What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-10-28 · 163 added, 254 removed, 267 unchanged (61% of the section changed)

15 unchanged sentences

the potential outcome of loss contingencies;

our expectations regarding the closing of any pending acquisitions;

our expectations regarding the closing of any pending acqu isitions;

business strategy;

1 unchanged sentence

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;

3 unchanged sentences

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

the war in the Ukraine and related economic sanctions;

our ability to successfully integrate the operations of Piraeus Merchant Services;

and economic conditions in specific countries and regions;

6 unchanged sentences

changes in fees payable for transactions performed for cards bearing international logos or over switching networks such as card transactions on ATMs;

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;

our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, sanctions, consumer and data protection and privacy 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;

the cost of borrowing, availability of credit and terms of and compliance with debt covenants;

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 .

the cost of borrowing (including fluctuations in interest rates), availability of credit and terms of and compliance with debt covenants;

and ren ewal 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, 2021 .

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.

4 unchanged sentences

We offer payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers.

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.

Our primary product offerings include comprehensive ATM, POS, card outsourcing, card issuing and merchant acquiring services, software solutions, electronic distribution of prepaid mobile airtime, managed services and other electronic payment products, foreign currency exchange services and global money transfer services.

We operate in the following three segments:

T he EFT Processing Segment, which processes transactions for a network of 45,520 active ATMs and approximately 400,000 POS terminals across Europe, the Middle East, Asia Pacific, the United States and Africa.

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, dynamic currency conversion ("DCC"), and other value added services.

1) The EFT Processing Segment, which processes transactions for a network of 44,353 ATMs and approximately 491,000 POS terminals across Europe, the Middle East, Africa, 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, debit and prepaid card outsourcing, DCC, and other value added services.

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

2 unchanged sentences

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, 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 507,000 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).

3) The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, IME, AFEX, and xe and global account-to-account money transfer services under the brand name xe.

We offer services under the brand names Ria 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 495,000 locations.

xe is a provider of foreign currency exchange information and of fers money transfer services on its currency data websit es (xe.com and x-rates.com).

In addition to money transfers, we also offer customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up.

8 unchanged sentences

Each operating segment’s sources of revenues are described below.

EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 28 % and 20% of total consolidated revenues for the three and nine months ended September 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 29 % and 33% of total consolidated revenues for the three and nine months ended September 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 67 % 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 43 % and 47% of total consolidated revenues for the three and nine months ended September 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.

EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 20% of total consolidated revenues for the three months ended March 31, 2022, 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.

epay Segment — Revenues in the epay Segment, which represented approximately 33% of total consolidated revenues for the three months ended March 31, 2022 , are primarily derived from commissions earned from the distribution of electronic content, vouchers, and physical gifts and commissions or processing fees rec eived from mobile phone operators for the processing and distribution of prepaid mobile airtime.

Branded payments, which includes the distribution of digital media content, were 66% of epay Segment revenues for the three months ended March 31, 2022.

Branded payments include digital content such as music, games and software, as well as, other products including prepaid long distance calling card plans, prepaid Internet plans, prepaid debit cards, gift cards, vouchers, transport payments, lottery payments, bill payment, and money transfer.

Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately 47% of total consolidated revenues for the three months ended March 31, 2022 , are primarily derived from transaction fees, as well as the margin earned from purchasing foreign currency at wholesale exchange rates and selling the foreign currency to customers at retail exchange rates.

We have a sending agent network in place comprised of agents, customer service representatives, Company-owned stores, primarily in North America, Europe and Malaysia, and Ria, and xe branded websites, along with a worldwide network of correspondent agents, consisting primarily of financial institutions in the transfer destination countries.

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

19 unchanged sentences

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 .

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 in which we operate 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.

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

The overall growth rate in the digital media content and prepaid mobile phone 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.

10 unchanged sentences

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 three and nine months ended September 30, 2021 and 2020 .

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.

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

and the European Union, 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.

Although vaccines for COVID-19 are widely available, a significant portion of the population remains unvaccinated and long term effectiveness of the vaccines, especially against new variants, is 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 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 re-negotiating 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.

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 as well as certain restrictions that may impact immigrant laborers.

SEGMENT SUMMARY RESULTS OF OPERATIONS

Revenues and operating income by segment for the three and nine months ended September 30, 2021 and 2020 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, 2022 and 2021 are summarized in the tables below:

Revenues for the Three Months Ended March 31,

Year-over-Year Change

3 unchanged sentences

Corporate services, eliminations and other

Operating Income (Expense) for the Three Months Ended

September 30,

Year-over-Year Change

Operating (Loss) Income for the Nine Months Ended

September 30,

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

Year-over-Year Change

13 unchanged sentences

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)

Increase (Decrease) Percent

Australian dollar

British pounds sterling

Canadian dollar

Hungarian forint

1 unchanged sentence

New Zealand dollar

COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

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, 2021 and 2020 :

The following table summarizes the results of operations for our EFT Processing Segment for the three months ended March 31, 2022 and 2021 :

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

Operating expenses:

Direct operating costs

Direct operating costs, exclusive of depreciation

Salaries and benefits

Selling, general and administrative

Goodwill impairment

Depreciation and amortization

Total operating expenses

Operating income (loss)

Operating loss

Transactions processed (millions)

Active ATMs as of September 30,

Active ATMs as of March 31,

Average Active ATMs

EFT Processing Segment total revenues were $227.1 million for the three months ended September 30, 2021, an increase of $83.1 million or 58% compared to the same period in 2020.

