What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-05 compared with 2020-11-02 · 170 added, 239 removed, 324 unchanged (56% of the section changed)

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trends affecting our business plans and financing plans and requirements;

the effect of the COVID-19 pandemic on our business;

trends affecting our business;

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the expected effects of changes in laws or accounting standards;

the impact of the COVID-19 pandemic on our results of operations and financial position;

technological advances;

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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;

Actual results may materially differ from those in the forward-looking statements as a result of various factors, including, but not limited to, conditions in world financial markets and general economic conditions, including impacts from the COVID-19 pandemic;

the speed and effectiveness of rollouts for vaccines and treatments for COVID-19;

the effects in Europe of the U.K.'s departure from the E.U.

and economic conditions in specific countries and regions;

technological developments affecting the market for our products and services;

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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;

our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, sanctions, consumer and data protection and the European Union's General Data Protection Regulation and Second Revised Payment Service Directive 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;

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 our Quarterly Report on Form 10-Q for the period ended June 30, 2020.

and renewal of sources of funding as they expire and the availability of replacement funding 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, 2020 .

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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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.

Our primary product offerings include comprehensive Automated Teller Machine ("ATM"), point-of-sale ("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 43,956 ATMs and approximately 324,000 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.

T he EFT Processing Segment, which processes transactions for a network of 36,777 active ATMs and approximately 349,000 POS terminals across Europe, the Middle East, Asia Pacific, the United States and Africa.

Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.

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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 447,000 locations.

The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, AFEX, 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 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 475,000 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).

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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 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.

EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 13 % of total consolidated revenues for the first quarter of 2021 , 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 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.

epay Segment — Revenues in the epay Segment, which represented approximately 37 % of total consolidated revenues for the first quarter of 2021 , 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 69% 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 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.

Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately 50% of total consolidated revenues for the first quarter of 2021 , a re 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.

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the expansion of our various business lines in markets where we operate and in new markets;

our entry into additional card acceptance and ATM management agreements with banks;

our entry into additional card acceptance and ATM management agreements with financial institutions;

our ability to obtain required licenses in markets we intend to enter or expand services;

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the continued development and implementation of our software products and their ability to interact with other leading products;

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.

the impact of government imposed restrictions on travel into countries where we operate ATMs.

We consistently evaluate and add prospects to our list of potential ATM outsource customers.

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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;

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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 may be closed from time to time as nonessential services.

the impact of government imposed restrictions on retailers with whom we partner.

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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our ability to provide additional value-added products under the xe brand;

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.

the impact of government imposed restrictions on our network of agents and correspondents.

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.

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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.

The outbreak of the COVID-19 (coronavirus) pandemic has resulted in varying degrees of border and business closures, travel restrictions and other social distancing orders in most of the countries where we operate during the first quarter of 2021.

These types of orders were first put into effect in late February 2020 or early March 2020.

As the number and rate of new cases has fluctuated in various locations around the global, the closures, restrictions and other social distancing orders have been modified, rescinded and/or re-imposed.

Some version of these orders remains in almost every location in which we operate.

Although vaccines for COVID-19 are becoming widely available in the U.S.

and parts of Europe, their availability is still limited in many parts of the world where we operate.

In addition, the rate of acceptance and long term effectiveness of the vaccines, especially against new variants, are still unknown.

The EFT Segment has experienced declines in certain transaction volumes due to these restrictions, especially high-margin cross-border transactions.

The epay Segment has experienced the impacts of consumer movement restrictions in certain markets, while other markets have been positively impacted where we have a higher mix of digital distribution or a higher concentration of retailers that are deemed essential and have remained open during the pandemic.

The Money Transf er Segment continues to be impacted by the pandemic related restrictions in certain markets hat limit customers' ability to access our network of company owned stores and agents.

In response to the COVID-19 pandemic driven impacts, we implemented several key measures to offset the impact across the business, including renegotiating certain third party contracts, reducing travel, decreasing capital expenditures, and expanding ATM seasonal deactivations (placing them in dormancy status, terminating, or re-negotiating) in more sites and more markets.

