What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-23 · 117 added, 150 removed, 436 unchanged (38% of the section changed)

4 unchanged sentences

Company Overview, Geographic Locations and Principal Products and Services

Euronet is a leading electronic payments provider.

Euronet is a leading financial technology solutions and payments provider.

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

15 unchanged sentences

Our executive offices are located in Leawood, Kansas, USA.

With approximately 73 % of our revenues denominated in currencies other than the U.S.

With approximately 75% of ou r revenues denominated in currencies other than the U.S.

dollar, any significant changes in foreign currency exchange rates will likely have a significant impact on our results of operations (for a further discussion, see Item 1 A - Risk Factors and Item 7 A - Quantitative and Qualitative Disclosures About Market Risk).

8 unchanged sentences

Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately 42 % of total consolidated revenues for the year ended December 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.

We have a sending agent network in place comprised of agents, customer service representatives, Company-owned stores, primarily in North America, Europe and Malaysia, 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.

14 unchanged sentences

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.

As an organization, our focus is on increasing our market presence through both physical (ATMs, POS terminals, 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.

18 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 years ended December 31 , 2021 and 2020 .

These types of orders were first put into effect in the first half of 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.

During 2022, we experienced a significant recovery from the previous business closures and travel restrictions that were in place in many of our markets during 2020 and 2021.

However, the travel industry has not yet fully recovered as the airlines and airports have not returned their staffing levels to pre-COVID levels, which has limited the level of recovery.

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.

The Money Transf er Segment has experienced the impacts 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 and decreasing capital expenditures.

8 unchanged sentences

Our annual consolidated operating income increased by 109% for 2022 compared to 2021.

The increase in operating income for 2021 was primarily due to the increases in transaction volume across all three segments and corresponding increase in revenues, a $106.6 million decrease in non-cash impairment of goodwill and acquired intangible assets, partially offset by a $38.6 million increase in non-cash impairment of contract assets, and increases in stock-based compensation and selling general and administrative expenses.

Net income attributable to Euronet for 2021 was $70.7 million , or $1.32 per diluted share compared to a net loss to Euronet for 2020 of $ 3.4 million, or $ 0.06 per diluted share.

The increase in operating income for 2022 was primarily due to the increases in transaction volume across all three segments.

Net income attributable to Euronet for 2022 was $231.0 million , or $4.41 per diluted share compared to a net income attributable to Euronet for 2021 of $ 70.7 million, or $ 1.32 per diluted share.

Impact of changes in foreign currency exchange rates

4 unchanged sentences

dollar and positively impacted by a weaker U.S.

Considering the results by country and the associated functional currency, our 2021 consolidated operating income was approximately 2.1% higher due to changes in foreign currency exchange rates when compared to 2020 .

Considering the results by country and the associated functional currency, our 2022 consolidated operating income was approximately (12%) lower due to changes in foreign currency exchange rates when compared to 2021 .

If significant, in our discussion we will refer to the impact of fluctuations in foreign currency exchange rates in our comparison of operating segment results.

2 unchanged sentences

Average Translation Rate Year Ended December 31,

2021 Increase Percent

2022 Increase (Decrease) Percent

Australian dollar

17 unchanged sentences

Selling, general and administrative

Goodwill impairment

Depreciation and amortization

Total operating expenses

Operating loss

Operating income / (loss)

Transactions processed (millions)

4 unchanged sentences

EFT Processing Segment total revenues were $924.2 million for the year ended December 31, 2022, an increase of $333.1 million or 56 % compared to the same period in 2021.

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 December of 2020.

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

In 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 year ended December 31 , 2021 compared to the same period in 2020 as cross-border travel and corresponding DCC and surcharge revenues increased, partially offset by the year ended December 31 , 2020 including two months of pre-COVID-19 level DCC and surcharge transaction volumes compared to the year ended December 31 , 2021 which had various levels of restrictions throughout the entire period.

Foreign currency movements increased revenues by approximately $12.3 million for the year ended December 31, 2021 , compared to the same period in 2020 .

During 2022 we saw further easing of COVID-19 restrictions.

Revenues increased for the year ended December 31 , 2022 compared to the same period in 2021 as cross-border travel and corresponding DCC and surcharge revenues increased.

Also, the acquisition of Merchant Acquiring Business of Piraeus Bank in 2022 added $88.8 million of revenues.

Foreign currency movements decreased revenues by approximately ( $110.9) million for the year ended December 31, 2022 , compared to the same period in 2021 .

Average monthly revenues per ATM increased to $1,633 for the year ended December 31, 2022 compared to $1,188 for the same period in 2021.

Revenues per transaction was $0.14 for both years ended December 31, 2022 and 2021.

For the year ended December 31, 2021, the average monthly revenues per ATM increased primarily due to the lower average ATM count in Asia Pacific, partially offset by increases in Europe, as we modified our estate of ATMs beginning in the second quarter of 2020 and DCC and international surcharge transactions began to recover from 2020 volumes.