EFT Processing Segment total revenues were $427.7 million for the nine months ended September 30, 2021, an increase of $59.3 million or 16% 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 September of 2020.

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

however, remaining cross-border travel patterns prevented our volume of DCC and surcharge transactions from returning to pre-COVID-19 levels.

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

Revenues increased for the nine months ended September 30, 2021 compared to the same period in 2020 as cross-border travel and corresponding DCC and surcharge revenues increased, partially offset by the nine months ended September 30, 2020 including two months of pre-COVID-19 level DCC and surcharge transaction volumes compared to the nine months ended September 30, 2021 which had various levels of restrictions throughout the entire nine month period.

Foreign currency movements increased revenues by approximately $1.7 million and $12.0 million for the three and nine months ended September 30, 2021 , respectively, compared to the same periods in 2020 .

Average monthly revenues per ATM increased to $1,660 for the three months ended September 30, 2021 compared to $1,085 for the same period in 2020.

Average monthly revenues per ATM increased to $1,162 for the nine months ended September 30, 2021 compared to $949 for the same period in 2020.

Revenues per transaction increased to $0.19 for the three m onths ended September 30, 2021 compared to $0.16 for the same period in 2020.

Revenues per transaction decreased to $0.14 for the nine m onths ended September 30, 2021 compared to $0.16 for the same period in 2020.

For the three months ended September 30, 2021, the increase in average monthly revenues per ATM and revenues per transaction were attributable to the easing of COVID-19 restrictions throughout Europe and corresponding increase in cross-border DCC and surcharge transactions, partially offset by 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 nine months ended September 30, 2021, the average monthly revenues per ATM increased primarily due to the lower average ATM count as we modified our estate of ATMs beginning in the second quarter of 2020, 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 as well as a shift in the mix of our transaction volume .

Direct operating costs

EFT Processing Segment direct operating costs were $106.3 million for the three months ended September 30, 2021 , an increase of $23.7 million or 29 % compared to the same period in 2020 .

EFT Processing Segment direct operating costs were $258.6 million for the nine months ended September 30, 2021 , an increase of $26.0 million or 11% co mpared 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.

For the three months ended September 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 nine months ended September 30, 2021, the increase in direct operating costs was primarily due to the increase in transaction volumes, costs associated with modifying our estate of ATMs, and the weakening of the U.S.

Foreign currency movements increased direct operating costs by approximately $0.6 million and $9.3 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020 .

Gross profit, which is calculated as revenues less direct operating costs, was $120.8 million for the three months ended September 30, 2021, an increase of $59.4 million or 97% compared to $61.4 million for the same period in 2020 .

Gross profit was $169.1 million for the nine months ended September 30, 2021, an increase of $33.4 million or 25% compared to $135.7 million for the same period in 2020 .

Gross profit as a percentage of revenues (“gross margin”) increased to 53.2 % and 39.5% for the three and nine months ended September 30, 2021, respectively , compared to 42.6% and 36.9% for the same periods in 2020, respectively.

For the three and nine months ended September 30, 2021, the increase in gross profit and gross margin was primarily driven by the increase in cross-border transactions and overall increase in transaction volumes.

EFT Processing Segment total revenues were $145.6 million for the three months ended March 31, 2022 , an increase of $58.5 million or 67 % compared to the same period in 2021 .

The increase in revenues was primarily due to the increase in domestic and international withdrawal transactions resulting from continued lifting of travel restrictions across Europe and the increase in volume of transactions for low-value point-of-sale transactions in Europe and low-value payment processing transactions in Asia Pacific.

Foreign currency movements decreased revenues by approximately $8.5 million for the three months ended March 31, 2022 compared to the same period in 2021 .

Average monthly revenues per ATM increased to $1,118 for the three months ended March 31, 2022 compared to $793 for the same period in 2021 .

Revenues per transaction increased to $0.11 for the three m onths ended March 31, 2022 compared to $0.09 for the same period in 2021 .

The increases in average monthly revenues per ATM and revenues per transaction were primarily due to the increase in domestic and international withdrawal transactions resulting from continued lifting of travel restrictions across Europe, partially offset by the increase in volume of low-value point-of-sale transactions in Europe and low-value payment processing transactions in Asia Pacific.

Direct operating costs, exclusive of depreciation

EFT Processing Segment direct operating costs were $93.3 million for the three months ended March 31, 2022 , an increase of $23.7 million or 34 % compared to the same period in 2021 .

The increase in direct operating costs was primarily due to the increase in the number of ATMs under management as there were fewer deactivated ATMs during the three months ended March 31, 2022 compared to the same period in 2021 resulting in an increase in ATM site rental fees and cash delivery costs.

Foreign currency movements decreased direct operating costs by approximately $5.6 million for the three months ended March 31, 2022 compared to the same period in 2021 .

Gross profit, which is calculated as revenues less direct operating costs, was $52.2 million for the three months ended March 31, 2022 , an increase of $34.7 million or 198% compared to $17.5 million for the same period in 2021 .

Gross profit as a percentage of revenues (“gross margin”) increased to 35.9 % for the three months ended March 31, 2022 , compared to 20.1% for the same period in 2021 .

The increase in gross profit and gross margin was primarily due to the incremental volume of transactions that were processed on our network relative to the fixed costs incurred, and the higher proportion of high value and high margin DCC transactions due to the lifting of travel restrictions.