SEGMENT SUMMARY RESULTS OF OPERATIONS

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 Nine Months Ended September 30,

Revenues and operating income by segment for the three months ended March 31, 2021 and 2020 are summarized in the tables below:

Revenues for the Three Months Ended March 31,

Year-over-Year Change

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Corporate services, eliminations and other

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

Year-over-Year Change

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

Operating Income (Loss) for the Three Months Ended March 31,

Year-over-Year Change

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Average Translation Rate

Three Months Ended September 30,

Average Translation Rate

Nine Months Ended September 30,

Three Months Ended March 31,

Currency (dollars per foreign currency)

(Decrease) Percent

Australian dollar

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New Zealand dollar

COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

EFT PROCESSING SEGMENT

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 :

The following table summarizes the results of operations for our EFT Processing Segment for the three months ended March 31, 2021 and 2020 :

Three Months Ended

September 30,

Year-over-Year Change

Nine Months Ended

September 30,

Year-over-Year Change

(dollar amounts in thousands)

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(Decrease) Percent

Increase (Decrease) Amount

(Decrease) Percent

Total revenues

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Selling, general and administrative

Goodwill and acquired intangible assets impairment

Depreciation and amortization

Total operating expenses

Operating income (loss)

Operating (loss) income

Transactions processed (millions)

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.

ATMs as of March 31,

Average Active ATMs

EFT Processing Segment total revenues were $87.1 million for the three months ended March 31, 2021 , a decrease of $58.7 million or 40 % compared to the same period in 2020 .

The decrease in revenues was primarily 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, travel restrictions and lockdowns.

The government imposed border and business closures, travel restrictions and lockdowns were in effect to varying degrees for all of the first quarter of 2021 compared to similar restrictions that were primarily limited to the month of March in 2020.

These closures, restrictions and other orders resulted in a significant decline in tourism throughout Europe which led to a decrease in DCC and surcharge revenues for the three months ended March 31, 2021 compared to the same period in 2020.

Foreign currency movements increased revenues by approximately $3.2 million for the three months ended March 31, 2021 compared to the same period in 2020 .

Average monthly revenues per ATM decreased to $793 for the three months ended March 31, 2021 compared to $1,085 for the same period in 2020 .

Revenues per transaction decreased to $0.09 for the three m onths ended March 31, 2021 compared to $0.19 for the same period in 2020 .

The decreases in average monthly revenues per ATM and revenues per transaction were attributable to a shift in the mix in our transaction volume as COVID-19 restrictions significantly reduced the volume of higher revenue transactions (DCC and surcharge) throughout Europe while we experienced a significant increase in the volume of lower revenue transactions (processing bank wallet transactions and payments for e-commerce sites) primarily in our Asia Pacific region .

Direct operating costs

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 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.

EFT Processing Segment direct operating costs were $69.6 million for the three months ended March 31, 2021 , a decrease of $17.9 million or 20 % compared to the same period in 2020 .

Direct operating costs primarily consist 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.

Foreign currency movements increased direct operating costs by approximately $3.2 million for the three months ended March 31, 2021 compared to the same period in 2020 .

Gross profit, which is calculated as revenues less direct operating costs, was $17.5 million for the three months ended March 31, 2021 , a decrease of $40.8 million or 70% compared to $58.3 million for the same period in 2020 .

Gross profit as a percentage of revenues (“gross margin”) decreased to 20.1 % for the three months ended March 31, 2021 , compared to 40.0% for the same period in 2020 .

The decrease in gross profit and gross margin was attributable to the decrease in DCC transactions and domestic and international surcharges.

Salaries and benefits

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.

Salaries and benefits expenses were $23.6 million for the three months ended March 31, 2021, an increase of $1.5 million or 7% c ompared to the same period in 2020 .

Foreign currency movements in the countries we employ our workforce increased these expenses by $1.3 million for the three months ended March 31, 2021 compared to the same period in 2020.

As a percentage of revenues, these expenses increased to 27.1 % for the three months ended March 31, 2021, compared to 15.1% for the same period in 2020 .

We made a decision to retain our employees during the pandemic.

Selling, general and administrative

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.

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.

Selling, general and administrative expenses were $12.0 million for the three months ended March 31, 2021 , an increase of $1.0 million or 9% compared to the same period in 2020 .

