What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-03 compared with 2021-05-05 · 222 added, 210 removed, 284 unchanged (60% of the section changed)

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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 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.

EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 16 % and 15% of total consolidated revenues for the three and six months ended June 30, 2021, 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 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.

epay Segment — Revenues in the epay Segment, which represented approximately 34 % and 35% of total consolidated revenues for the three and six months ended June 30, 2021, 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 68 % 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 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.

Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately 50 % of total consolidated revenues for both the three and six months ended June 30, 2021, respectively, 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.

Sending and correspondent agents each earn fees for cash collection and distribution services, which are recognized as direct operating costs at the time of sale.

The Company offers a money transfer product called Walmart-2-Walmart Money Transfer Service which allows customers to transfer money to and from Walmart stores in the U.S.

We offer a money transfer product called Walmart-2-Walmart Money Transfer Service which allows customers to transfer money to and from Walmart stores in the U.S.

Our Ria business executes the transfers with Walmart serving as both the sending agent and payout correspondent.

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Opportunities and Challenges

Our expansion plans and opportunities are focused on eight primary areas:

increasing the number of ATMs and cash deposit terminals in our independent ATM networks;

increasing transactions processed on our network of owned and operated ATMs and POS devices;

signing new outsourced ATM and POS terminal management contracts;

expanding value added services and other products offered by our EFT Processing Segment, including the sale of DCC, acquiring and other prepaid card services to banks and retailers;

expanding our epay processing network and portfolio of digital content;

expanding our money transfer services, cross-currency payments products and bill payment network;

expanding our cash management solutions and foreign currency risk management services;

developing our credit and debit card outsourcing business.

EFT Processing Segment — The continued expansion and development of our EFT Processing Segment business will depend on various factors including, but not necessarily limited to, the following:

the impact of competition by banks and other ATM operators and service providers in our current target markets;

the demand for our ATM outsourcing services in our current target markets;

our ability to develop products or services, including value added services, to drive increases in transactions and revenues;

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

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;

our ability to enter into sponsorship agreements where our licenses are not applicable;

our ability to enter into and renew ATM network cash supply agreements with financial institutions;

the availability of financing for expansion;

our ability to efficiently install ATMs contracted under newly awarded outsourcing agreements;

our ability to renew existing contracts at profitable rates;

our ability to maintain pricing at current levels or mitigate price reductions in certain markets;

the impact of changes in rules imposed by international card organizations such as Visa ® and Mastercard ® on card transactions on ATMs, including reductions in ATM interchange fees, restrictions on the ability to apply direct access fees, the ability to offer DCC transactions on ATMs, and increases in fees charged on DCC transactions;

the impact of changes in laws and regulations affecting the profitability of our services, including regulation of DCC transactions by the E.U.;

the impact of overall market trends on ATM transactions in our current target markets;

our ability to expand and sign additional customers for the cross-border merchant processing and acquiring business;

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

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.

However, we cannot predict the increase or decrease in the number of ATMs we manage under outsourcing agreements because this depends largely on the willingness of banks to enter into outsourcing contracts with us.

Due to the thorough internal reviews and extensive negotiations conducted by existing and prospective banking customers in choosing outsource vendors, the process of entering into or renewing outsourcing agreements can take several months.

The process is further complicated by the legal and regulatory considerations of local countries.

These agreements tend to cover large numbers of ATMs, so significant increases and decreases in our pool of managed ATMs could result from the acquisition or termination of one or more of these management contracts.

Therefore, the timing of both current and new contract revenues is uncertain and unpredictable.

Software products are an integral part of our product lines, and our investment in research, development, delivery and customer support reflects our ongoing commitment to an expanded customer base.

epay Segment — The continued expansion and development of the epay Segment business will depend on various factors, including, but not necessarily limited to, the following:

our ability to maintain and renew existing agreements, and to negotiate new agreements in additional markets with mobile operators, digital content providers, agent financial institutions and retailers;

our ability to use existing expertise and relationships with mobile operators, digital content providers and retailers to our advantage;

the continued use of third-party providers such as ourselves to supply electronic processing solutions for existing and additional digital content;

the overall pace of growth in the prepaid mobile phone and digital content market, including consumer shifts between prepaid and postpaid services;

our market share of the retail distribution capacity;

the development of new technologies that may compete with POS distribution of prepaid mobile airtime and other products;

the level of commission that is paid to the various intermediaries in the electronic payment distribution chain;

our ability to fully recover monies collected by retailers;

our ability to add new and differentiated products in addition to those offered by mobile operators;

our ability to develop and effectively market additional value added services;

our ability to take advantage of cross-selling opportunities with our EFT Processing and Money Transfer Segments, including providing money transfer services through our distribution network;

the availability of financing for further expansion;

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.

