ 0.2356 $ 0.2428 (3) % New Zealand dollar $ 0.6180 $ 0.6625 (7) % $ 0.6266 $ 0.6719 (7) % Polish zloty $ 0.2446 $ 0.2626 (7) % $ 0.2499 $ 0.2633 (5) % 29 Table of Contents COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 EFT PROCESSING SEGMENT The following table summarizes the results of operations for our EFT Processing Segment for the three and six months ended June 30, 2020 and 2019 : Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change (dollar amounts in thousands) 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent Total revenues $ 78,488 $ 231,946 $ (153,458) (66) % $ 224,313 $ 377,649 $ (153,336) (41) % Operating expenses: Direct operating costs 62,465 105,568 (43,103) (41) % 150,001 189,344 (39,343) (21) % Salaries and benefits 21,289 21,339 (50) (0) % 43,380 40,770 2,610 6 % Selling, general and administrative 9,515 10,745 (1,230) (11) % 20,456 19,831 625 3 % Goodwill impairment 21,861 — 21,861 N/A 21,861 — 21,861 N/A Depreciation and amortization 19,934 17,778 2,156 12 % 40,256 34,420 5,836 17 % Total operating expenses 135,064 155,430 (20,366) (13) % 275,954 284,365 (8,411) (3) % Operating (loss) income $ (56,576) $ 76,516 $ (133,092) (174) % $ (51,641) $ 93,284 $ (144,925) (155) % Transactions processed (millions) 679 752 (73) (10) % 1,463 1,444 19 1 % ATMs as of June 30, 41,648 46,636 (4,988) (11) % 41,648 46,636 (4,988) (11) % Average ATMs 40,358 45,717 (5,359) (12) % 42,586 43,317 (731) (2) % Revenues EFT Processing Segment total revenues for the three and six months ended June 30, 2020 were $ 78.5 million and $ 224.3 million , respectively, a decrease of $153.5 million or 66% and $153.3 million or 41% compared to the same periods in 2019 , respectively. Total revenues for the three and six months ended June 30, 2020 decreased due to the impact of fewer active ATMs and fewer ATM transactions, especially high-margin cross-border transactions (DCC), related to COVID-19 pandemic-driven government-imposed border closures and shelter-in-place orders. The government imposed border closures and shelter-in-place orders were in effect for the majority of the three and six months ended June 30, 2020. These closures and orders resulted in a decrease in revenues for the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019. Foreign currency movements decreased total revenues by approximately $ 3.3 million and $ 7.1 million for the three and six months ended June 30, 2020 compared to the same period in 2019 . Average monthly revenues per ATM were $ 648 and $ 878 for the three and six months ended June 30, 2020 , respectively, compared to $1,691 and $1,453 for the three and six months ended June 30, 2019 , respectively. Revenues per transaction were $ 0.12 and $0.15 for the three and six months ended June 30, 2020, respectively , compared to $0.31 and $0.26 for the three and six months ended June 30, 2019 , respectively . The decreases in average monthly revenues per ATM were attributable to the decreases in transactions and revenues per transaction, driven by the decrease from D CC, which earns higher revenues per transaction than other ATM or card-based services, surcharges. The decrease in DCC transactions was due to the decline in tourism throughout Europe driven by the border closures during the three months ended June 30, 2020. Direct operating costs EFT Processing Segment direct operating costs were $62.5 million and $150.0 million for the three and six months ended June 30, 2020 , respectively, a decrease of $43.1 million or 41% and $39.3 million or 21 % compared to the same periods in 2019 , respectively. Direct operating costs in the EFT Processing Segment consist primarily of site rental fees, cash delivery costs, cash supply costs, maintenance, insurance, telecommunications, payment scheme processing fees, data center operations-related personnel, as well as the processing centers’ facility-related costs and other processing center-related expenses and commissions paid to retail merchants, banks and card processors involved with POS DCC transactions. 30 Table of Contents The decrease in direct operating costs was primarily due to the decrease in the number of ATMs under management, renegotiated and reduced site rental fees, and reduced operating costs for ATM's winterized during COVID-19 imposed restrictions. Foreign currency movements decreased direct operating costs for the three and six months ended June 30, 2020 by approximately $3.4 million and $6.1 million, respectively compared to the same period in 2019 . Gross profit Gross profit, which is calculated as revenues less direct operating costs, was $16.0 million and $74.3 million for the three and six months ended June 30, 2020 , respectively, compared to $126.4 million and $188.3 million for the three and six months ended June 30, 2019 , respectively. The decrease in gross profit was primarily due to the decrease in DCC transactions. Gross profit as a percentage of revenues (“gross margin”) was 20.4% and 33.1% for the three and six months ended June 30, 2020 , respectively, compared to 54.5% and 49.9% for the three and six months ended June 30, 2019 , respectively . The decrease in gross margin was attributable to the decrease in DCC transactions and domestic and international surcharge. Salaries and benefits Salaries and benefits expense were flat for the three months