Foreign currency movements increased these expenses by $1.2 million for the three months ended March 31, 2021 compared to the same period in 2020, which were partially offset by decreases in travel re lated expenses and bad debt expense.

As a percentage of revenues, these expenses increased to 13.7% for the three months ended March 31, 2021 , compared to 7.5% for the same period in 2020 .

Depreciation and amortization

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 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:

Depreciation and amortization expenses were $22.0 million for the three months ended March 31, 2021, an increase of $1.7 million or 8% compared to the same period in 2020 .

Foreign currency movements increased these expenses by $1.2 million for the three months ended March 31, 2021 compared to the same period in 2020, with the remainder of the increase driven by the acquisition of additional ATMs and software assets.

As a percentage of revenues, these expenses increased to 25.3 % for three months ended March 31, 2021 , compared to 13.9% for the same period in 2020 .

Operating (loss) income

EFT Processing Segment had an operating loss of ( $40.1 million) for the three months ended March 31, 2021, a decrease of $45.0 million or (912%) compared to the operating income for the same period in 2020 .

O perating (loss) income as a percentage of revenues (“operating margin”) decreased to (46.0 %) for the three months ended March 31, 2021, compared to 3.4 % for the same period in 2020 .

Operating (loss) income per transaction was ( $0.04) for the three months ended March 31, 2021, compared to $0.01 for the same period in 2020 .

The decreases in operating income, operating margin and operating income per transaction were primarily driven by the decrease in travel throughout Europe that led to the significant decrease in DCC and surcharge revenues compared to the same period in 2020.

The following table presents the results of operations for the three months ended March 31, 2021 and 2020 for our epay Segment:

Three Months Ended

September 30,

Year-over-Year Change

Nine Months Ended

September 30,

Year-over-Year Change

(dollar amounts in thousands)

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(Decrease) Percent

Increase (Decrease) Amount

(Decrease) Percent

Total revenues

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Transactions processed (millions)

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 .

epay Segment total revenues were $242.3 million for the three months ended March 31, 2021 , an increase of $69.4 million or 40% compared to the same period in 2020 .

The increase in 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 first quarter of 2021.

Foreign currency movements in creased revenues by approximately $12.9 million for the three months ended March 31, 2021 compared to the same period in 2020 .

The epay segment was impacted by COVID-19 pandemic-driven government imposed lockdowns and business closures, primarily at retail outlets, which were offset by increases in digital media offerings in Asia and revenues derived from businesses that were classified as essential and remained open during the pandemic .

Revenues per transaction decreased to $0.36 for the three months ended March 31, 2021, compared to $0.39 for the same period in 2020 .

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 $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 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.

epay Segment direct operating costs were $182.6 million for the three months ended March 31, 2021 , an increase of $52.6 million or 40% compared to the same period in 2020 .

Direct operating costs primarily consist of 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 increase in transaction volumes of low-value mobile top-up transactions and by the U.S.

dollar weakening against key foreign currencies in the first quarter of 2021.

Foreign currency movements increased direct operating costs by approximately $9.4 million for the three months ended March 31, 2021 compared to the same period in 2020 .

Gross profit was $59.7 million for the three months ended March 31, 2021 , an increase of $16.9 million or 39% compared to $42.8 million for the same period in 2020 .

Gross margin decreased to 24.6 % for the three months ended March 31, 2021, compared to 24.8% for the same period in 2020 .

The increase in gross profit and decrease in gross margin is driven by the increase in transaction volumes processed in regions where we generally earn lower revenues per transaction.

Salaries and benefits

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.

Salaries and benefits expenses were $19.4 million for the three months ended March 31, 2021 , an increase of $3.7 million or 23% compared to the same period in 2020 .

The increase in salaries and benefits was driven by an increase in headcount to support the growth of the business as well as a $1.2 million increase from foreign currency movements for the three months ended March 31, 2021 compared to the same period in 2020.

As a percentage of revenues, these expenses decreased to 8.0 % for the three months ended March 31, 2021, compared to 9.1% for the same period in 2020.

Selling, general and administrative

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.