Direct operating costs

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For the year ended December 31 , 2022, the increase in direct operating costs was primarily due to the increase in transaction volumes, and costs associated with modifying our estate of ATMs .

Foreign currency movements increased direct operating costs by approximately $7.6 million for the year ended December 31, 2021 compared to the same period in 2020 .

Gross profit, which is calculated as revenues less direct operating costs, less acquired contract cost impairments, was $236.9 million for the year ended December 31 , 2021, an increase of $ 70.8 million or 43% compared to $166.1 million for the same period in 2020 .

Foreign currency movements offset direct operating costs increases by approximately ($54.8) million for the year ended December 31, 2022 compared to the same period in 2021 .

Gross profit, which is calculated as revenues less direct operating costs, was $448.4 million for the year ended December 31 , 2022, an increase of $ 211.5 million or 89% compared to $236.9 million for the same period in 2021 .

Gross profit as a percentage of revenues (“gross margin”) increased to 48.5% for the year ended December 31, 2022, compared to 40.1% for the same period in 2021.

For the year ended December 31, 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.

For the year ended December 31, 2022, the increase in gross profit and gross margin was primarily driven by the increase in higher-margin cross-border transactions and overall increase in transaction volumes.

Salaries and benefits

Salaries and benefits expenses were $112.0 million for the year ended December 31, 2022 , an in crease of $13.4 million or 14% c ompared to the same period in 2021 .

The increase in salaries and benefits for the year ended December 31, 2021 compared to the same period in 2020 was primarily driven by an increase in bonus expense and a $2.3 million increase from foreign currency movements in the countries where we employ our workforce.

The increase in salaries and benefits for the year ended December 31, 2022 compared to the same period in 2021 was primarily driven by an increase in salaries and bonus expense offset by ( $14.0) million de crease from foreign currency movements in the countries where we employ our workforce.

As a percentage of revenues, these expenses decreased to 12.1% for the year ended December 31, 2022, compared to 16.7% for the same period in 2021 .

1 unchanged sentence

Selling, general and administrative expenses were $57.0 million for the year ended December 31, 2022 , an increase of $9.2 million or 19% compared to the same period in 2021 .

The increase in these expenses is primarily driven by a $5.3 million increase in professional fees and a $2.4 million increase from foreign currency movements.

As a percentage of revenues, these expenses increased to 8.1 % for the year ended December 31 , 2021, compared to 7.5 % for the same period in 2020 .

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.

The increase in these expenses is primarily driven by a $16.8 million increase in professional fees, travel & meals, advertising and other expenses offset by ($7.6) million decrease from foreign currency movements.

As a percentage of revenues, these expenses decreased to 6.2 % for the year ended December 31 , 2022, compared to 8.1 % for the same period in 2021 .

Depreciation and amortization

Depreciation and amortization expenses were $95.5 million for the year ended December 31, 2022 , an increase of $4.5 million or 5% compared to the same period in 2021 .

Foreign currency movements increased these expenses by $2.2 million for the year ended December 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.

Foreign currency movements offset these increases by ($10.1) million for the year ended December 31, 2022, compared to the same period in 2021, 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 10.3 % for the year ended December 31, 2022 , compared to 15.4% for the same period in 2021 .

Operating (loss)

EFT Processing Segment had operating losses of $0.5 million for the year ended December 31, 2021, a decrease of $66.2 million or 99% compared to the same period in 2020 .

O perating income (loss) as a percentage of revenues (“operating margin”) decreased to (0.1 %) for the year ended December 31 , 2021, compared to (14.2%) for the same period in 2020 .

Operating (loss) per transaction was less than ( $0.01) for the year ended December 31 , 2021, compared to ($0.02) for the same period in 2020 .

For the year ended December 31 , 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.

Operating income (loss)

EFT Processing Segment had operating income of $183.9 million for the year ended December 31, 2022, compared to operating losses of $0.5 million in 2021, an increase of $184.4 million compared to the same period in 2021 .

O perating income (loss) as a percentage of revenues (“operating margin”) increased to 19.9 % for the year ended December 31 , 2022, compared to (0.1%) for the same period in 2021 .

Operating income (loss) per transaction was $0.03 for the year ended December 31 , 2022, compared to ($0.00) for the same period in 2021 .

For the year ended December 31 , 2022, the increase in operating income and increase in operating margin was primarily driven by further easing of COVID-19 restrictions.

The following table summarizes the results of operations for our epay Segment for the years ended December 31, 2022 and 2021 :

1 unchanged sentence

Year-over-Year Change

Increase Amount

Increase Percent

(dollar amounts in thousands)

Increase Amount

Increase (Decrease) Percent

Total revenues

7 unchanged sentences

Transactions processed (billions)

epay Segment total revenues were $1,011.5 million for the year ended December 31, 2021, an increase of $176.0 million or 21% 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.

