What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-02 compared with 2020-08-06 · 177 added, 158 removed, 386 unchanged (46% of the section changed)

43 unchanged sentences

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.

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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.

EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 22 % and 21% of total consolidated revenues for the three and nine months ended September 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.

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.

epay Segment — Revenues in the epay Segment, which represented approximately 30 % and 31 % of total consolidated revenues for the three and nine months ended September 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 65% 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.

Other electronic content offered by this segment includes digital content such as music, games and software, as well as, other products including mobile wallets, 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 49% and 48% of total consolidated revenues for the three and nine months ended September 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, IME 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.

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the availability of financing for further expansion;

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.

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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,

Revenues and operating income by segment for the three and nine months ended September 30, 2020 and 2019 are summarized in the tables below:

Revenues for the Three Months Ended September 30,

Year-over-Year Change

Revenues for the Six Months Ended June 30,

Revenues for the Nine Months Ended September 30,

Year-over-Year Change

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Corporate services, eliminations and other

Operating Income (Expense) for the Three Months Ended June 30,

Operating Income (Expense) for the Three Months Ended September 30,

Year-over-Year Change

Operating Income (Expense) for the Six Months Ended June 30,

Operating Income (Expense) for the Nine Months Ended September 30,

Year-over-Year Change

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Average Translation Rate

Three Months Ended June 30,

Three Months Ended September 30,

Average Translation Rate

Six Months Ended June 30,

Nine Months Ended September 30,

Currency (dollars per foreign currency)

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New Zealand dollar

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019

COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 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 :

The following table summarizes the results of operations for our EFT Processing Segment for the three and nine months ended September 30, 2020 and 2019 :

Three Months Ended

September 30,

Year-over-Year Change

Six Months Ended

Nine Months Ended

September 30,

Year-over-Year Change

9 unchanged sentences

Selling, general and administrative

Goodwill impairment

Goodwill and acquired intangible assets impairment

Depreciation and amortization

Total operating expenses

Operating (loss) income

Operating income (loss)

Transactions processed (millions)

ATMs as of June 30,

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.

ATMs as of September 30,

EFT Processing Segment total revenues for the three and nine months ended September 30, 2020 were $ 144.1 million and $ 368.4 million , respectively, a decrease of $172.1 million or 54% and $325.5 million or 47% compared to the same periods in 2019 , respectively.

Total revenues for the three and nine months ended September 30, 2020 decreased due to the impact of fewer active ATMs and fewer high-margin cross-border transactions (DCC), related to COVID-19 pandemic-driven government-imposed border and business closures and shelter-in-place orders.

The government imposed border and business closures and shelter-in-place orders were in effect for the majority of the three and nine months ended September 30, 2020.

These closures and orders resulted in a decrease in revenues for the three and nine months ended September 30, 2020 compared to the three and nine months ended September 30, 2019.

Foreign currency movements increased total revenues by approximately $ 3.2 million and $ 1.6 million for the three and nine months ended September 30, 2020 , respectively, compared to the same periods in 2019 .

Average monthly revenues per ATM were $ 1,085 and $ 949 for the three and nine months ended September 30, 2020 , respectively, compared to $2,238 and $1,730 for the three and nine months ended September 30, 2019 , respectively.

Revenues per transaction were $ 0.16 for both the three and nine months ended September 30, 2020 , compared to $0.40 and $0.31 for the three and nine months ended September 30, 2019 , respectively .

The decreases in average monthly revenues per ATM were attributable to the decreases in D CC transactions, which earn higher revenues per transaction than other ATM or card-based services, and surcharges.

The decrease in DCC transactions was due to the decline in tourism throughout Europe driven by the border and business closures during the three and nine months ended September 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.

EFT Processing Segment direct operating costs were $82.6 million and $232.6 million for the three and nine months ended September 30, 2020 , respectively, a decrease of $28.5 million or 26% and $67.8 million or 23 % 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.