Competition among prepaid mobile airtime and electronic content distributors results in the increase of commissions paid to retailers and increases in retailer attrition rates.

To grow, we must capture market share from other prepaid mobile airtime and electronic content distributors, offer a superior product offering and demonstrate the value of a global network.

In certain markets in which we operate, many of the factors that may contribute to rapid growth (growth in electronic content, expansion of our network of retailers and access to products of mobile operators and other content providers) remain present.

Money Transfer Segment — The continued expansion and development of our Money Transfer Segment business will depend on various factors, including, but not necessarily limited to, the following:

the continued growth in worker migration and employment opportunities;

the mitigation of economic and political factors that have had an adverse impact on money transfer volumes, such as changes in the economic sectors in which immigrants work and the developments in immigration policies in the countries in which we operate;

the continuation of the trend of increased use of electronic money transfer and bill payment services among high-income individuals, immigrant workers and the unbanked population in our markets;

our ability to maintain our agent and correspondent networks;

our ability to offer our products and services or develop new products and services at competitive prices to drive increases in transactions;

the development of new technologies that may compete with our money transfer network, and our ability to acquire, develop and implement new technologies;

the expansion of our services in markets where we operate and in new markets;

our ability to strengthen our brands;

our ability to fund working capital requirements;

our ability to recover from agents funds collected from customers and our ability to recover advances made to correspondents;

our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate;

our ability to take advantage of cross-selling opportunities with our epay Segment, including providing prepaid services through our stores and agents worldwide;

our ability to leverage our banking and merchant/retailer relationships to expand money transfer corridors to Europe, Asia and Africa, including high growth corridors to Central and Eastern European countries;

the availability of financing for further expansion;

the ability to maintain banking relationships necessary for us to service our customers;

our ability to successfully expand our agent network in Europe using our payment institution licenses under the Second Payment Services Directive ("PSD 2 ") and using our various licenses in the United States;

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

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

The global product markets in which we operate are large and fragmented, which poses both opportunities and challenges for our technology to disrupt new and existing competition.

As an organization, our focus is on increasing our market presence through both physical (ATMs, POS terminals, company stores and agent correspondents) and digital assets and providing new and improved products and services for customers through all of our channels, which may in turn drive an increase in the number of transactions on our networks.

Each of these opportunities also presents us with challenges, including differentiating our portfolio of products and services in highly competitive markets, the successful development and implementation of our software products and access to financing for expansion.

The EFT Processing Segment opportunities include physical expansion into target markets, developing value added products or services, increasing high value DCC and surcharge transactions and efficiently leveraging our portfolio of software solutions.

Our opportunities are dependent on renewing and expanding our card acceptance, ATM and POS management and outsourcing, cash supply and other commercial agreements with customers and financial institutions.

Operational challenges in the EFT Processing Segment include obtaining and maintaining the required licenses and sponsorship agreements in markets in which we operate and navigating frequently changing rules imposed by international card organizations, such as Visa ® and Mastercard ® , that govern ATM interchange fees, direct access fees and other restrictions.

Our profitability is dependent on the laws and regulations that govern DCC transactions, specifically in the E.U., as well as the laws and regulations of each country that we operate in that may impact the volume of cross-border and cross-currency transactions .

The timing and amount of revenues in the EFT Processing Segment is uncertain and unpredictable due to inherent limitations in managing our estate of ATMs, which is dependent on contracts that cover large numbers of ATMs, which are complicated by legal and regulatory considerations of local countries, as well as our customers' decisions whether to outsource ATMs.

The epay Segment opportunities include renewing existing and negotiating new agreements in target markets in which we operate, primarily with mobile operators, digital content providers, financial institutions and retailers.

The overall growth rate in the prepaid mobile phone and digital media content markets, shifts between prepaid and postpaid services, and our market share in those respective markets will have a significant impact on our ability to maintain and grow the epay Segment revenues.

There is significant competition in these markets that may impact our ability to grow organically and increase the margin we earn and the margin that we pay to retailers.

The profitability of the epay Segment is dependent on our ability to adapt to new technologies that may compete with POS distribution of digital content and prepaid mobile airtime, as well as our ability to leverage cross-selling opportunities with our EFT and Money Transfer Segments.

The epay Segment opportunities may be impacted by government-imposed restrictions on retailers and/or content providers with whom we partner in countries in which we have a presence, and corresponding licensure requirements mandated upon such parties to legally operate in such countries .