Salaries and benefits

Salaries and benefits expenses were $23.7 million for the three months ended September 30, 2021, a decrease of $1.5 million or 6% c ompared to the same period in 2020 .

Salaries and benefits expenses were $71.3 million for the nine months ended September 30, 2021, an increase of $2.8 million or 4% c ompared to the same period in 2020 .

The increase in salaries and benefits for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily driven by a $3.3 million increase from foreign currency movements in the countries where we employ our workforce.

As a percentage of revenues, these expenses decreased to 10.4% and 16.7% for the three and nine months ended September 30, 2021, respectively, compared to 17.5% and 18.6% for the same periods in 2020, respectively .

Salaries and benefits expenses were $25.2 million for the three months ended March 31, 2022, an increase of $1.7 million or 7% c ompared to the same period in 2021 .

The increase is primarily due to an increase in headcount to support the growth of the business.

Foreign currency movements in the countries in which we employ our workforce decreased these expenses by $1.6 million for the three months ended March 31, 2022 compared to the same period in 2021.

As a percentage of revenues, these expenses decreased to 17.3 % for the three months ended March 31, 2022, compared to 27.1% for the same period in 2021 .

Selling, general and administrative

Selling, general and administrative expenses were $11.3 million for the three months ended September 30, 2021, an increase of $2.7 million or 32% compared to the same period in 2020 .

Selling, general and administrative expenses were $33.1 million for the nine months ended September 30, 2021, an increase of $4.0 million or 14% compared to the same period in 2020 .

The increase in these expenses is primarily driven by an increase in professional fees and travel related expenses.

As a percentage of revenues, these expenses decreased to 5.0 % and 7.7 % for the three and nine m onths ended September 30, 2021, respectively, compared to 6.0 % and 7.9% 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.

Selling, general and administrative expenses were $11.1 million for the three months ended March 31, 2022 , a decrease of ( $0.8 million) or (7%) compared to the same period in 2021 .

As a percentage of revenues, these expenses decreased to 7.6 % for the three months ended March 31, 2022 , compared to 13.7 % for the same period in 2021 .

Depreciation and amortization

Depreciation and amortization expenses were $22.6 million for the three months ended September 30, 2021, an increase of $1.1 million or 5% compared to the same period in 2020 .

Depreciation and amortization expenses were $66.9 million for the nine months ended September 30, 2021, an increase of $5.1 million or 8% compared to the same period in 2020 .

Foreign currency movements increased these expenses by $0.1 million and $2.9 million for the three and nine months ended September 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 10.0 % and 15.6% for the three and nine months ended September 30, 2021 , respectively, compared to 14.9 % and 16.8% for the same periods in 2020, respectively .

Operating income (loss)

EFT Processing Segment had operating income of $63.2 million for the three months ended September 30, 2021, an increase of $57.0 million or 926% compared to the same period in 2020 .

EFT Processing Segment had an operating loss of ( $2.2 million) for the nine months ended September 30, 2021, a decrease of $43.3 million or 95% compared to the operating loss in the same period in 2020 .

O perating income (loss) as a percentage of revenues (“operating margin”) increased to 27.8 % and (0.5%) for the three and nine months ended September 30, 2021, respectively, compared to 4.3% and (12.3%) for the same periods in 2020, respectively .

Operating income (loss) per transaction was $0.05 and ($0.00) for the three and nine months ended September 30, 2021, respectively, compared to $0.01 and ($0.02) for the same periods in 2020, respectively .

For the three months ended September 30, 2021, the increases in operating income, operating margin and operating income per transaction were primarily driven by the easing of COVID-19 restrictions in limited regions where we operate.

For the nine months ended September 30, 2021, the decrease in operating loss and increase in operating margin was primarily driven by the easing of COVID-19 restrictions in limited regions where we operate and the $21.9 million decrease in non-cash goodwill impairment charges , partially offset by the decrease in tourism in the months of January and February 2021 compared to the same periods in the prior period.

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

Depreciation and amortization expenses were $22.3 million for the three months ended March 31, 2022, an increase of $0.3 million or 1% compared to the same period in 2021 .

As a percentage of revenues, these expenses decreased to 15.3 % for the three months ended March 31, 2022 , compared to 25.3 % for the same period in 2021 .

Operating loss

EFT Processing Segment had an operating loss of ( $6.5 million) for the three months ended March 31, 2022, a reduction of 84% compared to the same period in 2021 .

O perating loss as a percentage of revenues (“operating margin”) decreased to (4.4 %) for the three months ended March 31, 2022, compared to (46.0 %) for the same period in 2021 .

Operating loss per transaction was less than ( $0.01) for the three months ended March 31, 2022, compared to ( $0.04) for the same period in 2021 .

The decrease in operating loss, improved operating margin and decrease in operating loss per transaction were primarily due to increased volumes processed on our network, and associated revenues, compared to the same period in 2021.

The following table presents the results of operations for the three months ended March 31, 2022 and 2021 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)

Increase Amount

Increase (Decrease) Amount

(Decrease) Percent

Total revenues

Operating expenses:

Direct operating costs

Direct operating costs, exclusive of depreciation

Salaries and benefits

4 unchanged sentences

Transactions processed (millions)

epay Segment total revenues were $238.3 million for the three months ended September 30, 2021, an increase of $39.4 million or 20% compared to the same period in 2020.

epay Segment total revenues were $724.5 million for the nine months ended September 30, 2021, an increase of $165.1 million or 30% 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 2021.