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, 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.

Foreign currency movements increased direct operating costs for the three and nine months ended September 30, 2020 by approximately $2.1 million and $0.5 million, respectively, compared to the same periods in 2019 .

Gross profit, which is calculated as revenues less direct operating costs, was $61.4 million and $135.7 million for the three and nine months ended September 30, 2020 , respectively, compared to $205.1 million and $393.4 million for the three and nine months ended September 30, 2019 , respectively.

Gross profit as a percentage of revenues (“gross margin”) was 42.6% and 36.9% for the three and nine months ended September 30, 2020 , respectively, compared to 64.9% and 56.7% for the three and nine months ended September 30, 2019 , respectively .

The decrease in gross profit and 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.

Salaries and benefits expense increased $1.2 million or 5% and $3.9 million or 6% for the three and nine months ended September 30, 2020 , respectively, compared to the same periods in 2019 .

The increase for the three and nine months ended September 30, 2020 was primarily due to additional headcount to support expansion in the United States and long-term growth strategy, partially offset by a decrease in bonus expense.

The border and business closures and 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 third 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 high-margin cross-border transactions and revenues for the three and nine months ended September 30, 2020.

As a percentage of revenues, these costs increased to 17.5% and 18.6% for the three and nine months ended September 30, 2020 , respectively, compared to 7.6% and 9.3% and for the three and nine months ended September 30, 2019 , respectively.

The Company made a decision to retain its 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

Selling, general and administrative expenses for the three and nine months ended September 30, 2020 were $8.6 million and $29.0 million , respectively, a decrease of $3.6 million and $3.0 million compared to the three and nine months ended September 30, 2019, respectively.

The decrease for the three months ended September 30, 2020 compared to the same period in 2019 was primarily due to a decrease in travel related expenses and a decrease in bad debt expense.

The decrease for the nine months ended September 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.

As a percentage of revenues, selling, general and administrative expenses were 6.0% and 7.9% for the three and nine months ended September 30, 2020 , respectively, compared to 3.9% and 4.6% for the three and nine months ended September 30, 2019 , respectively.

Goodwill and acquired intangible assets 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.

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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.

Depreciation and amortization expense increased $3.5 million and $9.3 million for the three and nine months ended September 30, 2020 , respectively, compared to the same periods in 2019 .

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.

The following table presents the results of operations for the three and six months ended June 30, 2020 and 2019 for our epay Segment:

As a percentage of revenues, depreciation and amortization expense was 14.9% and 16.8% for three and nine months ended September 30, 2020 , respectively, compared to 5.7% and 7.6% for the same periods in 2019, respectively .

Operating income (loss)

EFT Processing Segment had operating income for the three months ended September 30, 2020 of $6.2 million and an operating loss for the nine months ended September 30, 2020 of $45.5 million , a decrease of $144.7 million or 96% and $289.7 million or 119 % compared to the operating income in the same periods in 2019 .

O perating income as a percentage of revenues (“operating margin”) was 4.3% for the three months ended September 30, 2020 and operating loss as a percentage of revenues was ( 12.3)% for the nine months ended September 30, 2020, compared to operating margin of 47.7% and 35.2% for the same periods in 2019 .

For the three months ended September 30, 2020, the decreases in operating income and operating margin were primarily due to the decrease in revenues compared to the same period in 2019, and for the nine months ended September 30, 2020, 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 period in 2019.

Beginning in late February 2020 and throughout September 2020, high margin cross-border transactions (DCC) decreased throughout Europe due to the COVID-19 pandemic driven government imposed border and business closures and shelter-in-place orders.

Operating income per transaction was $0.01 and operating loss per transaction was $0.02 for the three and nine months ended September 30, 2020, respectively, compared to operating income per transaction of $0.19 and $0.11 for the same periods in 2019, respectively .