The Money Transfer Segment opportunities include expanding our portfolio of products and services to new and existing customers around the globe, which in turn may lead to an increase in transaction volumes.

The opportunities to expand are contingent on our ability to effectively leverage our network of bank accounts for digital money transfer delivery, maintaining our physical agent network, cross selling opportunities with our EFT and epay segments and our penetration into high growth money transfer corridors.

The challenges inherit in these opportunities include maintaining compliance with all regulatory requirements, maintaining all required licenses, ensuring the recoverability of funds advanced to agents and the continued reliance on the technologies required to operate our business.

The volume of transactions processed on our network is impacted by shifts in our customer base, which can change rapidly with worker migration patterns and changes in unbanked populations across the globe.

Foreign regulations that impact cross-border migration patterns and the money transfer markets can significantly impact our ability to grow the number of transactions on our network.

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.

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 three and six months ended June 30, 2021 and 2020 .

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

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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.

The Money Transf er Segment continues to be impacted by the pandemic-related restrictions in certain markets that 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 increasing the number of seasonal ATM 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 months ended March 31, 2021 and 2020 are summarized in the tables below:

Revenues for the Three Months Ended March 31,

Revenues and operating income by segment for the three and six months ended June 30, 2021 and 2020 are summarized in the tables below:

Revenues for the Three Months Ended

Year-over-Year Change

Revenues for the Six Months Ended

Year-over-Year Change

(dollar amounts in thousands)

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Corporate services, eliminations and other

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

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

Year-over-Year Change

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

Year-over-Year Change

(dollar amounts in thousands)

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Average Translation Rate

Three Months Ended March 31,

Three Months Ended June 30,

Average Translation Rate

Six Months Ended June 30,

Currency (dollars per foreign currency)

Increase Percent

Australian dollar

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New Zealand dollar

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

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30 , 2021 AND 2020

EFT PROCESSING SEGMENT

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

The following table summarizes the results of operations for our EFT Processing Segment for the three and six months ended June 30, 2021 and 2020 :

Three Months Ended

Year-over-Year Change

Six Months Ended

Year-over-Year Change

(dollar amounts in thousands)

1 unchanged sentence

(Decrease) Percent

Increase (Decrease) Amount

(Decrease) Percent

Total revenues

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Selling, general and administrative

Goodwill impairment

Depreciation and amortization

Total operating expenses

Operating (loss) income

Operating (loss)

Transactions processed (millions)

ATMs as of March 31,

Active ATMs as of June 30,

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 .

EFT Processing Segment total revenues were $113.5 million for the three months ended June 30, 2021, an increase of $35.0 million or 45% compared to the same period in 2020.

EFT Processing Segment total revenues were $200.6 million for the six months ended June 30, 2021, a decrease of $23.8 million or 11% compared to the same period in 2020.

Beginning in the late first quarter of 2020, the COVID-19 related government-imposed border and business closures, travel restrictions and other orders significantly reduced tourism throughout Europe, which led to a significant decrease in high-margin cross-border transactions (DCC) and surcharge transactions from March through June of 2020.

During 2021, we began increasing our estate of active ATMs as certain countries began easing COVID-19 restrictions;

however, many countries continue to have restrictions that prevented our volume of DCC and surcharge transactions from returning to pre-COVID-19 levels.

Revenues increased for the three months ended June 30, 2021 compared to the same period in 2020 primarily due to the reactivation of ATMs and gradual increase in high-margin cross-border transaction volumes during 2021.

Revenues decreased for the six months ended June 30, 2021 compared to the same period in 2020 primarily because the six months ended June 30, 2020 included two months of pre-COVID-19 level DCC and surcharge transaction volumes compared to the six months ended June 30, 2021 which had various levels of restrictions throughout the entire six month period.

Foreign currency movements increased revenues by approximately $7.1 million and $10.3 million for the three and six months ended June 30, 2021 , respectively, compared to the same periods in 2020 .

Average monthly revenues per ATM increased to $934 for the three months ended June 30, 2021 compared to $648 for the same period in 2020.

Average monthly revenues per ATM decreased to $867 for the six months ended June 30, 2021 compared to $878 for the same period in 2020.

Revenues per transaction decreased to $0.11 for the three m onths ended June 30, 2021 compared to $0.12 for the same period in 2020.

Revenues per transaction decreased to $0.10 for the six m onths ended June 30, 2021 compared to $0.15 for the same period in 2020.