Foreign currency movements in creased revenues by approximately $22.4 million for the year ended December 31, 2021, compared to the same period in 2020 .

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

epay Segment total revenues were $998.0 million for the year ended December 31, 2022, a decrease of ($13.5) million or (1%) compared to the same period in 2021.

Foreign currency movements de creased revenues by approximately ( $95.3) million for the year ended December 31, 2022, compared to the same period in 2021 .

The decrease in revenues due to foreign currency movements was offset by an increase in revenues of $81.8 million due to increase in transaction volumes in all markets where we operate.

Revenues per transaction decreased to $0.03 for the year ended December 31, 2022, compared to $0.04 for the same period in 2021 .

1 unchanged sentence

Direct operating costs

epay Segment direct operating costs were $760.9 million for the year ended December 31, 2021 , an increase of $130.5 million or 21 % compared to the same period in 2020 .

epay Segment direct operating costs were $753.1 million for the year ended December 31, 2022 , a decrease of ( $7.7) million or (1 %) 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 increase in direct operating costs was 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 $16.5 million for the year ended December 31, 2021, compared to the same period in 2020 .

Gross profit was $250.6 million for the year ended December 31, 2021, an increase of $45.5 million or 22% compared to $205.1 million for the same period in 2020 .

Gross margin increased to 24.8 % for the year ended December 31, 2021, compared to 24.6% for the same period in 2020 .

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

The decrease in direct operating costs was primarily due to foreign currency movements of approximately ($69.8) million offset by the increase in cost for transaction volumes of low-value mobile top-up transactions and an increase in retailer commissions.

Gross profit was $244.9 million for the year ended December 31, 2022, a decrease of ($5.7) million or (2%) compared to $250.6 million for the same period in 2021 .

Gross margin decreased to 24.5 % for the year ended December 31, 2022, compared to 24.8% for the same period in 2021 .

The decrease in gross profit and gross margin was primarily driven by foreign currency movements.

Salaries and benefits

1 unchanged sentence

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 $2.4 million for the year ended December 31, 2021, compared to the same period in 2020.

Foreign currency movements in the countries where we employ our workforce offset these increases by ( $7.7) million for the year ended December 31, 2022, compared to the same period in 2021.

As a percentage of revenues, these expenses increased to 8.2% for the year ended December 31, 2022, compared to 7.9% for the year ended December 31, 2021.

Selling, general and administrative

Selling, general and administrative expenses were $39.6 million for the year ended December 31, 2021, an increase of $3.8 million or 11% compared to the same period in 2020 .

Foreign currency movements increased these expenses by $1.2 million for the year ended December 31, 2021, compared to the same period in 2020 .

Selling, general and administrative expenses were $36.0 million for the year ended December 31, 2022, a decrease of ( $3.6) million or (9%) compared to the same period in 2021 .

Foreign currency movements decreased these expenses by ($3.5) million for the year ended December 31, 2022, compared to the same period in 2021 .

As a percentage of revenues, these expenses decreased to 3.6% for the year ended December 31, 2022, compared to 3.9 % for the same period in 2021.

Depreciation and amortization

Depreciation and amortization expenses were $8.5 million for the year ended December 31, 2021, an increase of $0.6 million or 8% compared to the same period in 2020 .

Depreciation and amortization expenses were $6.2 million for the year ended December 31, 2022, a decrease of ( $2.3) million or (27%) 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.

1 unchanged sentence

Operating income

epay Segment operating income was $123.0 million for the year ended December 31, 2021 , an increase of $26.4 million or 27% c ompared to the same period in 2020 .

Operating margin increased to 12.2 % for the year ended December 31, 2021 , compared to 11.6 % for the same period in 2020 .

Operating income per transaction was $0.04 for both years ended December 31, 2021 and 2020.

The increases in operating income and operating margin for the year ended December 31, 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 $121.0 million for the year ended December 31, 2022 , a decrease of ( $2.1) million or (2%) c ompared to the same period in 2021 .

Operating margin decreased to 12.1 % for the year ended December 31, 2022 , compared to 12.2 % for the same period in 2021 .

Operating income per transaction was $0.03 for the year ended December 31, 2022, compared to $0.04 for the same period 2021.

The decrease in operating income was due to foreign currency movements and the decrease in operating margin was primarily due to an increase in the number of low-margin digital transactions.

Money Transfer Segment

11 unchanged sentences

Selling, general and administrative

Goodwill and acquired intangible assets impairment

Depreciation and amortization

3 unchanged sentences

Money Transfer Segment total revenues were $1,444.3 million for the year ended December 31, 2022, an increase of $43.3 million or 3% compared to the same period in 2021.

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 increased to $10.37 for the year ended December 31, 2021, compared to $10.16 for the same period in 2020 .

Foreign currency movements increased revenues by approximately $30.3 million for the year ended December 31, 2021, compared to the same period in 2020 .