ended June 30, 2020 and increased $2.6 million or 6% for the six months ended June 30, 2020 compared to the same periods in 2019 , respectively . The increase for the six months ended June 30, 2020 was primarily due to additional headcount to support an increase in the number of POS devices under management. The shelter-in-place orders that took effect in late February 2020 and March 2020 in response to the COVID-19 pandemic reduced transaction volumes and revenues through the end of the second quarter of 2020, but human resources to support actual and planned growth were added throughout 2019 as well as the early part of the first quarter of 2020 before the COVID-19 pandemic took effect, which led to lower transactions and revenues in the quarter, especially high-margin cross-border transactions. As a percentage of revenues, these costs increased to 27.1% and 19.3% for the three and six months ended June 30, 2020 , respectively, compared to 9.2% and 10.8% and for the three and six months ended June 30, 2019 , respectively. The Company made a decision to retain it's employees during the pandemic. Selling, general and administrative Selling, general and administrative expenses for the three and six months ended June 30, 2020 were $9.5 million and $20.5 million , respectively, a decrease of $1.2 million and an increase of $0.6 million compared to the three and six months ended June 30, 2019, respectively. The decrease for the three months ended June 30, 2020 compared to the same period in 2019 was primarily due to a decrease in travel related expenses, partially offset by an increase in bad debt expense. The increase for the six months ended June 30, 2020 compared to the same period in 2019 was primarily due to an increase in bad debt expense. As a percentage of revenues, selling, general and administrative expenses were 12.1% and 9.1% for the three and six months ended June 30, 2020 , respectively, compared to 4.6% and 5.3% for the three and six months ended June 30, 2019 , respectively. Goodwill impairment Due to the economic impacts of the COVID-19 pandemic, the Company recorded a $21.9 million non-cash goodwill impairment charge related to two reporting units during the second quarter of 2020. A $14.0 million non-cash goodwill impairment charge was recorded for Innova as a result of the decline in VAT refund activity directly related to the decline in international tourism within the European Union, and a $7.9 million non-cash goodwill impairment charge was recorded for Pure Commerce related to the decline in international tourism in Asia Pacific. Depreciation and amortization Depreciation and amortization expense increased $2.2 million and $5.8 million for the three and six months ended June 30, 2020 , respectively, compared to the same periods in 2019 , respectively. The increase was primarily due to the deployment of additional ATMs and software assets. As a percentage of revenues, depreciation and amortization expense was 25.4% and 17.9% for three and six months ended June 30, 2020 , respectively, compared to 7.7% and 9.1% for the same periods of 2019 , respectively. Operating (loss) income EFT Processing Segment operating loss for the three and six months ended June 30, 2020 was $56.6 million and $51.6 million , respectively, a decrease of $133.1 million or 174% and $144.9 million or 155 % compared to the operating income in the same periods in 2019 , respectively . O perating loss as a percentage of revenues (“operating margin”) was 72.1% and 23.0% for three and six months ended June 30, 2020, respectively, compared to operating income of 33.0% and 24.7% for the same periods of 2019 . The decreases in operating income and operating margin were primarily due to the non-cash goodwill impairment and decrease in revenues compared to the same periods in 2019. Beginning in late February 2020 and throughout June 2020, high margin cross-border transactions (DCC) decreased throughout Europe due to the COVID-19 pandemic driven government imposed border closures and shelter-in-place orders. Operating loss per transaction was $0.08 and $0.04 for the three and six months ended June 30, 2020, respectively, compared to operating income of $0.10 and $0.06 for the same periods of 2019 , respectively. 31 Table of Contents EPAY SEGMENT The following table presents the results of operations for the three and six months ended June 30, 2020 and 2019 for our epay Segment: Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change (dollar amounts in thousands) 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent Total revenues $ 187,563 $ 184,160 $ 3,403 2 % $ 360,474 $ 360,274 $ 200 0 % Operating expenses: Direct operating costs 144,056 140,427 3,629 3 % 274,130 273,952 178 0 % Salaries and benefits 15,191 14,998 193 1 % 30,888 29,751 1,137 4 % Selling, general and administrative 8,635 9,424 (789) (8) % 17,473 17,476 (3) (0) % Depreciation and amortization 1,651 1,756 (105) (6) % 3,495 3,541 (46) (1) % Total operating expenses 169,533 166,605 2,928 2 % 325,986 324,720 1,266 0 % Operating income $ 18,030 $ 17,555 $ 475 3 % $ 34,488 $ 35,554 $ (1,066) (3) % Transactions processed (millions) 585 369 216 59 % 1,032 707 325 46 % Revenues epay Segment total revenues for the three and six months ended June 30, 2020 were $187.6 million and $360.5 million , respectively, an increase