Selling, general and administrative expenses were $9.0 million for the three months ended March 31, 2021 , an increase of $0.2 million or 2 % compared to the same period in 2020 .

As a percentage of revenues, these expenses decreased to 3.7 % for the three months ended March 31, 2021 , compared to 5.1 % for the same period in 2020 .

Depreciation and amortization

Depreciation and amortization expenses were $2.1 million for the three months ended March 31, 2021 , an increase of $0.3 million or 15 % compared to the same period in 2020 .

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 $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.

As a percentage of revenues, these expenses decreased to 0.9 % for the three months ended March 31, 2021 , compared to 1.1 % for same period in 2020.

Operating income

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.

epay Segment operating income was $29.2 million for the three months ended March 31, 2021 , an increase of $12.7 million or 77% c ompared to the same period in 2020 .

Operating margin increased to 12.0 % for the three months ended March 31, 2021 , compared to 9.5 % for the same period in 2020 .

Operating income per transaction was $0.04 for both the three m onths ended March 31, 2021 and 2020 .

The increases in operating income and operating margin for the three months ended March 31, 2021 compared to the same period in 2020 were primarily due to an increase in the number of higher-margin digital media transactions.

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:

The following table presents the results of operations for the three months ended March 31, 2021 and 2020 for the Money Transfer Segment:

Three Months Ended

September 30,

Year-over-Year Change

Nine Months Ended

September 30,

Year-over-Year Change

(dollar amounts in thousands)

1 unchanged sentence

(Decrease) Percent

Increase (Decrease) Amount

(Decrease) Percent

Total revenues

3 unchanged sentences

Selling, general and administrative

Goodwill and acquired intangible assets impairment

Depreciation and amortization

2 unchanged sentences

Transactions processed (millions)

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.

Money Transfer Segment total revenues were $324.9 million for the three months ended March 31, 2021 , an increase of $58.7 million or 22 % compared to the same period in 2020 .

The increase in revenues 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 .

Revenues per transaction increased to $10.41 for the three months ended March 31, 2021 , compared to $9.72 for the same period in 2020 .

Foreign currency movements increased revenues by approximately $14.3 million for the three months ended March 31, 2021 compared to the same period in 2020 .

Direct operating costs

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 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.

Money Transfer Segment direct operating costs were $183.9 million for the three months ended March 31, 2021 , an increase of $41.0 million or 29 % compared to the same period in 2020 .

Direct operating costs 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 increase in direct operating costs was primarily due to 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.

Foreign currency movements increased direct operating costs by approximately $7.1 million for the three months ended March 31, 2021 compared to the same period in 2020 .

Gross profit was $141.0 million for the three months ended March 31, 2021 , an increase of $17.7 million or 14% compared to $123.3 million for the same period in 2020 .

The increase in gross profit 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.

Gross margin decreased to 43.4% for the three months ended March 31, 2021, compared to 46.3% for the same period in 2020.

The decrease in gross margin is primarily attributable to the increase in direct operating costs driven by increased agent commissions in the first quarter of 2021 compared to the same period in 2020.

Salaries and benefits

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.

Salaries and benefits expenses were $60.5 million for the three months ended March 31, 2021, an increase of $6.7 million or 12% compared to the same period in 2020 .

The increase in salaries and benefits was primarily driven by an increase in headcount to support the growth of the business, an increase in bonus expense and an increase of $2.6 million from foreign currency movements for the three months ended March 31, 2021 compared to the same period in 2020 .

As a percentage of revenues, these expenses decreased to 18.6 % for the three months ended March 31, 2021 , compared to 20.2% for the same period in 2020 .

Selling, general and administrative

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 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.

Selling, general and administrative expenses were $36.1 million for the three months ended March 31, 2021 , a decrease of $2.5 million or 6 % compared to the same period in 2020 .

The decrease was primarily due to a $3.7 million decrease in bad debt expense and a $1.6 million decrease in travel related expenses, partially offset by a $2.6 million increase from foreign currency movements for the three months ended March 31, 2021 compared to the same period in 2020.

As a percentage of revenues, these expenses decreased to 11.1% for the three months ended March 31, 2021 , compared to 14.5% for the same period in 2020 .

Depreciation and amortization

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 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.