For the three months ended June 30, 2021, the increase in average monthly revenues per ATM were attributable to the limited easing of COVID-19 restrictions throughout Europe and corresponding increase in cross-border DCC and surcharge transactions and the decrease in revenue per transaction was attributable to a shift in the mix of our transaction volume as 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.

For the six months ended June 30, 2021, the average monthly revenues per ATM and revenues per transaction decreased due to the effect of lower DCC and surcharge revenues during January and February of 2021 compared to January and February 2020 prior to COVID-19's initial emergence.

Direct operating costs

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 .

EFT Processing Segment direct operating costs were $82.7 million for the three months ended June 30, 2021 , an increase of $20.2 million or 32 % compared to the same period in 2020 .

EFT Processing Segment direct operating costs were $152.3 million for the six months ended June 30, 2021 , an increase of $2.3 million or 2 % 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.

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 seasonally deactivated during COVID-19 pandemic imposed restrictions.

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.

For the three months ended June 30, 2021, the increase in direct operating costs was primarily due to the increase in the number of ATMs under management in Europe and the increase in transaction volumes.

For the six months ended June 30, 2021, the increase in direct operating costs was primarily due to the weakening of the U.S.

dollar and increase in transaction volumes, partially offset by the decrease in number of ATMs under management .

Foreign currency movements increased direct operating costs by approximately $5.5 million and $8.7 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020 .

Gross profit, which is calculated as revenues less direct operating costs, was $30.8 million for the three months ended June 30, 2021, an increase of $14.8 million or 93% compared to $16.0 million for the same period in 2020 .

Gross profit was $48.3 million for the six months ended June 30, 2021, a decrease of $26.0 million or 35% compared to $74.3 million for the same period in 2020 .

Gross profit as a percentage of revenues (“gross margin”) increased to 27.1 % and decreased to 24.1% for the three and six months ended June 30, 2021, respectively , compared to 20.4% and 33.1% for the same periods in 2020, respectively.

For the three months ended June 30, 2021, the increase in gross profit and gross margin was primarily driven by the increase in cross-border transactions and the reactivation of ATMs.

For the six months ended June 30, 2021, the decrease in gross profit and gross margin was primarily attributable to the lower DCC transactions and domestic and international surcharge transactions during the months of January and February 2021 compared to January and February 2020, as these months in the prior period were before the emergence of COVID-19.

Salaries and benefits

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.

Salaries and benefits expenses were $24.1 million for the three months ended June 30, 2021, an increase of $2.8 million or 13% c ompared to the same period in 2020 .

Salaries and benefits expenses were $47.7 million for the six months ended June 30, 2021, an increase of $4.3 million or 10% c ompared to the same period in 2020 .

The increase in salaries and benefits was primarily driven by an increase in foreign currency movements and an increase in bonus expense.

Foreign currency movements in the countries where we employ our workforce increased these expenses by $1.8 million and $3.1 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020.

As a percentage of revenues, these expenses decreased to 21.2% and increased to 23.8% for the three and six months ended June 30, 2021, respectively, compared to 27.1% and 19.3% for the same periods in 2020, respectively .

Selling, general and administrative

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 .

Selling, general and administrative expenses were $9.8 million for the three months ended June 30, 2021, an increase of $0.3 million or 3% compared to the same period in 2020 .

Selling, general and administrative expenses were $21.8 million for the six months ended June 30, 2021, an increase of $1.3 million or 6% compared to the same period in 2020 .

As a percentage of revenues, these expenses decreased to 8.6 % and increased to 10.9 % for the three and six m onths ended June 30, 2021, respectively, compared to 12.1 % and 9.1% for the same periods in 2020, respectively .

Goodwill impairment

Due to the economic impacts of the COVID-19 pandemic, the Company recorded a $21.9 million non-cash goodwill impairment charge related to two reporting units during the second quarter of 2020.

A $14.0 million non-cash goodwill impairment charge was recorded for Innova as a result of the decline in value added tax, or VAT, refund activity directly related to the decline in international tourism within the European Union, and a $7.9 million non-cash goodwill impairment charge was recorded for Pure Commerce related to the decline in international tourism in Asia Pacific.

Depreciation and amortization

Depreciation and amortization 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:

Depreciation and amortization expenses were $22.2 million for the three months ended June 30, 2021, an increase of $2.3 million or 12% compared to the same period in 2020 .

Depreciation and amortization expenses were $44.3 million for the six months ended June 30, 2021, an increase of $4.0 million or 10% compared to the same period in 2020 .