of $3.4 million and $0.2 million compared to the same periods in 2019 , respectively . The increase in total revenues was primarily due to an increase in the number of transactions processed driven by continued digital media growth, partially offset by the U.S. dollar strengthening against key foreign currencies. Foreign currency movements decreased total revenues by approximately $6.7 million and $12.0 million for the three and six months ended June 30, 2020, respectively compared to the same periods in 2019 . The epay segment was impacted by COVID-19 pandemic-driven government-imposed shelter-in-place orders, primarily at retail outlets, which were partially offset by increases in digital media offerings in Asia. Revenues per transaction were $0.32 and $0.35 for the three and six months ended June 30, 2020, respectively compared to $0.50 and $0.51 for the same periods in 2019 , respectively . The decrease in revenues per transaction was primarily driven by the increase in the number of mobile transactions processed in a region where we generally earn lower revenues per transaction. Direct operating costs epay Segment direct operating costs were $144.1 million and $274.1 million for the three and six months ended June 30, 2020 , respectively, an increase of $3.6 million and $0.2 million compared to the same periods in 2019 , respectively . Direct operating costs in the epay Segment include the commissions paid to retail merchants for the distribution and sale of prepaid mobile airtime and other prepaid products, expenses incurred to operate POS terminals and the cost of vouchers sold and physical gifts fulfilled. The increase in direct operating costs was primarily due to the increases in promotional digital media transactions fulfilled by our cadooz subsidiary and commission paid to wholesalers, partially offset by the U.S. dollar strengthening against key foreign currencies. Foreign currency movements decreased direct operating costs for the three and six months ended June 30, 2020 by approximately $ 5.1 million and $ 9.0 million compared to the same period in 2019, respectively . Gross profit Gross profit was $43.5 million and $86.3 million for the three and six months ended June 30, 2020 , respectively, compared to $43.7 million and $86.3 million for the three and six months ended June 30, 2019 , respectively. Gross margin decreased to 23.2% for the three months ended June 30, 2020 compared to 23.7% for the same period in 2019, and was 24 .0% for both the six months ended June 30, 2020 and 2019. 32 Table of Contents Salaries and benefits Salaries and benefits expense increased $0.2 million or 1 % and $1.1 million or 4 % for the three and six months ended June 30, 2020 , respectively, compared to the same periods in 2019 , respectively. As a percentage of revenues, salaries and benefits were 8.1% and 8.6% for the three and six months ended June 30, 2020, respectively, which were consistent with 8.1% and 8.3% for the same periods in 2019, respectively. Selling, general and administrative Selling, general and administrative expenses were $8.6 million and $17.5 million for the three and six months ended June 30, 2020 , respectively, an increase of 8% and flat compared to the same periods in 2019 , respectively. As a percentage of revenues, selling, general and administrative expenses were 4.6% and 4.8% for the three and six months ended June 30, 2020 , respectively, compared to 5.1% and 4.9% for the same periods in 2019 , respectively. Depreciation and amortization Depreciation and amortization expense primarily represents depreciation of POS terminals we install in retail stores and amortization of acquired intangible assets. Depreciation and amortization expense was $1.7 million and $3.5 million for the three and six months ended June 30, 2020 , respectively, a decrease of 6 % and 1 % compared to the same periods in 2019 , respectively. As a percentage of revenues, depreciation and amortization expense was 0 .9% and 1.0% for the three and six months ended June 30, 2020 , respectively, compared to 1.0% for both the three and six months ended June 30, 2019. Operating income epay Segment operating income for the three and six months ended June 30, 2020 was $18.0 million and $34.5 million , respectively, an increase of $0.5 million and a decrease of $1.1 million compared to the same periods in 2019 , respectively . Operating margin for both the three and six months ended June 30, 2020 was 9.6% , compared to 9.5% and 9.9% for the same periods in 2019 , respectively . Operating income per transaction decreased to $0.03 for both the three and six months ended June 30, 2020 , respectively, from $0.05 for the same periods in 2019 driven by transactions processed in a region where we generally earn lower revenues per transaction. The increases in operating income and operating margin for the three months ended June 30, 2020 compared to the same period in 2019 was primarily due to an increase in the portion of higher-margin digital media transactions, partially offset by the U.S. dollar strengthening against key foreign currencies. The decreases in operating income and operating margin for the six months ended June 30, 2020 compared to the same period in 2019 was primarily due to the U.S. dollar strengthening against key foreign currencies. 