The increase in revenues was primarily due to 13% growth in US -outbound transactions, 13% growth in international-originated money transfers - which included 13% growth in transfers initiated largely in Europe and 14% growth in transfers initiated in the Middle-East and Asia and 25% growth in xe transactions, partially offset by a 17% decline in the intra -US bu siness.

These transaction growth rates include 38% growth in direct-to-consumer digital transactions.

Revenues per transaction decreased to $9.77 for the year ended December 31, 2022, compared to $10.37 for the same period in 2021 .

Foreign currency movements decreased revenues by approximately ( $86.1) million for the year ended December 31, 2022, compared to the same period in 2021 .

Direct operating costs

Money Transfer Segment direct operating costs were $793.2 million for the year ended December 31, 2021, an increase of $144.2 million or 22% compared to the same period in 2020.

Money Transfer Segment direct operating costs were $797.0 million for the year ended December 31, 2022, an increase of $3.7 million 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.

1 unchanged sentence

outbound and international-originated money transfer transactions and corresponding increase in agent commissions.

Foreign currency movements increased direct operating costs by approximately $15.3 million for the year ended December 31, 2021, compared to the same period in 2020 .

Foreign currency movements decreased direct operating costs by approximately ($42.9) million for the year ended December 31, 2022, compared to the same period in 2021 .

Acquired contract cost impairment

1 unchanged sentence

The impairment charge is the result of lower-than-expected customer transaction volumes related to these specific contracts, stemming primarily from COVID-19 related disruptions.

These charges are included in the gross profit calculation.

Gross profit was $647.4 million for the year ended December 31, 2022, an increase of $39.6 million or 7% compared to $607.7 million for the same period in 2021 .

Gross margin decreased to 40.6 % for the year ended December 31, 2021, compared to 45.2% for the same period in 2020 .

The increase in gross profit was primarily attributable to the increase in transaction volume and the decrease in gross margin is primarily attributable to the $38.6 million non-cash contract asset impairment charge and the increased agent commissions for the year ended December 31, 2021 compared to the same period in 2020.

Gross margin in creased to 44.8 % for the year ended December 31, 2022, compared to 43.4% for the same period in 2021 .

The increase in gross profit was primarily attributable to the increase in transaction volume for the year ended December 31, 2022.

Salaries and benefits

Salaries and benefits expenses were $277.0 million for the year ended December 31, 2022, an increase of $21.2 million or 8% c ompared 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 and an increase in bonus expense.

Foreign currency movements in the countries where we employ our workforce increased these expenses by $6.1 million for the year ended December 31, 2021, 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.

Foreign currency movements in the countries where we employ our workforce de creased these expenses by ( $15.1) million for the year ended December 31, 2022, compared to the same period in 2021.

As a percentage of revenues, these expenses increased to 19.2% for the year ended December 31, 2022, compared to 18.3% for the same period in 2021 .

1 unchanged sentence

Selling, general and administrative expenses were $182.4 million for the year ended December 31, 2022, an increase of $24.4 million or 15% compared to the same period in 2021 .

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

Foreign currency movements increased these expenses by $3.6 million for the year ended December 31, 2021, compared to the same period in 2020 .

As a percentage of revenues, these expenses decreased to 11.3% for the year ended December 31, 2021, compared to 12.0% for the same period in 2020.

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 second half of 2020, a $2.0 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 2020.

The increase in these expenses was primarily driven by an increase in marketing expenses, professional fees and travel related expenses.

Foreign currency movements decreased these expenses by ($8.9) million for the year ended December 31, 2022, compared to the same period in 2021 .

As a percentage of revenues, these expenses increased to 12.6% for the year ended December 31, 2022, compared to 11.3% for the same period in 2021.

Depreciation and amortization

Depreciation and amortization expenses were $35.7 million for the year ended December 31, 2021, an increase of $1.0 million or 3% compared to the same period in 2020 .

Depreciation and amortization expenses were $33.7 million for the year ended December 31, 2022, a decrease of ( $2.0) million or (6%) 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.

4 unchanged sentences

Operating income per transaction increased to $1.04 for the year ended December 31, 2022, compared to $0.89 for the same period in 2021 .

The increase in operating income, operating margin and operating income per transaction for the year ended December 31, 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, $38.6 million non-cash contract asset impairment and an increase in headcount to support the growth of the business.

The increase in operating income, operating margin and operating income per transaction for the year ended December 31, 2022 compared to the same period in 2021 was primarily driven by the increase in transaction volume, specifically the higher margin transactions for US outbound and international-originated money transfers, and the impairment of the contract assets in 2021, partially offset by the increase in agent commissions, and an increase in headcount to support the growth of the business.

Corporate Services

11 unchanged sentences

Total Corporate operating expenses were $73.7 million for the year ended December 31, 2022, an increase of $15.6 million or 27%, compared to the same period in 2021 .