The following table presents the results of operations for the three and nine months ended September 30, 2020 and 2019 for our epay Segment:

Three Months Ended

September 30,

Year-over-Year Change

Six Months Ended

Nine Months Ended

September 30,

Year-over-Year Change

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Transactions processed (millions)

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 .

epay Segment total revenues for the three and nine months ended September 30, 2020 were $198.9 million and $559.4 million , respectively, an increase of $7.9 million or 4% and $8.1 million or 1% 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 and the U.S.

dollar weakening against key foreign currencies during the third quarter of 2020.

Foreign currency movements in creased total revenues by approximately $2.8 million and decreased total revenues by approximately $0.4 million for the three and nine months ended September 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 and business closures, primarily at retail outlets, which were partially offset by increases in digital media offerings in Asia.

Revenues per transaction were $0.30 and $0.33 for the three and nine months ended September 30, 2020, respectively, compared to $0.48 and $0.50 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 .

epay Segment direct operating costs were $150.0 million and $424.1 million for the three and nine months ended September 30, 2020 , respectively, an increase of $4.6 million or 3% and $4.8 million or 1% 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 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.

The increase in direct operating costs was primarily due to the increases in transaction volumes for the large volume of low-value mobile top-up transactions and by the U.S.

dollar weakening against key foreign currencies in the third quarter of 2020.

Foreign currency movements increased direct operating costs by approximately $ 1.9 million and decreased direct operating costs by approximately $ 0.3 million for the three and nine months ended September 30, 2020, respectively, compared to the same periods in 2019 .

Gross profit was $48.9 million and $135.3 million for the three and nine months ended September 30, 2020 , respectively, compared to $45.7 million and $132.0 million for the three and nine months ended September 30, 2019 , respectively.

Gross margin increased to 24.6% and 24.2% for the three and nine months ended September 30, 2020, respectively, compared to 23.9% for both the three and nine months ended September 30, 2019.

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.

Salaries and benefits expense increased $0.9 million or 6 % and $2.1 million or 5 % for the three and nine months ended September 30, 2020 , respectively, compared to the same periods in 2019 .

As a percentage of revenues, salaries and benefits were 8.1% and 8.4% for the three and nine months ended September 30, 2020, respectively, compared to 7.9% and 8.2% for the same periods in 2019, respectively.

The increases in salaries and benefits were driven by an increase in headcount to support the growth of the business.

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.

Selling, general and administrative expenses were $8.5 million and $25.9 million for the three and nine months ended September 30, 2020 , respectively, a decrease of 4% and 1% compared to the same periods in 2019 , respectively.

As a percentage of revenues, selling, general and administrative expenses were 4.3% and 4.6% for the three and nine months ended September 30, 2020 , respectively, compared to 4.6% and 4.8% 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.

Depreciation and amortization expense was $2.1 million and $5.6 million for the three and nine months ended September 30, 2020 , respectively, an increase of 36 % and 10 % compared to the same periods in 2019 , respectively.

As a percentage of revenues, depreciation and amortization expense was 1 .1% and 1.0% for the three and nine months ended September 30, 2020 , respectively, compared to 0.8% and 0.9% for the three and nine months ended September 30, 2019, respectively.

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.

epay Segment operating income for the three and nine months ended September 30, 2020 was $22.2 million and $56.7 million , respectively, an increase of $2.2 million or 11% and $1.1 million or 2% compared to the same periods in 2019 , respectively .

Operating margin was 11.2% and 10.1% for the three and nine months ended September 30, 2020, respectively , compared to 10.5% and 10.1% for the same periods in 2019 , respectively .

Operating income per transaction decreased to $0.03 for both the three and nine months ended September 30, 2020 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 September 30, 2020 compared to the same period in 2019 were primarily due to an increase in the portion of higher-margin digital media transactions.

The increase in operating income for the nine months ended September 30, 2020 compared to the same period in 2019 was primarily due to the increase in transaction volume.