33 Table of Contents MONEY TRANSFER SEGMENT The following table presents the results of operations for the three and six months ended June 30, 2020 and 2019 for the Money Transfer Segment: Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change (dollar amounts in thousands) 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent Total revenues $ 262,863 $ 276,783 $ (13,920) (5) % $ 529,097 $ 533,364 $ (4,267) (1) % Operating expenses: Direct operating costs 144,589 148,834 (4,245) (3) % 287,498 286,238 1,260 0 % Salaries and benefits 49,059 52,713 (3,654) (7) % 102,923 103,869 (946) (1) % Selling, general and administrative 33,172 31,731 1,441 5 % 71,754 60,840 10,914 18 % Goodwill impairment 82,693 — 82,693 N/A 82,693 — 82,693 N/A Depreciation and amortization 8,577 8,159 418 5 % 17,148 16,297 851 5 % Total operating expenses 318,090 241,437 76,653 32 % 562,016 467,244 94,772 20 % Operating (loss) income $ (55,227) $ 35,346 $ (90,573) (256) % $ (32,919) $ 66,120 $ (99,039) (150) % Transactions processed (millions) 25.8 28.9 (3.1) (11) % 53.2 55.5 (2.3) (4) % Revenues Money Transfer Segment total revenues for the three and six months ended June 30, 2020 were $262.9 million and $529.1 million , respectively, a decrease of $13.9 million or 5 % and $4.3 million or 1% compared to the same periods in 2019 , respectively. The decrease in revenues was primarily due to decreases in the number of international money transfers processed in March, April and May 2020 compared to the same periods in 2019 as a result of the COVID-19 pandemic related temporary store closures. Revenues per transaction increased to $10.19 and $9.95 for the three and six months ended June 30, 2020 , respectively, from $9.58 and $9.61 for the same periods in 2019, respectively . Foreign currency movements decreased total revenues by approximately $ 3.8 million and $ 8.3 million for the three and six months ended June 30, 2020 compared to the same period in 2019 . Direct operating costs Money Transfer Segment direct operating costs were $144.6 million and $287.5 million for the three and six months ended June 30, 2020 , respectively, a decrease of $4.2 million or 3 % and an increase of $1.3 million or flat compared to the same periods in 2019 , respectively. Direct operating costs in the Money Transfer Segment primarily consist of commissions paid to agents who originate money transfers on our behalf and correspondent agents who disburse funds to the customers’ destination beneficiaries, together with less significant costs, such as bank depository fees. The decrease in direct operating costs for the three months ended June 30, 2020 was primarily due the decrease in the number of money transfer transactions processed in both the U.S. and foreign markets, partially offset by the impact of the U.S. dollar strengthening against key foreign currencies. Foreign currency movements decreased direct operating costs for the three and six months ended June 30, 2020 by approximately $ 1.8 million and $ 3.6 million compared to the same period in 2019 . Gross profit Gross profit was $118.3 million and $241.6 million for the three and six months ended June 30, 2020 , respectively, compared to $127.9 million and $247.1 million for the three and six months ended June 30, 2019 , respectively . The decrease in gross profit was primarily due to the decrease in number of money transfer transactions processed in both the U.S. and foreign markets. Gross margin decreased to 45.0% and 45.7% for the three and six months ended June 30, 2020, respectively, compared to 46.2% and 46.3% for the same periods in 2019, respectively. Salaries and benefits Salaries and benefits expense decreased $3.7 million or 7% and $0.9 million or 1% for the three and six months ended June 30, 2020 , respectively, compared to the same periods in 2019 . As a percentage of revenues, salaries and benefits were 18.7% and 19.5% for the three and six months ended June 30, 2020 , respectively, compared to 19.0% and 19.5% for the same periods in 2019 . The decrease in salaries and benefits was primarily driven by a decrease in bonus expense for the three and six months ended June 30, 2020 compared to the same periods in 2019. 34 Table of Contents Selling, general and administrative Selling, general and administrative expenses were $33.2 million and $71.8 million for the three and six months ended June 30, 2020 , respectively, an increase of 5% and 18% compared to the same periods in 2019 , respectively. The increase was primarily due to expenses incurred to support the growth of our money transfer services, the expansion of new products in both the U.S. and foreign markets, and an increase in additional charges taken to cover anticipated agent receivable defaults as a result of government ordered business closures required to manage the COVID-19 pandemic. As a percentage of revenues, selling, general and administrative expenses were 12.6% and 13.6% for the three and six months ended June 30, 2020 , respectively, compared to 11.5% and 11 .4% for the same periods in 2019, respectively . Goodwill impairment Due to the economic impacts of the COVID-19 pandemic, the Company recorded an $82.7 million non-cash goodwill impairment charge related to the xe reporting unit during the second quarter of 2020. The non-cash goodwill impairment charge was recorded for xe as a result of declines