Foreign currency movements increased these expenses by $1.6 million and $2.8 million for the three and six months ended June 30, 2021, respectively, compared to the same periods 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 decreased to 19.6 % and increased to 22.1% for the three and six months ended June 30, 2021 , respectively, compared to 25.4 % and 17.9% for the same periods in 2020, respectively .

Operating income (loss)

EFT Processing Segment had an operating loss of ( $25.3 million) for the three months ended June 30, 2021, a decrease of $31.2 million or (55%) compared to the same period in 2020 .

EFT Processing Segment had an operating loss of ( $65.4 million) for the six months ended June 30, 2021, an increase of ($13.8 million) or 27% compared to the same period in 2020 .

O perating income (loss) as a percentage of revenues (“operating margin”) decreased to (22.3 %) and increased to (32.6%) for the three and six months ended June 30, 2021, respectively, compared to (72.1%) and (23.0%) for the same periods in 2020, respectively .

Operating loss per transaction was ( $0.03) for both the three and six months ended June 30, 2021, compared to ( $0.08) and ($0.04) for the same periods in 2020, respectively .

For the three months ended June 30, 2021, the decreases in operating loss, operating margin and operating loss per transaction were primarily driven by the $21.9 million decrease in non-cash goodwill impairment charges and the easing of COVID-19 restrictions in limited regions where we operate.

For the six months ended June 30, 2021, the increases in operating loss and operating margin were primarily driven by the decrease in tourism in the months of January and February 2021 compared to the same periods in the prior period, partially offset by the $21.9 million decrease in non-cash goodwill impairment charges.

The following table presents the results of operations for the three and six months ended June 30, 2021 and 2020 for our epay Segment:

Three Months Ended

Year-over-Year Change

Six Months Ended

Year-over-Year Change

(dollar amounts in thousands)

Increase (Decrease) Amount

(Decrease) Percent

Increase Amount

Total revenues

7 unchanged sentences

Transactions processed (millions)

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 .

epay Segment total revenues were $243.9 million for the three months ended June 30, 2021, an increase of $56.4 million or 30% compared to the same period in 2020.

epay Segment total revenues were $486.2 million for the six months ended June 30, 2021, an increase of $125.7 million or 35% 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 .

dollar weakening against key foreign currencies during 2021.

Foreign currency movements in creased revenues by approximately $16.0 million and $28.9 million for the three and six months ended June 30, 2021, respectively, compared to the same periods 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.

Revenues per transaction decreased to $0.31 and $0.33 for the three and six months ended June 30, 2021, respectively, compared to $0.32 and $0.35 for the same periods in 2020, respectively .

The decreases in revenues per transaction were 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 $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 .

epay Segment direct operating costs were $185.0 million for the three months ended June 30, 2021 , an increase of $40.9 million or 28 % compared to the same period in 2020 .

epay Segment direct operating costs were $367.6 million for the six months ended June 30, 2021 , an increase of $93.5 million or 34 % 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.

The increases in direct operating costs were 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 during 2021.

Foreign currency movements increased direct operating costs by approximately $11.9 million and $21.3 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020 .

Gross profit was $58.9 million for the three months ended June 30, 2021, an increase of $15.4 million or 35% compared to $43.5 million for the same period in 2020 .

Gross profit was $118.6 million for the six months ended June 30, 2021, an increase of $32.3 million or 37% compared to $86.3 million for the same period in 2020 .

Gross margin in creased to 24.2 % and 24.4% for the three and six months ended June 30, 2021, respectively , compared to 23.2% and 24.0% for the same periods in 2020, respectively .

The increase in gross profit and gross margin is driven by the increase in transaction volumes.

Salaries and benefits

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.

Salaries and benefits expenses were $19.8 million for the three months ended June 30, 2021, an increase of $4.6 million or 30% compared to the same period in 2020 .

Salaries and benefits expenses were $39.1 million for the six months ended June 30, 2021, an increase of $8.3 million or 27% c ompared 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 and an increase in bonus expense.

Foreign currency movements in the countries where we employ our workforce increased these expenses by $1.5 million and $2.7 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020.

As a percentage of revenues, these expenses were 8.1% for both the three and six months ended June 30, 2021, compared to 8.1% and 8.6% for the same periods in 2020, respectively .

Selling, general and administrative

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 .

Selling, general and administrative expenses were $9.8 million for the three months ended June 30, 2021, an increase of $1.1 million or 13% compared to the same period in 2020 .

Selling, general and administrative expenses were $18.8 million for the six months ended June 30, 2021, an increase of $1.3 million or 8% compared to the same period in 2020 .

Foreign currency movements increased these expenses by $0.9 million and $1.5 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020 .