The increase is primarily due to a $14.6 million increase in share based compensation for the year ended December 31, 2021, compared to the same period in 2020.

The increase was primarily due to a $7.6 million increase in share based compensation and a $4.8 million increase in bonuses as a result of improved performance for the year ended December 31, 2022, compared to the same period in 2021.

Other Expense, Net

2 unchanged sentences

(dollar amounts in thousands)

(Decrease) Amount

Increase (Decrease) Amount

Increase (Decrease) Percent

2 unchanged sentences

Foreign currency exchange loss, net

( 17,309 ) 159

Other gains, net

Other expense, net

$ ( 14,403 ) 30

Foreign currency exchange loss, net

1 unchanged sentence

Assets and liabilities denominated in currencies other than the local currency of each of our subsidiaries give rise to foreign currency exchange gains and losses.

Foreign currency exchange gains and losses that result from remeasurement of these assets and liabilities are recorded in net income.

Foreign currency exchange gains and losses that result from re-measurement of these assets and liabilities are recorded in net income.

The majority of our foreign currency exchange gains or losses are due to the remeasurement of intercompany loans which are not considered a long-term investment in nature and are in a currency other than the functional currency of one of the parties to the loan.

16 unchanged sentences

Income before income taxes

Goodwill and acquired intangible assets impairment

Acquired contract cost impairment

7 unchanged sentences

We calculate our effective income tax rate by dividing income tax expense by pre-tax book income.

Our effective income tax rates were 48.0 % a nd 140.4 % for the years ended December 31, 2021 and 2020 , respectively.

The effective income tax rates were significantly influenced by the impact of the goodwill and acquired intangible asset impairment, acquired contract cost impairment, and foreign currency exchange gains (losses).

Excluding foreign currency exchange gains (losses), goodwill and acquired intangible asset impairment, and acquired contract cost impairment items from pre-tax income, as well as the related tax effects for these items, our adjusted effective income tax rates were 36.1% and 13.2 % for the years ended December 31, 2021 and 2020 , respectively.

The effective income tax rate, as adjusted, for 2021 was higher than the applicable statutory income tax rate of 21% as a result of an increase in the valuation allowance related to the projected utilization of U.S.

Our effective income tax rates were 28.5% and 48.0% for the years ended December 31, 2022 and 2021, respectively.

The effective income tax rates were significantly influenced by the impact of acquired contract cost impairment, and foreign currency exchange gains (losses).

Excluding foreign currency exchange gains (losses), and acquired contract cost impairment items from pre-tax income, as well as the related tax effects for these items, our adjusted effective income tax rates were 22.7% and 36.1% for the years ended December 31, 2022 and 2021, respectively.

The effective income tax rate, as adjusted, for 2022 was higher 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 and certain foreign earnings being subject to higher local statutory tax rates.

The effective income tax rate, as adjusted, was offset by a decrease in the valuation allowance related to the projected utilization of U.S.

tax benefits.

The effective income tax rate, as adjusted, for 2021 was higher than the applicable statutory income tax rate of 21% primarily because of an increase in the valuation allowance related to the projected utilization of U.S.

tax benefits, the non-recognition of tax benefits from losses in certain foreign countries where we have a limited history of profitable earnings and certain foreign earnings being subject to higher local statutory tax rates.

The effective income tax rate, as adjusted, for 2020 was lower than the applicable statutory income tax rate of 21 % primarily because of the release of unrecognized tax benefits for the completion of foreign country tax audits.

We determine income tax expense based upon enacted tax laws applicable in each of the taxing jurisdictions where we conduct business.

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Net Income (Loss) Attributable to Euronet

Net income attributable to Euronet was $70.7 million for the year ended December 31, 2021, an increase of $74.1 million compared to the net loss in the same period in 2020 .

For the year ended December 31, 2021, the increase in net income was primarily attributable to the $150.5 million increase in gross profit driven by an increase in transaction volumes across all three segments and $106.0 million decrease in non-cash goodwill and intangible assets impairment charges, partially offset by an $80.7 million increase in salaries and benefits, a $53.6 million increase in income tax expense, a $30.3 million increase in selling, general and administrative expenses, an $8.7 million increase in depreciation and amortization expenses, a $7.1 million increase in foreign currency exchange losses, and an increase in other expenses aggregating $2.0 million.

Net income attributable to Euronet was $231.0 million for the year ended December 31, 2022, an increase of $160.3 million compared to net income in the same period in 2021 .

For the year ended December 31, 2022, the increase in net income was primarily attributable to the $245.4 million increase in gross profit driven by an increase in transaction volumes across all three segments, an $ 38.6 million decrease in contract asset impairment, partially offset by an $49.4 million increase in salaries and benefits, a $26.8 million increase in income tax expense, a $33.2 million increase in selling, general and administrative expenses, and a $46.1 million increase in foreign currency exchange losses .