in the international payments business stemming from economic uncertainty. Depreciation and amortization Depreciation and amortization expense increased $0.4 million or 5% and $0.9 million or 5% for the three and six months ended June 30, 2020 , respectively, compared to the same periods in 2019 . Depreciation and amortization primarily represent amortization of acquired intangible assets and depreciation of money transfer terminals, computers and software, leasehold improvements and office equipment. As a percentage of revenues, depreciation and amortization expense was 3.3% and 3.2% for the three and six months ended June 30, 2020, respectively, compared to 2.9% and 3.1% for the same periods of 2019 , respectively. Operating (loss) income Money Transfer Segment operating loss for the three and six months ended June 30, 2020 was $55.2 million and $32.9 million , respectively, a decrease of $90.6 million or 256 % and $99.0 million or 150% compared to the operating income in the same periods of 2019 . As a percentage of revenues, operating loss was 21.0% and 6.2% for the three and six months ended June 30, 2020 , respectively, compared to operating income of 12.8% and 12.4% for the same periods in 2019 , respectively. The decreases in operating income and operating margin were primarily due to the non-cash goodwill impairment charge, decrease in revenues driven by the decrease in transaction volume, and the increase in selling, general and administrative expenses incurred to support the expansion of new products and markets and COVID-19 pandemic related anticipated agent receivables default charges. Operating loss per transaction was $2.14 and $0.62 for the three and six months ended June 30, 2020 , respectively, compared to operating income of $1.22 and $1.19 for the same periods in 2019 , respectively. CORPORATE SERVICES The following table presents the operating expenses for the three and six months ended June 30, 2020 and 2019 for Corporate Services: Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change (dollar amounts in thousands) 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent Salaries and benefits $ 5,413 $ 9,500 $ (4,087) (43) % $ 15,001 $ 16,955 $ (1,954) (12) % Selling, general and administrative 2,005 1,946 59 3 % 4,437 3,863 574 15 % Depreciation and amortization 80 74 6 8 % 159 149 10 7 % Total operating expenses $ 7,498 $ 11,520 $ (4,022) (35) % $ 19,597 $ 20,967 $ (1,370) (7) % Corporate operating expenses Overall, operating expenses for Corporate Services decreased 35 % and 7% for the three and six months ended June 30, 2020 compared to the same periods in 2019 , respectively. The decrease is primarily due to the decrease in salaries and benefits driven by the decrease in bonus expense. 35 Table of Contents OTHER INCOME (EXPENSE), NET Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change (dollar amounts in thousands) 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent 2020 2019 Increase (Decrease) Amount Increase (Decrease) Percent Interest income $ 161 $ 513 $ (352) (69) % $ 728 $ 856 $ (128) (15) % Interest expense (8,884) (10,029) 1,145 (11) % (18,117) (18,228) 111 (1) % Foreign currency exchange gain (loss), net 2,495 (121) 2,616 n/m (16,311) 3,087 (19,398) (628) % Loss on early extinguishment of debt — (8,903) 8,903 N/A — (9,831) 9,831 N/A Other gains (losses) 697 (29) 726 n/m 728 (4) 732 n/m Other expense, net $ (5,531) $ (18,569) $ 13,038 (70) % $ (32,972) $ (24,120) $ (8,852) 37 % ________________ n/m — Not meaningful Interest income The decrease in interest income for the three and six months ended June 30, 2020 compared to the same periods in 2019 is primarily due to a decrease in interest rates on cash balances held at banks. Interest expense The decrease in interest expense for the three and six months ended June 30, 2020 compared to the same period in 2019 was primarily related to the decrease in borrowings on the revolving credit agreement during 2020 compared to the same period in 2019. Foreign currency exchange gain (loss), net Foreign currency exchange activity includes gains and losses on certain foreign currency exchange derivative contracts and the impact of remeasurement of assets and liabilities denominated in foreign currencies. Assets and liabilities denominated in currencies other than the local currency of each of our subsidiaries give rise to foreign currency exchange gains and losses. Foreign currency exchange gains and losses that result from remeasurement of these assets and liabilities are recorded in net income. The majority of our foreign currency exchange gains or losses are due to the remeasurement of intercompany loans which are not considered a long-term investment in nature and are in a currency other than the functional currency of one of the parties to the loan. For example, we make intercompany loans based in euros from our corporate division, which is composed of U.S. dollar functional currency entities, to certain European entities that use the euro as the functional currency. As the U.S. dollar strengthens against the euro, foreign currency exchange losses are recognized by our corporate entities because the number of euros to be received in settlement of the loans decreases in U.S. dollar terms. Conversely, in this example, in periods where the U.S. dollar weakens, our corporate