As a percentage of revenues, these expenses decreased to 4.0% and 3.9% for the three and six months ended June 30, 2021, respectively, compared to 4.6 % and 4.8% for the same periods in 2020, respectively.

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 expenses were $2.1 million for the three months ended June 30, 2021, an increase of $0.5 million or 30% compared to the same period in 2020 .

Depreciation and amortization expenses were $4.3 million for the six months ended June 30, 2021, an increase of $0.8 million or 22% 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.

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.

As a percentage of revenues, these expenses were 0.9 % for both the three and six months ended June 30, 2021 , compared to 0.9 % and 1.0% for the same periods in 2020, respectively .

Operating income

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.

epay Segment operating income was $27.2 million for the three months ended June 30, 2021 , an increase of $9.2 million or 51% c ompared to the same period in 2020 .

epay Segment operating income was $56.4 million for the six months ended June 30, 2021 , an increase of $21.9 million or 64% c ompared to the same period in 2020 .

Operating margin increased to 11.2 % and 11.6% for the three and six months ended June 30, 2021 , respectively, compared to 9.6 % for both of the same periods in 2020 .

Operating income per transaction was $0.03 and $0.04 for the three and six m onths ended June 30, 2021, respectively, compared to $0.03 for both of the same periods in 2020.

The increases in operating income and operating margin for the three and six months ended June 30, 2021 compared to the same periods 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 months ended March 31, 2021 and 2020 for the Money Transfer Segment:

The following table presents the results of operations for the three and six months ended June 30, 2021 and 2020 for the Money Transfer Segment:

Three Months Ended

Year-over-Year Change

Six Months Ended

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 impairment

Depreciation and amortization

Total operating expenses

Operating income

Operating income (loss)

Transactions processed (millions)

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 .

Money Transfer Segment total revenues were $359.3 million for the three months ended June 30, 2021, an increase of $96.4 million or 37% compared to the same period in 2020.

Money Transfer Segment total revenues were $684.2 million for the six months ended June 30, 2021, an increase of $155.1 million or 29% compared to the same period in 2020.

The increase in revenues was primarily due to increases in U.S.

1 unchanged sentence

domestic business.

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 .

Revenues per transaction increased to $10.51 and $10.48 for the three and six months ended June 30, 2021, respectively , compared to $10.19 and $9.95 for the same periods in 2020, respectively .

Foreign currency movements increased revenues by approximately $17.9 million and $32.2 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020 .

Direct operating costs

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 .

Money Transfer Segment direct operating costs were $205.2 million for the three months ended June 30, 2021, an increase of $60.6 million or 42 % compared to the same period in 2020.

Money Transfer Segment direct operating costs were $389.0 million for the six months ended June 30, 2021, an increase of $101.5 million or 35 % 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.

2 unchanged sentences

dollar weakening against key foreign currencies.

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 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.

Foreign currency movements increased direct operating costs by approximately $9.2 million and $16.3 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020 .

Gross profit was $154.1 million for the three months ended June 30, 2021, an increase of $35.8 million or 30% compared to $118.3 million for the same period in 2020 .

Gross profit was $295.2 million for the six months ended June 30, 2021, an increase of $53.6 million or 22% compared to $241.6 million for the same period in 2020 .

Gross margin decreased to 42.9 % and 43.1% for the three and six months ended June 30, 2021, respectively , compared to 45.0% and 45.7% for the same periods in 2020, respectively .

The decrease in gross margin is primarily attributable to the increase in direct operating costs driven by increased agent commissions in three and six months ended June 30, 2021 compared to the same periods in 2020.

Salaries and benefits

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 .

Salaries and benefits expenses were $62.7 million for the three months ended June 30, 2021, an increase of $13.7 million or 28% c ompared to the same period in 2020 .

Salaries and benefits expenses were $123.3 million for the six months ended June 30, 2021, an increase of $20.3 million or 20% c ompared 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 and an increase in bonus expense.

Foreign currency movements in the countries where we employ our workforce increased these expenses by $3.2 million and $5.8 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020.

As a percentage of revenues, these expenses decreased to 17.5% and 18.0% for the three and six months ended June 30, 2021, respectively, compared to 18.7% and 19.5% for the same periods in 2020, respectively .

Selling, general and administrative

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 .

Selling, general and administrative expenses were $38.3 million for the three months ended June 30, 2021, an increase of $5.2 million or 16% compared to the same period in 2020 .

Selling, general and administrative expenses were $74.4 million for the six months ended June 30, 2021, an increase of $2.7 million or 4% compared to the same period in 2020 .