Translation Adjustment

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dollars, differences between current and historical exchange rates generate this translation adjustment.

We recorded a net loss on translation adjustments of $78.5 million for 2021 and a net gain of $70.8 million for 2020 .

During 2021 , the U.S.

We recorded a net loss on translation adjustments of $78.4 million for 2022 and a net loss of $78.5 million for 2021 .

In 2021 and 2022 , the U.S.

dollar strengthened compared to key foreign currencies, resulting in translation losses which were recorded in comprehensive (loss) income.

I n 2020 , the U.S.

dollar weakened compared to key foreign currencies, resulting in translation gains which were recorded in comprehensive (loss) income.

Liquidity and Capital Resources

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As of December 31, 2022, we had working capital of $1,372.6 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 $159.8 million decrease in cash and cash equivalents, $77.5 million decrease in prepaid expenses and other current assets, $45.9 million increase in trade accounts payable, $22.7 million increase in income taxes payable, and $2.9 million aggregate increase in other working capital balances, offset by the $132.3 million increase in ATM cash, $85.5 million increase in trade accounts receivable, and $36.3 million decrease in accrued expenses and other current liabilities.

The decrease in working capital was due to several changes in working capital line items, mainly due to 2022 ending in the weekend, which impacts funding needs for our agents.

Our ratio of current assets to current liabilities was 1.58 and 1.79 at December 31, 2022 and December 31, 2021, respectively.

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As of December 31, 2022 , we had approximately $515.6 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 $132.3 million from $411.1 million as of December 31, 2020 to $543.4 million as of December 31, 2021 as a result of the 13% increase in the number of active ATMs as of December 31, 2021 compared to December 31, 2020.

ATM cash decreased $27.8 million from $543.4 million as of December 31, 2021 to $515.6 million as of December 31, 2022.

The Company has $1,131.2 million of unrestricted cash as of December 31, 2022 compared to $1,260.5 million as of December 31, 2021 .

The decrease in unrestricted cash was primarily due to the $132.3 million increase in ATM cash as unrestricted cash was utilized to fill the additional active ATMs, the $227.8 million of shares repurchased under stock repurchase programs, and $92.2 million of capital expenditures, partially offset by the $406.6 million of cash provided by operating activities.

Including the $543.4 million of cash in ATMs at December 31, 2021, the Company has access to $1,803.9 million in available cash, and $689.3 million available under the Credit Facility with no significant long-term debt principal payments until October 2023.

In March 2021, the Company entered into an agreement to purchase the Piraeus Bank Merchant Acquiring business of Piraeus Bank for € 300 million, or approximately $ 360 millio n.

The closing is targeted for the first half of 2022 and is subject to regulatory approvals, finalization of the commercial agreements, and customary closing conditions.

The Company expects to finance the purchase price using cash on hand.

See Note 6, Acquisitions, to our Consolidated Financial Statements for additional information.

The decrease in unrestricted cash was primarily due to the $175.0 million of shares repurchased under the stock repurchase programs, the acquisition of the Piraeus Bank Merchant Acquiring business of Piraeus Bank for $343.0 millio n (see Note 6 , Acquisitions, to our Consolidated Financial Statements for additional information) and $109.1 million of capital expenditures, partially offset by the $750.4 million of cash provided by operating activities and an increase in borrowings of $171.4 million .

Including the $515.6 million of cash in ATMs at December 31, 2022, the Company has access to $1,990.9 million in available cash, and $740.6 million available under the Credit Facility with no significant long-term debt principal payments until March 2025.

We had cash, cash equivalents and restricted cash of $1,990.9 million as of December 31, 2022 , of which $1,533.0 million was held outside of the U.S.

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

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

(Decrease) in cash and cash equivalents and restricted cash

Operating cash flow

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Cash flows used in investing activities were $453.8 million for the year ended December 31, 2022 compared to $98.1 million for the same period in 2021 .

We used $92.2 million for purchases of property and equipment for the year ended December 31, 2021 compared to $97.6 million for the same period in 2020 .

Cash used for software development and other investing activities totaled $5.9 million and $7.8 million for the year ended December 31, 2021 and 2020 , respectively.

We used $109.1 million for purchases of property and equipment for the year ended December 31, 2022 compared to $92.2 million for the same period in 2021 and $343.0 million for the acquisition of Piraeus Bank Merchant Acquiring business of Piraeus Bank.

There were no acquisitions in 2021.

Financing activity cash flow

Cash flows used in financing activities were $212.2 million for the year ended December 31, 2021 compared to cash flows provided by financing activities of $35.4 million for the same period in 2020 .

The increase in cash used in financing activities is primarily the result of the $13.0 million net borrowings on debt obligations for the year ended December 31, 2021 compared to $265.2 million for the same period in 2020 .

Cash flows used in financing activities were $1.2 million for the year ended December 31, 2022 compared to $212.2 million for the same period in 2021 .