entities will record foreign currency exchange gains. We recorded a net foreign currency exchange gain of $ 2.5 million and a net loss of $ 16.3 million for the three and six months ended June 30, 2020 , respectively compared to a net foreign currency exchange loss of $ 0.1 million and a net gain of $3.1 million for the same periods in 2019 , respectively. These realized and unrealized foreign currency exchange losses and gains reflect the fluctuation in the value of the U.S. dollar against the currencies of the countries in which we operated during the respective periods. INCOME TAX EXPENSE The Company's effective income tax rate was (8.4) % and (11.1) % for the three and six months ended June 30, 2020 , respectively, compared to 31.5 % and 31.6 % for the three and six months ended June 30, 2019 , respectively . The Company's effective income tax rate for the three and six months ended June 30, 2020 was different than the applicable statutory income tax rate of 21 % primarily due to the non-deductible goodwill impairment charge during the second quarter of 2020 and as a result of an increase in the valuation allowance in certain jurisdictions relating to the reversal of tax benefits recognized in the first quarter of 2020 for net operating losses in those jurisdictions which have a limited history of profitable earnings. The Company's effective income tax rate for the three and six months ended June 30, 2019 was higher than the applicable statutory income tax rate of 21 % largely because of the application to the Company of the global intangible low-taxed income ("GILTI") tax provision and certain foreign earnings of the Company being subject to higher local statutory income tax rates. 36 Table of Contents NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS Noncontrolling interests represent the elimination of net income or loss attributable to the minority shareholders’ portion of the following consolidated subsidiaries that are not wholly owned: Subsidiary Percent Owned Segment - Country Movilcarga 95% epay - Spain Euronet China 85% EFT - China Euronet Pakistan 70% EFT - Pakistan Euronet Infinitium Solutions 65% EFT - India NET (LOSS) INCOME ATTRIBUTABLE TO EURONET Net loss attributable to Euronet was $115.8 million and $113.9 million for the three and six months ended June 30, 2020 , respectively, a decrease of $184.0 million and $216.6 million compared to the net income in the same periods in 2019, respectively . The net loss for the three months ended June 30, 2020 compared to the net income for the same period in 2019 was primarily attributable to the $164.1 million decrease in revenues and $104.6 million non-cash goodwill impairment charge, partially offset by an $8.9 million decrease in loss on early retirement of debt, an increase in net foreign currency exchange gains of $2.5 million and a decrease in income tax expense of $22.4 million. The net loss for the six months ended June 30, 2020 compared to the net income for the same period in 2019 was primarily attributable to the $157.7 million decrease in revenues, $104.6 million non-cash goodwill impairment charge and a $19.4 million increase in net foreign currency exchange losses, partially offset by an $8.9 million decrease in loss on early retirement of debt and a decrease in income tax expense of $35.9 million. LIQUIDITY AND CAPITAL RESOURCES Working capital As of June 30, 2020 , we had working capital of $1,114.8 million , which is calculated as the difference between total current assets and total current liabilities, compared to working capital of $1,284.8 million as of December 31, 2019 . The decrease in working capital is primarily due to $239.8 million of share repurchases during the first quarter of 2020. Our ratio of current assets to current liabilities was 1.78 and 1.79 at June 30, 2020 and December 31, 2019 , respectively. We require substantial working capital to finance operations. The Money Transfer Segment funds the payout of the majority of our consumer-to-consumer money transfer services before receiving the benefit of amounts collected from customers by agents. Working capital needs increase due to weekends and banking holidays. As a result, we may report more or less working capital for the Money Transfer Segment based solely upon the day on which the reporting period ends. The epay Segment produces positive working capital, some of which is restricted in connection with the administration of its customer collection and vendor remittance activities. In our EFT Processing Segment, we obtain a significant portion of the cash required to operate our ATMs through various cash supply arrangements, the amount of which is not recorded on Euronet's Consolidated Balance Sheets. However, in certain countries, we fund the cash required to operate our ATM network from borrowings under the revolving credit facilities and cash flows from operations. As of June 30, 2020 , we had $410.5 million of our own cash in use or designated for use in our ATM network, which is recorded in ATM cash on Euronet's Consolidated Balance Sheet. ATM cash decreased $255.1 million from $665.6 million as of December 31, 2019 to $410.5 million as of June 30, 2020 as a result of the reduction in number of active ATMs as of June 30, 2020 compared to December 31, 2019. The Company has $864.9 million of unrestricted cash as of June 30, 2020 compared to $786.1 million as of December 31, 2019. The increase in cash is primarily due to the transfer of ATM cash to unrestricted cash and cash generated from operations, partially offset by $239.8 million in share repurchases during the first quarter of 2020. Additionally, the Company has $410.5 million of cash in ATMs at June 30, 2020, giving the Company access to $1,275.4 million in available cash, and $947.9 million available under the credit facility with no significant long-term debt principal payments until March 2025. 