Foreign currency movements increased these expenses by $2.4 million and $5.0 million for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020 .

As a percentage of revenues, these expenses decreased to 10.7% and 10.9% for the three and six months ended June 30, 2021, respectively, compared to 12.6 % and 13.6% for the same periods in 2020, respectively.

Goodwill impairment

Due to the economic impacts of the COVID-19 pandemic, the Company recorded an $82.7 million non-cash goodwill impairment charge related to the xe reporting unit during the second quarter of 2020.

The non-cash goodwill impairment charge was recorded for xe as a result of declines in the international payments business stemming from economic uncertainty.

Depreciation and amortization

Depreciation and amortization 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 expenses were $9.0 million for the three months ended June 30, 2021, an increase of $0.4 million or 5% compared to the same period in 2020 .

Depreciation and amortization expenses were $18.0 million for the six months ended June 30, 2021, an increase of $0.8 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 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.

As a percentage of revenues, these expenses decreased to 2.5 % and 2.6% for the three and six months ended June 30, 2021 , respectively, compared to 3.3 % and 3.2% for the same periods in 2020, respectively .

Operating income (loss)

Money Transfer Segment operating income was $44.1 million for the three months ended June 30 , 2021, an increase of $99.3 million or 180% compared to an operating loss in the same period in 2020 .

Money Transfer Segment operating income was $79.5 million for the six months ended June 30 , 2021, an increase of $112.4 million or 341% compared to an operating loss in the same period in 2020 .

Operating margin increased to 12.3% and 11.6% for the three and six months ended June 30, 2021, respectively, compared to (21.0 %) and (6.2%) for the same periods in 2020, respectively .

The increases in operating income and operating margin were primarily driven by the decrease in goodwill impairment charges, and an 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 .

Operating income (loss) per transaction increased to $1.29 and $1.22 for the three and six months ended June 30, 2021, respectively , compared to ( $2.14) and ($0.62) for the same periods in 2020, respectively .

CORPORATE SERVICES

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

The following table presents the operating expenses for the three and six months ended June 30, 2021 and 2020 for Corporate Services:

Three Months Ended

Year-over-Year Change

Six Months Ended

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

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.

Total Corporate operating expenses were $15.9 million and $29.9 million for the three and six months ended June 30, 2021, respectively, an increase of $8.4 million or 112% and $10.3 million or 52%, respectively, compared to the same periods in 2020 .

The increase is primarily due to a $7.8 million and $10.0 million increase in share based compensation for the three and six months ended June 30, 2021, respectively, compared to the same periods in 2020.

OTHER EXPENSE, NET

1 unchanged sentence

Year-over-Year Change

Six Months Ended

Year-over-Year Change

(dollar amounts in thousands)

1 unchanged sentence

(Decrease) Percent

Increase (Decrease) Amount

(Decrease) Percent

Interest income

Interest expense

Foreign currency exchange loss, net

Other gains, net

Foreign currency exchange gain (loss), net

Other gains (losses)

Other expense, net

Foreign currency exchange loss, net

Foreign currency exchange gain (loss), net

Foreign currency exchange activity includes gains and losses on certain foreign currency exchange derivative contracts and the impact of remeasurement of assets and liabilities denominated in foreign currencies.

8 unchanged sentences

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

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.

We recorded a net foreign currency exchange gain of $0.1 million and a loss of $3.9 million for the three and six months ended June 30, 2021, respectively, compared to a net foreign currency exchange gain of $2.5 million and a net foreign currency exchange loss of $16.3 million for the same periods in 2020, respectively.

These realized and unrealized foreign currency exchange gains and 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

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.

Our effective income tax rate was 58.9% and 99.9% for the three and six months ended June 30, 2021 , respectively, compared to (8.4)% and (11.1)% for the same periods in 2020, respectively.

Our effective income tax rate for the three and six months ended June 30, 2021 was higher than the applicable statutory income tax rate of 21 % as a result of certain foreign earnings being subject to higher local statutory tax rates, the non-recognition of tax benefits from losses in certain foreign countries where we have a limited history of profitable earnings 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 2021 for continuing net operating losses.

Our 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.

NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

7 unchanged sentences

NET INCOME (LOSS) ATTRIBUTABLE TO EURONET

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.

Net income attributable to Euronet was $8.6 million for the three months ended June 30, 2021, an increase of $124.4 million or 107% compared to t he net loss in the same period in 2020 .