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:

The following table presents the results of operations for the three and nine months ended September 30, 2020 and 2019 for the Money Transfer Segment:

Three Months Ended

September 30,

Year-over-Year Change

Six Months Ended

Nine Months Ended

September 30,

Year-over-Year Change

9 unchanged sentences

Selling, general and administrative

Goodwill impairment

Goodwill and acquired intangible assets impairment

Depreciation and amortization

Total operating expenses

Operating (loss) income

Operating income

Transactions processed (millions)

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 .

Money Transfer Segment total revenues for the three and nine months ended September 30, 2020 were $323.1 million and $852.2 million , respectively, an increase of $42.3 million or 15 % and $38.0 million or 5% compared to the same periods in 2019 , respectively.

The increase in revenues for the three and nine months ended September 30, 2020 compared to the same periods in 2019 was primarily due to increases in U.S.

outbound and international-originated money transfers, partially offset by decreases in the U.S.

domestic business.

Revenues per transaction increased to $10.46 and $10.13 for the three and nine months ended September 30, 2020 , respectively, from $9.58 and $9.60 for the same periods in 2019, respectively .

Foreign currency movements increased total revenues by approximately $ 5.7 million and $ 1.2 million for the three and nine months ended September 30, 2020 , respectively, compared to the same periods 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.

Money Transfer Segment direct operating costs were $176.7 million and $464.2 million for the three and nine months ended September 30, 2020 , respectively, an increase of $27.1 million or 18 % and $28.3 million or 6% 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 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.

The increase in direct operating costs for the three and nine months ended September 30, 2020 was primarily due the increase in the number of U.S.

outbound and international-originated money transfer transactions and the impact of the U.S.

dollar weakening against key foreign currencies.

Foreign currency movements increased direct operating costs for the three and nine months ended September 30, 2020 by approximately $ 3.1 million and $ 0.7 million, respectively, compared to the same periods in 2019 .

Gross profit was $146.4 million and $388.0 million for the three and nine months ended September 30, 2020 , respectively, compared to $131.2 million and $378.3 million for the three and nine months ended September 30, 2019 , respectively .

The increase in gross profit for the three and nine months ended September 30, 2020 compared to the same periods in 2019 was primarily due t o increases in U.S.

outbound and international-originated money transfers .

Gross margin decreased to 45.3% and 45.5% for the three and nine months ended September 30, 2020, respectively, compared to 46.7% and 46.5% 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.

Salaries and benefits expense increased $0.5 million or 1% and decreased $0.5 million for the three and nine months ended September 30, 2020 , respectively, compared to the same periods in 2019 .

As a percentage of revenues, salaries and benefits were 16.1% and 18.2% for the three and nine months ended September 30, 2020 , respectively, compared to 18.4% and 19.1% for the same periods in 2019, respectively .

The increase in salaries and benefits for the three months ended September 30, 2020 compared to the same period in 2019 was primarily driven by an increase in headcount to support the growth of the business, partially offset by a decrease in bonus expense.

The decrease in salaries and benefits for the nine months ended September 30, 2020 compared to the same period in 2019 was primarily driven by a decrease in bonus expense, partially offset by an increase in headcount to support the growth of the business.

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.

Selling, general and administrative expenses were $36.6 million and $108.4 million for the three and nine months ended September 30, 2020 , respectively, an increase of 2% and 12% 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

As a percentage of revenues, selling, general and administrative expenses were 11.3% and 12.7% for the three and nine months ended September 30, 2020 , respectively, compared to 12.8% and 11 .9% for the same periods in 2019, respectively .

Goodwill and acquired intangible assets 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.

During the third quarter of 2020, a $1.5 million non-cash acquired intangible asset impairment charge was recorded for xe on previously acquired customer relationship intangible assets due to the discontinuation of trading with certain customers during the quarter.

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 expense increased $0.5 million or 6% and $1.3 million or 6% for the three and nine months ended September 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.

As a percentage of revenues, depreciation and amortization expense was 2.7% and 3.0% for the three and nine months ended September 30, 2020, respectively, compared to 2.9% and 3.0% for the same periods in 2019 , respectively.