Foreign currency movements in creased revenues by approximately $2.1 million and $31.0 million for the three and nine months ended September 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 $0.29 and $0.32 for the three and nine months ended September 30, 2021, respectively, compared to $0.30 and $0.33 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 $180.2 million for the three months ended September 30, 2021 , an increase of $30.2 million or 20 % compared to the same period in 2020 .

epay Segment direct operating costs were $547.8 million for the nine months ended September 30, 2021 , an increase of $123.7 million or 29 % compared to the same period in 2020 .

epay Segment total revenues were $235.8 million for the three months ended March 31, 2022 , a decrease of ( $6.5 million) or (3%) compared to the same period in 2021 .

The decrease in revenues was primarily due to the $13.2 million decrease caused by foreign currency movements for the three months ended March 31, 2022 compared to the same period in 2021 as well as a decrease in branded payments in India, partially offset by the increase in transactions processed.

Revenues per transaction decreased to $0.28 for the three months ended March 31, 2022, compared to $0.36 for the same period in 2021 .

The decrease in revenues per transaction was primarily due to the increase in the number of transactions processed in a region where we generally earn lower revenues per transaction.

Direct operating costs, exclusive of depreciation

epay Segment direct operating costs were $178.3 million for the three months ended March 31, 2022 , a decrease of ( $4.3 million) or (2%) compared to the same period in 2021 .

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 increases in direct operating costs were primarily due to the increase in transaction volumes of low-value mobile top-up transactions, an increase in retailer commissions and the U.S.

dollar weakening against key foreign currencies during 2021.

Foreign currency movements increased direct operating costs by approximately $1.6 million and $22.9 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020 .

Gross profit was $58.1 million for the three months ended September 30, 2021, an increase of $9.2 million or 19% compared to $48.9 million for the same period in 2020 .

Gross profit was $176.7 million for the nine months ended September 30, 2021, an increase of $41.4 million or 31% compared to $135.3 million for the same period in 2020 .

Gross margin was 24.4 % for both the three and nine months ended September 30, 2021, compared to 24.6% and 24.2% for the same periods in 2020, respectively .

The increase in gross profit is primarily driven by the increase in transaction volumes at relatively flat margins.

The decrease in direct operating costs was primarily due to the $9.5 million decrease caused by foreign currency movements for the three months ended March 31, 2022 compared to the same period in 2021 .

Gross profit was $57.5 million for the three months ended March 31, 2022 , a decrease of ($2.2 million) or (4%) compared to $59.7 million for the same period in 2021 .

Gross margin decreased to 24.4 % for the three months ended March 31, 2022, compared to 24.6% for the same period in 2021 .

The decrease in gross profit and gross margin is primarily due to decrease in revenues associated with the shift in mix of transactions processed .

Salaries and benefits

Salaries and benefits expenses were $20.1 million for the three months ended September 30, 2021, an increase of $4.0 million or 25% compared to the same period in 2020 .

Salaries and benefits expenses were $59.2 million for the nine months ended September 30, 2021, an increase of $12.3 million or 26% 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 $0.3 million and $3.0 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020.

As a percentage of revenues, these expenses were 8.4% and 8.2% for the three and nine months ended September 30, 2021, respectively, compared to 8.1% and 8.4% for the same periods in 2020, respectively .

Salaries and benefits expenses were $20.2 million for the three months ended March 31, 2022 , an increase of $0.8 million or 4% compared to the same period in 2021 .

The increase in salaries and benefits was driven by an increase in headcount to support the growth of the business, partially offset by a $1.1 million decrease from foreign currency movements for the three months ended March 31, 2022 compared to the same period in 2021.

As a percentage of revenues, these expenses increased to 8.6 % for the three months ended March 31, 2022, compared to 8.0% for the same period in 2021.

Selling, general and administrative

Selling, general and administrative expenses were $9.8 million for the three months ended September 30, 2021, an increase of $1.3 million or 16% compared to the same period in 2020 .

Selling, general and administrative expenses were $28.6 million for the nine months ended September 30, 2021, an increase of $2.7 million or 10% compared to the same period in 2020 .

Foreign currency movements increased these expenses by $0.1 million and $1.6 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020 .

As a percentage of revenues, these expenses decreased to 4.1% and 3.9% for the three and nine months ended September 30, 2021, respectively, compared to 4.3 % and 4.6% for the same periods in 2020, respectively.

Selling, general and administrative expenses were $9.4 million for the three months ended March 31, 2022 , an increase of $0.4 million or 5 % compared to the same period in 2021 .

As a percentage of revenues, these expenses increased to 4.0 % for the three months ended March 31, 2022 , compared to 3.7 % for the same period in 2021 .

Depreciation and amortization

Depreciation and amortization expenses were $2.3 million for the three months ended September 30, 2021, an increase of $0.1 million or 6% compared to the same period in 2020 .

Depreciation and amortization expenses were $6.5 million for the nine months ended September 30, 2021, an increase of $0.9 million or 16% compared to the same period in 2020 .

Depreciation and amortization expenses were $1.7 million for the three months ended March 31, 2022 , a decrease of ($0.4 million) or (20 %) compared to the same period in 2021 .

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 both the three and nine months ended September 30, 2021 , compared to 1.1 % and 1.0% for the same periods in 2020, respectively .

As a percentage of revenues, these expenses decreased to 0.7 % for the three months ended March 31, 2022, compared to 0.9% for same period in 2021.