37 Table of Contents The following table identifies cash and cash equivalents provided by/(used in) our operating, investing and financing activities for the six month periods ended June 30, 2020 and 2019 (in thousands): Six Months Ended June 30, Liquidity 2020 2019 Cash and cash equivalents and restricted cash provided by (used in): Operating activities $ 178,557 $ 56,714 Investing activities (48,624) (68,760 ) Financing activities (240,974) 505,945 Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash (27,787) 4,907 (Decrease) increase in cash and cash equivalents and restricted cash $ (138,828) $ 498,806 Operating activity cash flow Cash flows provided by operating activities were $178.6 million for the first half of 2020 compared to $56.7 million for the first half of 2019 . The increase in operating cash flows was primarily due to fluctuations in working capital mainly associated with the timing of the settlement processes with content providers in the epay Segment, with correspondents in the Money Transfer Segment, and with card organizations and banks in the EFT Processing Segment. Investing activity cash flow Cash flows used in investing activities were $48.6 million for the first half of 2020 compared to $68.8 million for the same period in 2019 . We used $45.5 million for purchases of property and equipment for the first half of 2020 compared to $67.7 million for the first half of 2019 . Cash used for software development and other investing activities totaled $3.6 million and $1.0 million for the first half of 2020 and 2019 , respectively. Financing activity cash flow Cash flows used in financing activities were $241.0 million for the first half of 2020 compared to cash flows provided by financing activities of $505.9 million for the same period in 2019 . Our borrowing activities for the first half of 2020 consisted of cash outflows of $5.0 million compared to net borrowings of $524.1 million for the first half of 2019 . The decrease in net borrowings for the first half of 2020 compared to the same period in 2019 was the result of the issuance of $1,194.9 million of convertible notes and Senior Notes in the first half of 2019 which was used to fund the operating cash of our IAD networks, repay revolving credit facility borrowings and repurchase a portion of existing convertible notes. We repurchased $240.7 million and $2.4 million of our common stock during the first half of 2020 and 2019 , respectively. Of the $240.7 million repurchased shares, $239.8 million of Euronet Common Stock was repurchased under our repurchase program. We received proceeds of $5.7 million and $7.0 million during the first half of 2020 and 2019 , respectively, for the issuance of stock in connection with our Stock Incentive Plan. Other sources of capital Credit Facility - On October 17, 2018, the Company entered into a $1.0 billion unsecured credit agreement (the "Credit Facility") that expires on October 17, 2023. The Credit Facility allows for borrowings in Australian Dollars, British Pounds Sterling, Canadian Dollars, Czech Koruna, Danish Krone, Euros, Hungarian Forints, Japanese Yen, New Zealand Dollars, Norwegian Krone, Polish Zlotys, Swedish Krona, Swiss Francs, and U.S. Dollars. The Credit Facility contains a $200 million sublimit for the issuance of letters of credit, a $50 million sublimit for U.S. Dollar swingline loans, and a $90 million sublimit for certain foreign currencies swingline loans. As of June 30, 2020 , fees and interest on borrowings are based upon the Company's corporate credit rating (as defined in the credit agreement) and are based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over the London InterBank Offered Rate ("LIBOR") or a margin over the base rate, as selected by us, with the applicable margin ranging from 1.125% to 2.0% (or 0.175% to 1.0% for base rate loans). As of June 30, 2020 , we had no borrowings and $52.1 million of stand-by letters of credit outstanding under the Credit Facility. The remaining $947.9 million under the Credit Facility was available for borrowing. Uncommitted Line of Credit - On September 4, 2019, the Company entered into an Uncommitted Loan Agreement with Bank of America which provided Euronet up to $ 100.0 million under an uncommitted line of credit. Interest on borrowings was equal to LIBOR plus 0.65 % and the agreement was set to expire September 4, 2020. During the three months ended June 30, 2020, the Company and Bank of America mutually agreed to terminate the Uncommitted Loan Agreement. 