Depreciation and amortization expenses were $9.0 million for the three months ended March 31, 2021, an increase of $0.4 million or 5 % compared to the same period in 2020 .

Depreciation and amortization primarily represents amortization of acquired intangible assets and depreciation of money transfer terminals, computers and software, leasehold improvements and office equipment.

As a percentage of revenues, these expenses decreased to 2.8 % for the three months ended March 31, 2021, compared to 3.2 % for the same period in 2020 .

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.

Money Transfer Segment operating income was $35.4 million for the three months ended March 31, 2021 , an increase of $13.1 million or 59 % compared to the same period in 2020 .

Operating margin increased to 10.9% for the three months ended March 31, 2021, compared to 8.4 % for the same period in 2020 .

The increases in operating income and operating margin were primarily driven by the increase in transaction volume, specifically the higher margin transactions for U.S.

outbound and international-originated money transfers.

Operating income per transaction increased to $1.13 for the three months ended March 31, 2021 , compared to $0.81 for the same period in 2020 .

CORPORATE SERVICES

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

The following table presents the operating expenses for the three months ended March 31, 2021 and 2020 for Corporate Services:

Three Months Ended

September 30,

Year-over-Year Change

Nine Months Ended

September 30,

Year-over-Year Change

(dollar amounts in thousands)

1 unchanged sentence

(Decrease) Percent

Increase (Decrease) Amount

(Decrease) Percent

Salaries and benefits

3 unchanged sentences

Corporate operating expenses

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

Total Corporate operating expenses were $14.0 million for the three months ended March 31, 2021, an increase of $1.9 million or 16% compared to the same period in 2020 .

The increase is primarily due to a $2.2 million increase in share based compensation.

OTHER EXPENSE, NET

Three Months Ended

September 30,

Year-over-Year Change

Nine Months Ended

September 30,

Year-over-Year Change

(dollar amounts in thousands)

1 unchanged sentence

(Decrease) Percent

Increase (Decrease) Amount

(Decrease) Percent

Interest income

1 unchanged sentence

Foreign currency exchange loss, net

Loss on early extinguishment of debt

Other gains (losses)

Other gains, net

Other expense, net

________________

n/m — Not meaningful

Interest income

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

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

9 unchanged sentences

dollar weakens, our corporate entities will record foreign currency exchange gains.

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.

We recorded net foreign currency exchange losses of $4.0 million and $18.8 million for the three months ended March 31, 2021 and 2020, respectively.

These realized and unrealized foreign currency exchange losses reflect the fluctuation in the value of the U.S.

1 unchanged sentence

INCOME TAX EXPENSE

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.

Our effective income tax rate was (236.9 %) and 58.7% for the three months ended March 31, 2021 and 2020 , respectively.

Our effective income tax rate for the three months ended March 31, 2021 was lower than the applicable statutory income tax rate of 21% as a result of the non-recognition of tax benefits from losses in certain foreign countries where we have a limited history of profitable earnings, certain foreign earnings being subject to higher local statutory tax rates, and our U.S.

deferred tax activity on foreign exchange positions.

Our effective income tax rate for the three months ended March 31, 2020 was higher than the applicable statutory income tax rate of 21 % primarily as a result of certain foreign earnings being subject to higher local statutory income tax rates.

NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

7 unchanged sentences

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.

Net loss attributable to Euronet was ( $8.7 million) for the three months ended March 31, 2021, a decrease of $10.6 million or 551% compared to t he net income in the same period in 2020 .

The decrease in net income was primarily attributable to the $6.3 million decrease in gross profit that was largely driven by the decrease in revenues in the EFT Segment, a $14.4 million increase in salaries and benefits expense and a $3.6 million increase in income tax expense, partially offset by a decrease in net foreign currency exchange losses of $14.8 million.

LIQUIDITY AND CAPITAL RESOURCES

Working capital

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.

As of March 31, 2021 , we had working capital of $1,210.5 million , which is calculated as the difference between total current assets and total current liabilities, compared to working capital of $1,510.5 million as of December 31, 2020 .

The decrease in working capital was primarily due to the $270.4 million repayment of the outstanding balance on the Credit Facility during the first quarter of 2021 .