The decrease in cash used in financing activities was primarily the result of the $171.4 million net borrowings on debt obligations for the year ended December 31, 2022 compared to $13.0 million for the same period in 2021 .

We repurchased $175.0 million of common stock during the year ended December 31, 2022 compared to repurchases of $229.9 million for the same period in 2021 .

$2.1 million of share repurchases during the year ended December 31, 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 $9.1 million and $10.8 million during the year ended December 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.

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

The Credit Facility contains a $200 million sublimit for the issuance of letters of credit, a $50 million sublimit for U.S.

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

As of December 31, 2021 , fees and interest on borrowings are based upon the Company's corporate credit rating (as defined in the Credit Facility) 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 December 31, 2021 , we had $283.4 million of borrowings and $57.3 million of stand-by letters of credit outstanding under the Credit Facility.

The remaining $689.3 million under the Credit Facility was available for borrowing.

As of December 31, 2021, the weighted average interest rate under the Credit Facility was 1.2 % , excluding amortization of deferred financing costs.

Credit Facility - On October 24, 2022, the Company amended its revolving credit agreement (the “Credit Facility”) to increase the facility from $1.03 billion to $1.25 billion and to extend the expiration to October 24, 2027.

The revolving credit facility contains a sublimit of up to $250 million, with $150 million committed, for the issuance of letters of credit, a $75 million sublimit for U.S.

dollar swingline loans and a $75 million sublimit for swingline loans in euros or British pounds sterling.

The Credit Facility allows for borrowings in British pounds sterling, euro and U.S.

Subject to certain conditions, the Company has the option to increase the Credit Facility by up to an additional $500 million by requesting additional commitments from existing or new lenders.

Fees and interest on borrowings vary based upon the Company's corporate credit rating and will be based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over a secured overnight financing rate, as defined in the agreement, with a margin, including the facility fee, ranging from 1.00% to 1.625% or the base rate, as selected by the Company.

The applicable margin for borrowings under the credit facility, based on the Company's current credit rating is initially 1.25% including the facility fee.

As of December 31, 2022 and 2021, the Company had stand-by letters of credit/bank guarantees outstanding under the Credit Facility of $54.6 million and $57.3 million, respectively.

Stand-by letters of credit/bank guarantees reduce the Company's borrowing capacity under the Credit Facility and are generally used to secure trade credit and performance obligations.

As of December 31, 2022 and 2021, the stand-by letters of credit interest charges were each 1.1% per annum.

Borrowing capacity under the Credit Facility as of December 31, 2022 was $740.6 million.

Uncommitted Line of Credit - On June 24, 2022, the Company entered into an Uncommitted Loan Agreement for $150 million, for the sole purpose of providing vault cash for ATMs, that expires no later than June 23, 2023.

The loan was fully repaid and there was no balance at December 31, 2022.

The loan was either a Prime rate loan, a Bloomberg Short-term Bank Yield rate loan or bears interest at the rate agreed to by the bank and the Company at the time such loan is made.

The weighted average interest rate from the loan inception date to December 31, 2022 was 2.76%.

Convertible debt - On March 18, 2019, we completed the sale of $ 525.0 million in principal amount of Convertible Senior Notes due 2049 (“Convertible Notes”).

As of December 31, 2021 the carrying value of the Convertible Notes was $468.2 million.

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

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

Bank National Association, as trustee.

The Convertible Notes have an interest rate of 0.75 % per annum payable semi-annually in March and September, and are convertible into shares of Euronet common stock at a conversion price of approximately $ 188.73 per share if certain conditions are met (relating to the closing prices of Euronet common stock exceeding certain thresholds for specified periods).

Holders of the Convertible Notes have the option to require the Company to repurchase for cash all or part of their Convertible Notes on each of March 15, 2025, 2029, 2034, 2039 and 2044 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date.

Holders of the Convertible Notes have the option to require us to repurchase for cash all or part of their Convertible Notes on each of March 15, 2025, 2029 , 2034 , 2039 and 2044 at a repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date.

In connection with the issuance of the Convertible Notes, we recorded $ 12.8 million in debt issuance costs, which are being amortized through March 1, 2025.

Senior Notes - On May 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of Senior Notes that expire in May 2026 (the “Senior Notes”).

Senior Notes - On May 22, 2019, the Company completed the sale of €600 million ($669.9 million) aggregate principal amount of Senior Notes that mature on May 2026 (the "Senior Notes").

The Senior Notes accrue interest at a rate of 1.375% per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption.

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In addition, the Company may redeem some or all of these notes on or after February 22, 2026 at their principal amount plus any accrued and unpaid interest.

As of December 31, 2022, the Company had $4.1 million of unamortized debt issuance costs related to the Senior Notes.

Other debt obligations — Certain of our subsidiaries have available credit lines and overdraft facilities to generally supplement short-term working capital requirements, when necessary.