38 Table of Contents Convertible debt - On March 18, 2019, we completed the sale of $525.0 million in principal amount of Convertible Senior Notes due 2049 (“Convertible Notes”). The Convertible Notes were issued pursuant to an indenture, dated as of March 18, 2019 (the “Indenture”), by and between the Company and U.S. Bank National Association, as trustee. The Convertible Notes have an interest rate of 0.75% per annum payable semi-annually in March and September, and are convertible into shares of Euronet common stock at a conversion price of approximately $188.73 per share if certain conditions are met (relating to the closing prices of Euronet common stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require the Company to repurchase for cash all or part of their Convertible Notes on each of March 15, 2025, 2029, 2034, 2039 and 2044 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In connection with the issuance of the Convertible Notes, we recorded $12.8 million in debt issuance costs, which are being amortized through March 1, 2025. Senior Notes - On May 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of Senior Notes that expire on 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 June 30, 2020 , the Company has outstanding €600 million ( $673.9 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. Other debt obligations — Certain of our subsidiaries have available credit lines and overdraft facilities to generally supplement short-term working capital requirements, when necessary. There were $0.9 million and $6.2 million outstanding under these other obligation arrangements as of June 30, 2020 and December 31, 2019, respectively. Other uses of capital Capital expenditures and needs - Total capital expenditures for the six months ended June 30, 2020 were $ 45.5 million . These capital expenditures were primarily for the purchase of ATMs to expand our IAD network in Europe, the purchase and installation of ATMs in key under-penetrated markets, the purchase of POS terminals for the epay and Money Transfer Segments, and office, data center and company store computer equipment and software. Total capital expenditures for 2020 are currently estimated to range from approximately $50 million to $55 million . The Company has reduced estimated capital expenditures for 2020 due to the COVID-19 pandemic. At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts available under our Credit Facility and other existing and potential future financing will be sufficient to meet our debt, leasing, and capital expenditure obligations. If our capital resources are not sufficient to meet these obligations, we will seek to refinance our debt and/or issue additional equity under terms acceptable to us. However, we can offer no assurances that we will be able to obtain favorable terms for the refinancing of any of our debt or other obligations or for the issuance of additional equity. Share repurchase plan The Company's Board of Directors had authorized a stock repurchase program allowing Euronet to repurchase up to $375 million in value or 10.0 million shares of stock through March 31, 2020. The Company has repurchased all $375 million of stock under this program. On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of $120 million in value of the Company's common stock through March 11, 2021. The Company has repurchased $110.4 million of stock under this program. On February 26, 2020, the Company put a repurchase program in place to repurchase up to $250 million in value, but not more than 5.0 million shares of common stock through February 28, 2022. For the six months ended June 30, 2020 , the Company repurchased 2.1 million shares under the repurchase programs at a weighted average purchase price of $114.41 for a total value of $239.8 million . Repurchases under either of the current 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. Inflation and functional currencies Generally, the countries in which we operate have experienced low and stable inflation in recent years. Therefore, the local currency in each of these markets is the functional currency. Currently, we do not believe that inflation will have a significant effect on our results of operations or financial position. We continually review inflation and the functional currency in each of the countries where we operate. 39 Table of Contents OFF BALANCE SHEET ARRANGEMENTS On occasion, we grant guarantees of the obligations of our subsidiaries and we sometimes enter into agreements with unaffiliated third parties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. Our liability under such indemnification provisions may be subject to time and materiality limitations, monetary caps and other conditions and defenses. As of June 30, 2020 , there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2019 . To date, we are not aware of any significant claims made by the indemnified parties or parties to whom we have provided guarantees on behalf of our subsidiaries and, accordingly, no liabilities have been recorded as of June 30, 2020 . See also Note 13, Commitments, to the unaudited consolidated financial statements included elsewhere in this report. CONTRACTUAL OBLIGATIONS As of June 30, 2020 , there have been no material changes outside the ordinary course of business in our future contractual obligations from the amounts reported within our Annual Report on Form 10-K for the year ended December 31, 2019 , other than those resulting from changes in the amount of debt outstanding discussed in the Liquidity and Capital Resources section. 40 Table of Contents