Operating income

epay Segment operating income was $26.0 million for the three months ended September 30, 2021 , an increase of $3.7 million or 17% c ompared to the same period in 2020 .

epay Segment operating income was $82.3 million for the nine months ended September 30, 2021 , an increase of $25.6 million or 45% c ompared to the same period in 2020 .

Operating margin decreased to 10.9 % and increased to 11.4% for the three and nine months ended September 30, 2021 , respectively, compared to 11.2 % and 10.1% for the same periods in 2020 , respectively.

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

The increase in operating income and relatively flat operating margin for the three months ended September 30, 2021 compared to the same period in 2020 was primarily due to an increase in the number of overall transactions.

The increases in operating income and operating margin for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to an increase in the number of higher-margin digital media transactions .

epay Segment operating income was $26.2 million for the three months ended March 31, 2022 , a decrease of ( $3.0 million) or (10%) c ompared to the same period in 2021 .

Operating margin decreased to 11.1 % for the three months ended March 31, 2022 , compared to 12.0 % for the same period in 2021 .

Operating income per transaction decreased to $0.03 for the three months ended March 31, 2022 compared to $0.04 for same period in 2021 .

The decreases in operating income, operating margin and operating income per transaction for the three months ended March 31, 2022 compared to the same period in 2021 were primarily due to the shift in mix of transactions processed .

MONEY TRANSFER SEGMENT

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

The following table presents the results of operations for the three months ended March 31, 2022 and 2021 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

Operating expenses:

Direct operating costs

Direct operating costs, exclusive of depreciation

Salaries and benefits

Selling, general and administrative

Goodwill and acquired intangible assets impairment

Depreciation and amortization

2 unchanged sentences

Transactions processed (millions)

Money Transfer Segment total revenues were $353.5 million for the three months ended September 30, 2021, an increase of $30.4 million or 9% compared to the same period in 2020.

Money Transfer Segment total revenues were $1,037.7 million for the nine months ended September 30, 2021, an increase of $185.5 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 and transactions in the Middle East region.

Revenues per transaction decreased to $10.37 and increased to $10.44 for the three and nine months ended September 30, 2021, respectively , compared to $10.46 and $10.13 for the same periods in 2020, respectively .

Foreign currency movements increased revenues by approximately $3.2 million and $35.4 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020 .

Direct operating costs

Money Transfer Segment direct operating costs were $200.2 million for the three months ended September 30, 2021, an increase of $23.5 million or 13 % compared to the same period in 2020.

Money Transfer Segment direct operating costs were $589.3 million for the nine months ended September 30, 2021, an increase of $125.1 million or 27 % compared to the same period in 2020.

Money Transfer Segment total revenues were $339.0 million for the three months ended March 31, 2022 , an increase of $14.1 million or 4 % compared to the same period in 2021 .

The increase in revenues was primarily due to the increase in international-originated money transfers, U.S.

outbound transactions, and direct-to-consumer digital transactions, partially offset by a decrease in U.S.

domestic transactions.

Revenues per transaction decreased to $10.12 for the three months ended March 31, 2022 , compared to $10.41 for the same period in 2021 due to a shift in the mix of transactions processed.

Foreign currency movements decreased revenues by approximately $11.9 million for the three months ended March 31, 2022 compared to the same period in 2021 .

Direct operating costs, exclusive of depreciation

Money Transfer Segment direct operating costs were $188.4 million for the three months ended March 31, 2022 , an increase of $4.5 million or 2 % compared to the same period in 2021 .

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 corresponding increase in agent commissions.

Foreign currency movements increased direct operating costs by approximately $1.6 million and $17.9 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020 .

During the third quarter of 2021, the Company evaluated $40.8 million of deferred contract acquisition costs related to a large retail contract due to lower than expected cash flows.

An undiscounted cash flow analysis was performed comparing the carrying amount of the deferred contract acquisition costs to the projected undiscounted cash flows.

The undiscounted cash flows exceeded the carrying amount indicating no impairment at September 30, 2021 .

Gross profit was $153.2 million for the three months ended September 30, 2021, an increase of $6.8 million or 5% compared to $146.4 million for the same period in 2020 .

Gross profit was $448.4 million for the nine months ended September 30, 2021, an increase of $60.4 million or 16% compared to $388.0 million for the same period in 2020 .

Gross margin decreased to 43.3 % and 43.2% for the three and nine months ended September 30, 2021, respectively , compared to 45.3% and 45.5% for the same periods in 2020, respectively .

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

The increase in direct operating costs was primarily due to the increase in the number of international-originated and U.S.

outbound money transfer transactions, partially offset by foreign currency movements that decreased direct operating costs by approximately $5.9 million for the three months ended March 31, 2022 compared to the same period in 2021 .

Gross profit was $150.6 million for the three months ended March 31, 2022 , an increase of $9.6 million or 7% compared to $141.0 million for the same period in 2021 .

Gross margin increased to 44.4% for the three months ended March 31, 2022, compared to 43.4% for the same period in 2021.

The increase in gross profit and gross margin was primarily due t o increases in international-originated money transfers, U.S.

outbound money transfers and direct-to-consumer digital transactions .

Salaries and benefits

Salaries and benefits expenses were $65.3 million for the three months ended September 30, 2021, an increase of $13.3 million or 25% c ompared to the same period in 2020 .

Salaries and benefits expenses were $188.5 million for the nine months ended September 30, 2021, an increase of $33.6 million or 22% 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 $0.9 million and $6.7 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020.

As a percentage of revenues, these expenses increased to 18.5% and were flat at 18.2% for the three and nine months ended September 30, 2021, respectively, compared to 16.1% and 18.2% for the same periods in 2020, respectively .