Our ratio of current assets to current liabilities was 1.76 and 1.81 at March 31, 2021 and December 31, 2020 , respectively.

We require substantial working capital to finance operations.

5 unchanged sentences

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 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.

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,

As of March 31, 2021 , we had $339.9 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 $71.2 million from $411.1 million as of December 31, 2020 to $339.9 million as of March 31, 2021 as a result of the reduction in number of active ATMs as of March 31, 2021 compared to December 31, 2020.

The Company has $1,145.4 million of unrestricted cash as of March 31, 2021 compared to $1,420.3 million as of December 31, 2020 .

The decrease in unrestricted cash was primarily due to the $270.4 million repayment of the outstanding balance on the Credit Facility during the first quarter of 2021.

Including the $339.9 million of cash in ATMs at March 31, 2021, the Company has access to $1,485.3 million in available cash, and $941.1 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 three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended

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

3 unchanged sentences

Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash

(Decrease) increase in cash and cash equivalents and restricted cash

Decrease in cash and cash equivalents and restricted cash

Operating activity cash flow

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.

Cash flows (used in) provided by operating activities were ($2.6 million) f or the three months ended March 31, 2021 compared to $105.9 million for the same period in 2020 .

The decrease 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, and the decrease in net income.

Investing activity cash flow

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 .

Cash flows used in investing activities were $18.2 million for the three months ended March 31, 2021 compared to $31.6 million for the same period in 2020 .

We used $16.4 million for purchases of property and equipment for the three months ended March 31, 2021 compared to $30.4 million for the same period in 2020 .

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.

Cash used for software development and other investing activities totaled $1.8 million and $1.7 million for the three months ended March 31, 2021 and 2020 , respectively.

Financing activity cash flow

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 $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.

Cash flows used in financing activities were $269.2 million for the three months ended March 31, 2021 compared to $242.6 million for the same period in 2020 .

Our borrowing activities for the three months ended March 31, 2021 consisted of cash outflows of $270.4 million compared to no net borrowings for the same period in 2020 .

The decrease in net borrowings for the three months ended March 31, 2021 compared to the same period in 2020 was the result of the repayment of the outstanding balance on the Credit Facility.

We repurchased $0.8 million of common stock during the first quarter of 2021 compared to repurchases of $240.5 million during the first quarter of 2020 .

We received proceeds of $3.7 million and $1.7 million during the three months ended March 31, 2021 and 2020 , respectively, for the issuance of stock in connection with our Stock Incentive Plan.

Other sources of capital

3 unchanged sentences

Dollar swingline loans, and a $90 million sublimit for certain foreign currencies swingline loans.

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.

As of March 31, 2021 , fees and interest on borrowings are based upon our 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 March 31, 2021 , we had no borrowings and $58.9 million of stand-by letters of credit outstanding under the Credit Facility.

The remaining $941.1 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.

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.

The Convertible Notes were issued pursuant to an indenture, dated as of March 18, 2019 (the “Indenture”), by and between us 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.

Holders of the Convertible Notes have the option to require us 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.

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 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.

Senior Notes - On May 22, 2019, we 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 on May 22 of each year, until maturity or earlier redemption.

As of March 31, 2021 , we have outstanding €600 million ( $703.7 million ) principal amount of the Senior Notes.

In addition, we 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 September 30, 2020 and December 31, 2019, respectively.

There were $0.8 million and $0.9 million outstanding under these other obligation arrangements as of March 31, 2021 and December 31, 2020, respectively.

Other uses of capital

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.

Capital expenditures and needs - Total capital expenditures for the three months ended March 31, 2021 were $ 16.4 million .

These capital expenditures were primarily for 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 2021 are currently estimated to range from approximately $105 million to $110 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.

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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 $110.6 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 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.

Inflation and functional currencies

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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 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 .

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 September 30, 2020 .

As of March 31, 2021 , there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2020 .

See also Note 14, Commitments, to the unaudited consolidated financial statements included elsewhere in this report.

CONTRACTUAL OBLIGATIONS

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.

As of March 31, 2021 , 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, 2020 .

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What changed 10-Q

Item 2. Management’s Discussion and Analysis