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

There were $0.2 million and $0.9 million outstanding under these other obligation arrangements as of December 31, 2022 and December 31, 2021 .

Other uses of capital

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Share repurchase plan

The Company's Board of Directors had authorized a stock repurchase program allowing Euronet to repurchase up to $375 million in value or 10.0 million shares of stock through March 31, 2020.

The Company repurchased all $375 million of stock under this program.

On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized an additional repurchase program of $120 million in value of the Company's common stock through March 11, 2021.

The Company repurchased $110.6 million of stock under this program.

On February 26, 2020, the Company put a repurchase program in place to repurchase up to $250 million in value, but not more than 5.0 million shares of common stock through February 28, 2022.

The Company has repurchased $227.8 million of stock under this program.

On December 8, 2021, the Company put a repurchase program in place to repurchase up to $300 million in value, but not more than 5.0 million shares of common stock through December 8, 2023.

For the year ended December 31, 2021, t he Company repurchased 2.0 million shares under the repurchase programs at a weighted average purchase price of $113.88 for a total value of $227.8 million .

For the year ended December 31, 2022, t he Company repurchased 1.6 million shares under the repurchase program at a weighted average purchase price of $106.71 for a total value of $175.0 million .

On September 13, 2022, the Company put a repurchase program in place to repurchase up to $350 million in value, but not more than 7.0 million shares of common stock through September 13, 2024.

Repurchases under the programs may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan.

Inflation and functional currencies

Generally, the countries in which we operate have experienced low and stable inflation in recent years.

Therefore, the local currency in each of these markets is the functional currency.

Generally, the countries in which we operate have experienced low and stable inflation in recent years, further the local currency in each of these markets is the functional currency.

Currently, we do not believe that inflation will have a significant effect on our results of operations or financial position.

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It is reasonably possible that our operations will not perform as expected, or that estimates or assumptions could change, which may result in the recording of material non-cash impairment charges during the year in which these determinations take place.

The COVID-19 pandemic and subsequent mitigation efforts, which included global business shutdowns, the closing of borders and the implementation of mandatory social distancing requirements, created an unprecedented disruption to our business beginning in the first half of 2020.

These mitigation efforts coupled with the negative economic impacts to the tourism industry caused some of our reporting units to either have a temporary or sustained decline in revenues and earnings and necessitated changes to our forecasted outlook.

We determined the totality of these events constituted a triggering event that required us to perform an interim goodwill impairment assessment as of June 1, 2020.

We concluded a triggering event had occurred for six reporting units, resulting in quantitative impairment tests.

Three reporting units are within the EFT segment, two reporting units are within the Money Transfer segment, and one reporting unit is within the epay segment.

The fair value of these reporting units were determined using weighted results from the discounted cash flow model ("DCF model") and guideline public company method ("Market Approach model").

A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including forecasted revenue, forecasted EBITDA margin, and discount rate.

Significant assumptions and inputs in the Market Approach model are EBITDA, EBITDA market multiple, and the estimated control premium.

The DCF Model and Market Approach Model utilize Level 3 inputs in the fair value hierarchy as they include unobservable inputs that require significant management assumptions.

The results of the June 1, 2020 quantitative test were that three of the six reporting units’ fair value exceeded their respective carrying amounts.

For the remaining three reporting units, the quantitative test indicated that the fair value of each of the reporting units was less than the respective carrying amounts.

As a result, we recorded a non-cash goodwill impairment charge of $104.6 million with respect to the xe, Innova and Pure Commerce reporting units.

A total of $21.9 million of the impairment charge was included within the EFT Segment, and $82.7 million of the impairment charge was included in the Money Transfer Segment.

Subsequent to June 1, 2020 and through year-end 2021, including the fourth quarter annual impairment test, management monitored whether there were events or changes in circumstances that had occurred, at a reporting unit level, to indicate that goodwill was impaired or further impaired.

There were no indications of impairment and no additional non-cash goodwill impairment charges were recorded.

Acquired finite-lived intangible assets are amortized over their estimated useful lives.

We evaluate the recoverability of our intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.

We evaluate the recoverability of our finite-intangible assets, as a part of our long-lived assets, for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.

The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

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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 effectiveness of vaccines and treatments against COVID-19 variants;

the war in Ukraine and the related economic sanctions;

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

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

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

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 privacy and data protection and the European Union's General Data Protection Regulation and Second Revised Payment Service Directive requirements;

changes in laws and regulations affecting our business, including tax and immigration laws and any laws regulating payments, including DCC transactions, changes in our relationships with, or in fees charged by, our business partners;

the outcome of claims and other loss contingencies affecting Euronet;

the cost of borrowing, 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.

the cost of borrowing (including fluctuations in interest rates), 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.

Any forward-looking statements made in this Form 10-K speak only as of the date of this report.

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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-K

Item 7. Management’s Discussion and Analysis