Operating income

Money Transfer Segment operating income for the three and nine months ended September 30, 2020 was $47.6 million and $14.7 million , respectively, an increase of $12.0 million or 34 % and a decrease of $87.1 million or 86% compared to the operating income in the same periods of 2019, respectively .

As a percentage of revenues, operating income was 14.7% and 1.7% for the three and nine months ended September 30, 2020 , respectively, compared to 12.7% and 12.5% for the same periods in 2019 , respectively.

The increases in operating income and operating margin for the three months ended September 30, 2020 compared to the same period in 2019 were primarily driven by the increase in transaction volume, specifically the higher margin transactions for U.S.

outbound and international-originated money transfers, partially offset by a non-cash acquired intangible asset impairment charge.

The decreases in operating income and operating margin for the nine months ended September 30, 2020 compared to the same period in 2019 were primarily driven by the non-cash goodwill impairment charge 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, partially offset by increases in higher margin transactions for U.S.

outbound and international-originated money transfers during the third quarter of 2020.

Operating income per transaction was $1.54 and $0.17 for the three and nine months ended September 30, 2020 , respectively, compared to $1.22 and $1.20 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:

The following table presents the operating expenses for the three and nine months ended September 30, 2020 and 2019 for Corporate Services:

Three Months Ended

September 30,

Year-over-Year Change

Six Months Ended

Nine Months Ended

September 30,

Year-over-Year Change

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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.

Overall, operating expenses for Corporate Services decreased 21 % and 12% for the three and nine months ended September 30, 2020 compared to the same periods in 2019 , respectively.

The decrease is primarily due to the decrease in salaries and benefits driven by decreases in bonus expense and share based compensation.

OTHER INCOME (EXPENSE), NET

Three Months Ended

September 30,

Year-over-Year Change

Six Months Ended

Nine Months Ended

September 30,

Year-over-Year Change

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Interest expense

Foreign currency exchange gain (loss), net

Foreign currency exchange loss, net

Loss on early extinguishment of debt

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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 income decreased $0.4 million and $0.6 million for the three and nine months ended September 30, 2020 , respectively, compared to the same periods in 2019 .

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

Interest expense increased $0.4 million and $0.3 million for the three and nine months ended September 30, 2020 , respectively, compared to the same periods in 2019 .

Foreign currency exchange 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.

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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.

We recorded a net foreign currency exchange loss of $ 1.4 million and $ 17.7 million for the three and nine months ended September 30, 2020 , respectively compared to $ 11.0 million and $7.9 million for the same periods in 2019 , respectively.

These realized and unrealized foreign currency exchange losses 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.

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

The Company's effective income tax rate was 27.2 % and (55.9) % for the three and nine months ended September 30, 2020 , respectively, compared to 21.2 % and 26.0 % for the three and nine months ended September 30, 2019 , respectively .

The Company's effective income tax rate for the three and nine months ended September 30, 2020 was higher 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 and second 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 nine months ended September 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.

NET INCOME (LOSS) 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:

Percent Owned

Segment - Country

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Euronet Infinitium Solutions

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.

NET INCOME (LOSS) ATTRIBUTABLE TO EURONET

Net income attributable to Euronet was $40.2 million for the three months ended September 30, 2020 and the net loss attributable to Euronet was $73.6 million for the nine months ended September 30, 2020 , a decrease of $97.4 million and $313.9 million, respectively, compared to the net income in the same periods in 2019 .

The decrease in net income for the three months ended September 30, 2020 compared to the same period in 2019 was primarily attributable to the $122.6 million decrease in revenues, partially offset by a decrease in net foreign currency exchange losses of $9.6 million and a decrease in income tax expense of $21.9 million.