Salaries and benefits expenses were $67.2 million for the three months ended March 31, 2022, an increase of $6.7 million or 11% compared to the same period in 2021 .

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

As a percentage of revenues, these expenses increased to 19.8 % for the three months ended March 31, 2022 , compared to 18.6% for the same period in 2021 .

Selling, general and administrative

Selling, general and administrative expenses were $41.5 million for the three months ended September 30, 2021, an increase of $4.9 million or 13% compared to the same period in 2020 .

Selling, general and administrative expenses were $116.0 million for the nine months ended September 30, 2021, an increase of $7.6 million or 7% compared to the same period in 2020 .

The increase in these expenses is primarily driven by an increase in professional fees and travel related expenses.

Foreign currency movements decreased these expenses by $0.1 million and increased these expenses by $4.9 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020 .

As a percentage of revenues, these expenses increased to 11.8% and decreased to 11.2% for the three and nine months ended September 30, 2021, respectively, compared to 11.3% and 12.7% for the same periods in 2020, 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 $41.0 million for the three months ended March 31, 2022 , an increase of $4.9 million or 14 % compared to the same period in 2021 .

The increase was primarily due to an increase in marketing expenses and travel related expenses.

As a percentage of revenues, these expenses increased to 12.1 % for the three months ended March 31, 2022 , compared to 11.1% for the same period in 2021 .

Depreciation and amortization

Depreciation and amortization expenses were $8.9 million for the three months ended September 30, 2021, an increase of $0.3 million or 3% compared to the same period in 2020 .

Depreciation and amortization expenses were $26.9 million for the nine months ended September 30, 2021, an increase of $1.1 million or 4% compared to the same period in 2020 .

Depreciation and amortization expenses were $8.8 million for the three months ended March 31, 2022, a decrease of ( $0.1 million) or (1 %) compared to the same period in 2021 .

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 2.5 % and 2.6% for the three and nine months ended September 30, 2021 , respectively, compared to 2.7 % and 3.0% for the same periods in 2020, respectively .

As a percentage of revenues, these expenses decreased to 2.6 % for the three months ended March 31, 2022, compared to 2.8 % for the same period in 2021 .

Operating income

Money Transfer Segment operating income was $37.5 million for the three months ended September 30 , 2021, a decrease of $10.1 million or 21% compared to the same period in 2020 .

Money Transfer Segment operating income was $117.0 million for the nine months ended September 30 , 2021, an increase of $102.3 million or 695% compared to the same period in 2020 .

Operating margin decreased to 10.6% and increased to 11.3% for the three and nine months ended September 30, 2021, respectively, compared to 14.7 % and 1.7% for the same periods in 2020, respectively .

Operating income per transaction decreased to $1.10 and increased to $1.18 for the three and nine months ended September 30, 2021, respectively , compared to $1.54 and $0.17 for the same periods in 2020, respectively .

The decrease in operating income, operating margin and operating income per transaction for the three months ended September 30, 2021 compared to the same period in 2020 was primarily driven by the increase in agent commissions and increase in headcount to support the growth of the business.

The increase in operating income, operating margin and operating income per transaction for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily driven by the decrease in non-cash goodwill impairment charges, and an increase in transaction volume, specifically the higher margin transactions for U.S.

outbound and international-originated money transfers, partially offset by the increase in agent commissions and increase in headcount to support the growth of the business.

Money Transfer Segment operating income was $33.5 million for the three months ended March 31, 2022 , a decrease of ( $1.9 million) or (5 %) compared to the same period in 2021 .

Operating margin decreased to 9.9% for the three months ended March 31, 2022, compared to 10.9 % for the same period in 2021 .

The decreases in operating income and operating margin were primarily driven by the increase in salaries and selling, general and administrative expenses incurred.

Operating income per transaction decreased to $1.00 for the three months ended March 31, 2022 , compared to $1.13 for the same period in 2021 due to a shift in the mix of transactions processed .

CORPORATE SERVICES

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

The following table presents the operating expenses for the three months ended March 31, 2022 and 2021 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

Total Corporate operating expenses were $12.2 million and $42.0 million for the three and nine months ended September 30, 2021, respectively, an increase of $2.2 million or 22% and $12.5 million or 42%, respectively, compared to the same periods in 2020 .

The increases are primarily due to $1.8 million and $11.8 million increases in share based compensation for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020.

Total Corporate operating expenses were $16.5 million for the three months ended March 31, 2022, an increase of $2.5 million or 18% compared to the same period in 2021 .

The increase is primarily due to a $1.3 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

Other gains, net

Other expense, net

Interest expense

Interest expense was $6.1 million for the three months ended March 31, 2022, a decrease of ($3.1 million) or (33%) compared to the same period in 2021.

The decrease in interest expense relates to the $3.9 million accretion expense incurred for the three months ended March 31, 2021, which was reduced to $0 for the three months ended March 31, 2022 as a result of the adoption of ASU 2020-06, partially offset by increased borrowings on the revolving Credit Facility for the three months ended March 31, 2022 compared to the same period in 2021.

See Footnote 2, Recently Issued and Adopted Accounting Pronouncements, for more information on the impact of this adoption.

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 $8.1 million and $12.1 million for the three and nine months ended September 30, 2021, respectively, compared to a net foreign currency exchange loss of $1.4 million and $17.7 million for the same periods in 2020, respectively.

We recorded net foreign currency exchange losses of $5.5 million and $4.0 million for the three months ended March 31, 2022 and 2021, 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

Our effective income tax rate was 23.6% and 35.8% for the three and nine months ended September 30, 2021 , respectively, compared to 27.2% and (55.9)% for the same periods in 2020, respectively.

Our effective income tax rate for the three and nine months ended September 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 nine months ended S eptember 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.

Our effective income tax rate was 67.4 % and (236.9%) for the three months ended March 31, 2022 and 2021 , respectively.

Our effective income tax rate for the three months ended March 31, 2022 was higher than the applicable statutory income tax rate of 21 % a s a result of the Company’s U.S.

deferred tax activity on foreign exchange positions and certain foreign earnings of the Company being subject to higher local statutory tax rates.

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 of the Company being subject to higher local statutory tax rates, and the Company’s U.S.

deferred tax activity on foreign exchange positions.

NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

7 unchanged sentences

NET INCOME (LOSS) ATTRIBUTABLE TO EURONET

Net income attributable to Euronet was $73.9 million for the three months ended September 30, 2021, an increase of $33.6 million or 84% compared to the same period in 2020 .

For the three months ended September 30, 2021, the increase in net income was primarily attributable to the $75.4 million increase in gross profit driven by an increase in transaction volumes, partially offset by a $17.8 million increase in salaries and benefits, a $9.1 million increase in selling, general and administrative expenses, a $7.7 million increase in income tax expense, a $6.8 million increase in net foreign currency exchange losses and an increase in other expenses aggregating $0.4 million .

Net income attributable to Euronet was $73.9 million for the nine months ended September 30, 2021, an increase of $147.5 million or 200% compared to the net loss in the same period in 2020 .

For the nine months ended September 30, 2021, the increase in net income was primarily attributable to the $135.2 million increase in gross profit driven by an increase in transaction volumes, a $106.0 million decrease in non-cash goodwill and intangible assets impairment charges and a $5.6 million decrease in foreign currency exchange losses, partially offset by a $62.4 million increase in salaries and benefits, a $14.7 million increase in income tax expense, a $12.9 million increase in selling, general and administrative expenses, a $7.3 million increase in depreciation and amortization expenses and an increase in other expenses aggregating $2.0 million.

Net income attributable to Euronet was $8.3 million for the three months ended March 31, 2022, an increase of $17.0 million or 196% compared to t he net loss in the same period in 2021 .

The increase in net income was primarily attributable to the $65.8 million increase in revenues, largely driven by the increases within the EFT Segment as tourism and cross-border travel increased during the first quarter of 2022 compared to the first quarter of 2021.

The increased revenues led to a $42.2 million increase in gross profit, with $34.7 million of this increase within the EFT Segment.

The increase in gross profit was partially offset by an $11.1 million increase in salaries and benefits expense, an $11.1 million increase in income tax expense and a $5.1 million increase in selling, general and administrative expense.

LIQUIDITY AND CAPITAL RESOURCES

Working capital

As of September 30, 2021 , we had working capital of $1,395.5 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 $217.2 million decrease in the outstanding balance on the Credit Facility during the nine months ended September 30, 2021, partially offset by a $35.0 million increase in trade accounts receivable and a $34.7 million decrease in accrued expenses and other current liabilities .

Our ratio of current assets to current liabilities was 1.85 and 1.81 at September 30, 2021 and December 31, 2020 , respectively.

As of March 31, 2022 , we had working capital of $1,354.9 million , which is calculated as the difference between total current assets and total current liabilities, compared to working capital of $1,455.8 million as of December 31, 2021 .

The decrease in working capital was primarily due to the $346.2 million acquisition of PBMA and the $70.4 million of share repurchases, partially offset by a $303.5 million increase in borrowing on the Credit Facility as of March 31, 2022 compared to December 31, 2021 .

Our ratio of current assets to current liabilities was 1.77 and 1.79 at March 31, 2022 and December 31, 2021 , 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, 2021 , we had $669.7 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 increased $258.6 million from $411.1 million as of December 31, 2020 to $669.7 million as of September 30, 2021 as a result of the increase in the number of active ATMs as of September 30, 2021 compared to December 31, 2020.

The Company has $1,048.5 million of unrestricted cash as of September 30, 2021 compared to $1,420.3 million as of December 31, 2020 .

The decrease in unrestricted cash was primarily due to the $217.2 million net repayment of the outstanding balance on the Credit Facility during the nine months ended September 30, 2021 and the $258.6 million increase in ATM cash as unrestricted cash was utilized to fill the additional active ATMs.

Including the $669.7 million of cash in ATMs at September 30, 2021, the Company has access to $1,718.2 million in available cash, and $918.9 million available under the Credit Facility with no significant long-term debt principal payments until March 2025.

The following table identifies cash and cash equivalents provided by/(used in) our operating, investing and financing activities for the nine months ended September 30, 2021 and 2020 (in thousands):

Nine Months Ended

September 30,

As of March 31, 2022 , we had $644.4 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 $101.0 million from $543.4 million as of December 31, 2021 to $644.4 million as of March 31, 2022 as a result of the increase in number of active ATMs as of March 31, 2022 compared to December 31, 2021.

The Company has $986.5 million of unrestricted cash as of March 31, 2022 compared to $1,260.5 million as of December 31, 2021 .

The decrease in unrestricted cash was primarily due to the $346.2 million acquisition of PBMA, the $101.0 million allocated from unrestricted cash to ATM cash and the $70.4 million of share repurchases during the first quarter of 2022, partially offset by the $303.5 million increase in borrowings on the Credit Facility.

Including the $644.4 million of cash in ATMs at March 31, 2022 , the Company has access to $1,630.9 million in available cash, and $386.8 million available under the Credit Facility with no significant long-term debt principal payments until October 2023.

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, 2022 and 2021 (in thousands):

Three Months Ended

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

5 unchanged sentences

Operating activity cash flow

Cash flows provided by operating activities were $304.3 million f or the nine months ended September 30, 2021 compared to $220.4 million for the same period in 2020 .

The increase in operating cash flows was primarily due to the increase in net income and fluctuations in working capital mainly associated with the timing of the settlement processes with content providers in the epay Segment, with correspondents in the Money Transfer Segment, and with card organizations and banks in the EFT Processing Segment.

Cash flows provided by operating activities were $5.7 million f or the three months ended March 31, 2022 compared to cash flows used in operating activities of $2.6 million for the same period in 2021 .

The increase in operating cash flows was primarily due to the $17.0 million increase in net income, partially offset by fluctuations in working capital mainly associated with the timing of the settlement processes with content providers in the epay Segment, with correspondents in the Money Transfer Segment, and with card organizations and banks in the EFT Processing Segment.

Investing activity cash flow

Cash flows used in investing activities were $71.0 million for the nine months ended September 30, 2021 compared to $77.1 million for the same period in 2020 .

We used $66.1 million for purchases of property and equipment for the nine months ended September 30, 2021 compared to $71.4 million for the same period in 2020 .

Cash used for software development and other investing activities totaled $4.9 million and $5.7 million for the nine months ended September 30, 2021 and 2020 , respectively.

Cash flows used in investing activities were $356.8 million for the three months ended March 31, 2022 compared to $18.2 million for the same period in 2021 .

The increase in cash used in investing activities is primarily due to the $331.0 million of cash paid at the closing of PBMA during the quarter.

Additionally, w e used $23.8 million for purchases of property and equipment for the three months ended March 31, 2022 compared to $16.4 million for the same period in 2021 .

The increase in purchases of property and equipment is primarily due to the prior quarter expenditures being reduced by the COVID-19 related impacts to the EFT segment.

Cash used for software development and other investing activities totaled $2.1 million and $1.8 million for the three months ended March 31, 2022 and 2021 , respectively.

Financing activity cash flow

Cash flows used in financing activities were $216.3 million for the nine months ended September 30, 2021 compared to $244.1 million for the same period in 2020 .

Our borrowing activities for the nine months ended September 30, 2021 consisted of net cash outflows of $217.0 million compared to net cash outflows of $5.0 million for the same period in 2020 .

The increase in net cash outflows for the nine months ended September 30, 2021 compared to the same period in 2020 was the result of the net repayment of $217.2 million of the outstanding balance on the Credit Facility.

We repurchased $1.0 million of common stock during the nine months ended September 30, 2021 compared to repurchases of $240.8 million for the same period in 2020 .

The $1.0 million of share repurchases during the nine months ended September 30, 2021 were in connection with the settlement of Restricted Stock Unit awards and the exercise of option awards in certain countries in which we operate.

We received proceeds of $6.4 million and $6.6 million during the nine months ended September 30, 2021 and 2020 , respectively, for the issuance of stock in connection with our Stock Incentive Plan.

Cash flows provided by financing activities were $235.3 million for the three months ended March 31, 2022 compared to cash flows used in financing activities of $269.2 million for the same period in 2021 .

Our borrowing activities on the Credit Facility for the three months ended March 31, 2022 consisted of net borrowings of $303.5 million compared to net repayments of $270.4 million for the same period in 2021.

The increase in net borrowings on the Credit Facility is primarily the result of treasury management relating to settlement requirements across currencies as well as increased funding requirements for acquisitions and share repurchases during the first quarter of 2022.

We repurchased $70.5 million of common stock during the first quarter of 2022 compared to repurchases of $0.8 million during the first quarter of 2021 .

We received proceeds of $2.3 million and $3.7 million during the three months ended March 31, 2022 and 2021 , 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.

1 unchanged sentence

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

As of September 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 September 30, 2021 , we had $53.2 million of borrowings and $57.9 million of stand-by letters of credit outstanding under the Credit Facility.

As of March 31, 2022 , 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, 2022 , we had $586.9 million of borrowings and $56.3 million of stand-by letters of credit outstanding under the Credit Facility.

The remaining $386.8 million under the Credit Facility was available for borrowing.

7 unchanged sentences

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 September 30, 2021 , we have outstanding €600 million ( $694.9 million ) principal amount of the Senior Notes.

As of March 31, 2022 , we have outstanding €600 million ( $663.9 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 $1.1 million and $0.9 million outstanding under these other obligation arrangements as of September 30, 2021 and December 31, 2020, respectively.

There were $0.4 million and $0.9 million outstanding under these other obligation arrangements as of March 31, 2022 and December 31, 2021 , respectively.

Other uses of capital

Capital expenditures and needs - Total capital expenditures for the nine months ended September 30, 2021 were $66.1 million .

Capital expenditures and needs - Total capital expenditures for the three months ended March 31, 2022 were $23.8 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.

11 unchanged sentences

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, 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 September 30, 2021 .

As of March 31, 2022 , there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2021 .

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

CONTRACTUAL OBLIGATIONS

As of September 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 .

As of March 31, 2022 , 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, 2021 .

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