For the three months ended June 30, 2021, the increase in net income was primarily attributable to the $104.6 million decrease in non-cash goodwill impairment charges and a $66.1 million increase in gross profit, partially offset by a $30.1 million increase in salaries and benefits, a $5.8 million increase in selling, general and administrative expenses, a $2.4 million decrease in net foreign currency exchange gains, and an increase in other expenses aggregating $8.0 million.

Net loss attributable to Euronet was ($0.03 million) for the six months ended June 30, 2021, an increase of $113.9 million or 100% compared to the net loss in the same period in 2020 .

For the six months ended June 30, 2021, the increase in net income was primarily attributable to the $104.6 million decrease in non-cash goodwill impairment charges, a $59.8 million increase in gross profit and a $12.4 million decrease in net foreign currency exchange losses, partially offset by a $44.5 million increase in salaries and benefits, a $7.0 million increase in income tax expense, and an increase in other expenses aggregating $11.4 million.

LIQUIDITY AND CAPITAL RESOURCES

Working capital

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.

As of June 30, 2021 , we had working capital of $1,280.2 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 $249.6 million decrease in the outstanding balance on the Credit Facility during the six months ended June 30, 2021 .

Our ratio of current assets to current liabilities was 1.79 and 1.81 at June 30, 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 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

As of June 30, 2021 , we had $565.1 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 increased $154.0 million from $411.1 million as of December 31, 2020 to $565.1 million as of June 30, 2021 as a result of the increase in number of active ATMs as of June 30, 2021 compared to December 31, 2020.

The Company has $994.5 million of unrestricted cash as of June 30, 2021 compared to $1,420.3 million as of December 31, 2020 .

The decrease in unrestricted cash was primarily due to the $249.6 million net repayment of the outstanding balance on the Credit Facility during the six months ended June 30, 2021 and the $154.0 million increase in ATM cash as unrestricted cash was utilized to fill the additional active ATMs.

Including the $565.1 million of cash in ATMs at June 30, 2021, the Company has access to $1,559.6 million in available cash, and $949.7 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 months ended June 30, 2021 and 2020 (in thousands):

Six Months Ended

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

5 unchanged sentences

Operating activity cash flow

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.

Cash flows provided by operating activities were $173.3 million f or the six months ended June 30, 2021 compared to $178.6 million for the same period in 2020 .

Investing activity cash flow

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 $1.8 million and $1.7 million for the three months ended March 31, 2021 and 2020 , respectively.

Cash flows used in investing activities were $48.3 million for the six months ended June 30, 2021 compared to $48.6 million for the same period in 2020 .

We used $45.1 million for purchases of property and equipment for the six months ended June 30, 2021 compared to $45.5 million for the same period in 2020 .

Cash used for software development and other investing activities totaled $3.3 million and $3.6 million for the six months ended June 30, 2021 and 2020 , respectively.

Financing activity cash flow

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.

Cash flows used in financing activities were $248.6 million for the six months ended June 30, 2021 compared to $241.0 million for the same period in 2020 .

Our borrowing activities for the six months ended June 30, 2021 consisted of net cash outflows of $249.6 million compared to no net borrowings for the same period in 2020 .

The decrease in net borrowings for the six months ended June 30, 2021 compared to the same period in 2020 was the result of the net repayment of $249.6 million of the outstanding balance on the Credit Facility.

We repurchased $0.9 million of common stock during the six months ended June 30, 2021 compared to repurchases of $240.7 million for the same period in 2020 .

The $0.9 million of share repurchases during the six months ended June 30, 2021 were in connection with the settlement of RSU awards and the exercise of option awards in certain countries in which we operate.

We received proceeds of $5.3 million and $5.7 million during the six months ended June 30, 2021 and 2020 , 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.

In May 2021, an additional lender joined the Credit Facility which increased the revolving commitment by $30 million.

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.

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

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.

As of June 30, 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 June 30, 2021 , we had $20.8 million of borrowings and $59.5 million of stand-by letters of credit outstanding under the Credit Facility.

The remaining $949.7 million under the Credit Facility was available for borrowing.

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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.

As of June 30, 2021 , we have outstanding €600 million ( $711.3 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 $0.8 million and $0.9 million outstanding under these other obligation arrangements as of March 31, 2021 and December 31, 2020, respectively.

There were $0.8 million and $0.9 million outstanding under these other obligation arrangements as of June 30, 2021 and December 31, 2020, respectively.

Other uses of capital

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

Capital expenditures and needs - Total capital expenditures for the six months ended June 30, 2021 were $45.1 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.

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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 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 .

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 March 31, 2021 .

As of June 30, 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 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 .

As of June 30, 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 .

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