The increase in net loss for the nine months ended September 30, 2020 compared to the net income for the same period in 2019 was primarily attributable to the $280.3 million decrease in revenues, $106.0 million non-cash goodwill and acquired intangible assets impairment charges, and $9.8 million increase in net foreign currency exchange losses, partially offset by a $9.8 million decrease in loss on early retirement of debt and a decrease in income tax expense of $57.8 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.

As of September 30, 2020 , we had working capital of $1,216.8 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, partially offset by operating results for the nine months ended September 30, 2020.

Our ratio of current assets to current liabilities was 1.85 and 1.79 at September 30, 2020 and December 31, 2019 , respectively.

We require substantial working capital to finance operations.

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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.

As of September 30, 2020 , we had $409.7 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 $256.0 million from $665.6 million as of December 31, 2019 to $409.7 million as of September 30, 2020 as a result of the reduction in number of active ATMs as of September 30, 2020 compared to December 31, 2019.

The Company has $1,008.2 million of unrestricted cash as of September 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.

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

Including the $409.7 million of cash in ATMs at September 30, 2020, the Company has access to $1,417.9 million in available cash, and $953.1 million available under the credit facility with no significant long-term debt principal payments until March 2025.

The following table identifies cash and cash equivalents provided by/(used in) our operating, investing and financing activities for the nine months ended September 30, 2020 and 2019 (in thousands):

Nine Months Ended

September 30,

Cash and cash equivalents and restricted cash provided by (used in):

5 unchanged sentences

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.

Cash flows provided by operating activities were $220.4 million f or the nine months ended September 30, 2020 compared to $364.4 million for the same period in 2019 .

The decrease in operating cash flows was primarily due to the decrease in net income, partially offset by 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.

Cash flows used in investing activities were $77.1 million for nine months ended September 30, 2020 compared to $104.4 million for the same period in 2019 .

We used $71.4 million for purchases of property and equipment for the nine months ended September 30, 2020 compared to $100.4 million for the same period in 2019 .

The decrease in purchases of property and equipment is primarily driven by the COVID-19 related impacts to the EFT segment.

Cash used for software development and other investing activities totaled $5.7 million and $4.0 million for the nine months ended September 30, 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.

Cash flows used in financing activities were $244.1 million for the nine months ended September 30, 2020 compared to cash flows provided by financing activities of $461.6 million for the same period in 2019 .

Our borrowing activities for the nine months ended September 30, 2020 consisted of cash outflows of $5.0 million compared to net borrowings of $514.2 million for the same period in 2019 .

The decrease in net borrowings for the nine months ended September 30, 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 during the nine months ended September 30, 2019 which were 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 $240.8 million and $37.3 million of our common stock during the nine months ended September 30, 2020 and 2019 , respectively.

Of the $240.8 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.

We received proceeds of $6.6 million and $8.3 million during the nine months ended September 30, 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.

The Credit Facility allows for borrowings in Australian dollars, British pounds sterling, Canadian dollars, Czech koruna, Danish krone, euro, Hungarian forints, Japanese yen, New Zealand dollars, Norwegian krone, Polish zlotys, Swedish krona, Swiss francs, and U.S.

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.

As of September 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 September 30, 2020 , we had no borrowings and $46.9 million of stand-by letters of credit outstanding under the Credit Facility.

The remaining $953.1 million under the Credit Facility was available for borrowing.

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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.

For the Retired Convertible Notes, in accordance with ASC 470, the Company recognized a loss of $9.8 million on the conversion and redemption of the debt during the first half of 2019, representing the difference between the fair value of the Retired Convertible Notes converted and the carrying value of the bonds at the time of conversion.

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.

As of September 30, 2020 , the Company has outstanding €600 million ( $703.2 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.

There were $0.9 million and $6.2 million outstanding under these other obligation arrangements as of September 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 .

Capital expenditures and needs - Total capital expenditures for the nine months ended September 30, 2020 were $ 71.4 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.

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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 .

For the nine months ended September 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.

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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 .

As of September 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 .

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.

As of September 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis