> EVERY PAYMENT TELLS A STORY
Connecting technology to the way we live
generates opportunities for expansion.
Euronet Worldwide, Inc.
Leawood, Kansas, USA
euronetworldwide.com
> 2021 ANNUAL REPORT
EVERY PAYMENT
TELLS A STORY
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CONTENTS
Shareholder Letter
Technology In Use
Financial Highlights
Financial Overview
Payments Platforms
• REN
• Dandelion
Business Segments
• Electronic Funds Transfer
• epay
• Money Transfer (Ria, Xe)
Conclusion
Executive Summary
10K Report
Reconciliation Table
Looking Forward
Office Locations/Currencies
2
4
6
7
8
9
10
12
14
16
17
18
117
118
118
> WORLDWIDE OFFICE LOCATIONS
>
At Euronet, we believe that every payment tells a story, and we have
developed technology with these stories in mind. Throughout the pages
of our 2021 Annual Report, you will discover payment stories from
inside each of our business segments and how we make participation
in the global economy easier, faster and more secure for everyone.
> WORLDWIDE OFFICES
> WORLDWIDE EMPLOYEES
66
8,800
119
> TOTAL REVENUE
$3.0 billion
> TOTAL BANK ACCOUNTS REACHED
3.7 b
> TOTAL FUNDS THROUGH OUR
NETWORK
$113 b
> TOTAL TRANSACTIONS PROCESSED
7.6 b
> TOTAL MOBILE WALLET ACCOUNTS
REACHED
439 m
> TOTAL APP DOWNLOADS
> TOTAL ATMS OWNED AND OPERATED
100 m
48 k
> TOTAL EFT POS TERMINALS
> TOTAL EPAY POS TERMINALS
438 k
775 k
As of 12/31/2021
1
SHAREHOLDER LETTER
PAYMENT EQUALITY
>
At Euronet, our mission has always been to bring payments
convenience to consumers around the world.
I founded Euronet after being in Eastern Europe
and witnessing long bank lines on Fridays when
people got paid and wanted to get cash before
the banks closed for the weekend.
and technology have evolved, Euronet has
stayed at the cutting edge of payments, allowing
consumers to participate in the global economy
in whatever manner they prefer.
At the time, ATMs were cutting-edge and installing
them in Eastern Europe gave people access to
their cash when and where they wanted it. Each
of these people had a reason for needing their
money — to pay bills, to buy groceries or gifts — and
ATMs gave them the freedom to decide when they
needed the cash and eliminated those long lines
on Friday afternoons. As consumer preferences
Michael J. Brown
Chairman, CEO and President
2
Continually evolving
Despite the impact of COVID over the past two
years, we have continued to evolve our business
to meet the needs of our customers. We began
the year without much optimism, particularly
in our EFT segment as borders remained
closed and many countries — particularly those
in Asia — still in strict local and international
lockdowns. This generated further uncertainty
on the return of travel across the world and how
travel would respond when the borders were
open. It also limited the migrant worker base
in certain countries where they were unable
to travel or jobs weren’t available due to the
lockdown restrictions.
However, as we moved through the year and
vaccines became more widely available, in March
we started to see the European borders open to
European travelers and in July we finally saw the
borders reopen to U.S. travelers. And, as global
commerce began to re-establish itself, we were
able to validate our business model and affirm
the investments we made in our business over
the last two years to fuel expansion across all
three segments in the years to come.
We also saw that as movement restrictions
were lifted, both local consumers and travelers
still withdrew cash from ATMs. In fact, we saw
larger cash withdrawal amounts per transaction
following the pandemic. The investments in our
money transfer network — both physical and
digital — have continued to improve the customer
experience, attracting more customers and more
transfers. We validated that consumers would
still purchase digital content and that our flexible
technology would be the key to allowing them to
participate in the global digital economy in new
and innovative ways.
And, we learned that more and more consumers
were demanding new and real-time payment
options and we validated that our technology
is the bridge that allows these transactions to
happen. I am excited to tell you more about these
opportunities in the coming pages.
So, while the borders around the world weren’t
fully opened and there were still restrictions
on travel for many countries, we saw our most
profitable transactions rebound to within about
35% of certain 2019 pre-COVID levels. These
improving transaction trends produced better
profits in our EFT segment, and our epay and
Money Transfer segments each continued
to perform well, resulting in double-digit
consolidated earnings growth for the full year.
So, while 2021 didn't start out with a lot of
optimism, significant advances in vaccinations
around the world, together with improved COVID
management practices, helped us end the year
with strong contributions from our epay and
Money Transfer segments as well as dramatically
improving travel trends for our EFT segment. As a
result of continued investments during the COVID
constrained years, we see going into 2022 more
optimistically, hoping for a year of near normal.
>
RIA & ATLÉTICO — FOR ALL THE DREAMERS IN THE WORLD
Wizarchy, a Dominican barber living in Madrid,
believes that dreams can come true if you
work hard and believe in yourself. In this first
installment of Ria’s “Dreamers” campaign, in
collaboration with Atlético de Madrid, Ria brings
you the true story of an immigrant who became
the preferred barber of many Atlético players
over the years.
YOUTUBE WATCH NOW
Ria: Official global sponsor of Atlético de Madrid
3
TECHNOLOGY IN USE
TECHNOLOGY ADVANCES PAYMENTS
>
At Euronet, we believe that every payment tells a story and our
technology allows these payments to happen.
4 Over time, Euronet has developed industry-
leading technology, an expansive global network
and an extensive portfolio of products. These
products are part of consumers’ daily lives and
answer their demands for easier, faster and safer
ways to make transactions. Here are just a few
of the many ways Euronet technologies can be
utilized by a single consumer:
ATM Transaction
She can stage a cash withdrawal using an app
and collect the funds at a Euronet ATM using
contactless payments.
Buy and Use epay
She can quickly send a digital gift card to a friend
as a birthday gift.
Money Transfer
Using Ria’s app, which is powered by Dandelion,
she can send money to friends or loved ones in
165 countries in real time.
YOUTUBE WATCH NOW
Watch video and learn
how Euronet helps BLIK
do this and so much more.
YOUTUBE WATCH NOW
See how epay
helps Revolut make
it all possible.
YOUTUBE WATCH NOW
See how Ria Money
Transfer makes it
all possible.
5 FINANCIAL HIGHLIGHTS
2021 AT-A-GLANCE
Revenue
Adjusted EBITDA
Revenue
(Millions)
Adjusted
Operating
Income*
(Millions)
Diluted
Earnings
(Loss)
Per Share
Total
Equity
(Millions)
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Adjusted Operating Income*
$2,252 $2,537 $2,750 $2,483 $2,996
2019
2021
2017
2018
2020
$500
$400
$300
$200
$100
$0
Adjusted
EBITDA*
(Millions)
$700
$600
$500
$400
$300
$200
$100
$0
$415
Transactions
2017
$494
2018
$607
2019
$302
2020
$395
2021
Transactions
(Millions)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
$305
$153
$372
Diluted Earnings (Loss) Per Share
2018
2020
$474
2017
2019
$7
$6
$5
$4
$3
$2
$1
$0
-$1
$223
2021
Adjusted
Earnings
Per Share*
3,978
Adjusted Cash Earnings Per Share*
2018
4,710 5,796 7,625
2020
2019
3,631
2017
2021
$8
$7
$6
$5
$4
$3
$2
$1
$0
$2.85 $4.26
$6.31 $(0.06) $1.32
2017
Total Equity
2018
2019
2020
2021
$4.58 $5.53
$7.01 $2.82 $3.69
2017
Total Assets
2018
2019
2020
2021
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Total
Assets
(Millions)
$5,000
$4,000
$3,000
$2,000
$1,000
$0
$1,200 $1,233 $1,579 $1,446 $1,256
2017
2018
2019
2020
2021
$, $, $, $, $,
2017
2018
2019
2020
2021
Note: We believe that adjusted operating income, adjusted EBITDA and adjusted earnings per share provide useful information to investors because they are indicators
of the strength and performance of our ongoing business operations. While certain of these calculations are used more fully to describe the results of the business,
others are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the operating performance and value of companies
within the payment processing industry.
* On page 117, we have defined adjusted operating income, adjusted EBITDA and adjusted earnings per share terms and provided a reconciliation of these non-GAAP
financial measures to their most directly comparable U.S. GAAP financial measure.
6
FINANCIAL OVERVIEW
VALIDATION OF OUR EXPANSIVE VIEW
>
Our epay and Money Transfer segments continued to deliver very
strong growth trends. EFT benefited as borders began to reopen
and travel resumed.
We delivered nearly $3.0 billion in revenue in
2021 — a 21% increase over the prior year — despite
the continued heavy impact of COVID on our
EFT business. This growth was largely driven
by continued strength in our epay and Money
Transfer segments together with improvements in
EFT as the year progressed. This strong revenue
growth resulted in consolidated adjusted EBITDA
of $395 million, a 31% increase over the prior year.
The strength of our balance sheet contributed
to this strong revenue and adjusted EBITDA
growth, which allowed us to continue to invest in
our technology, our products and our people. We
ended the year with nearly $1.8 billion in available
cash and $690 million of availability on our
revolving credit facility.
Moreover, with the improving confidence brought
about by recovering cash flows through strong
growth in epay, Money Transfer and travel,
together with a decline in the stock markets
in general (including our stock), we were able
to repurchase two million of our shares for
approximately $225 million.
The EFT Segment delivered strong growth rates
in 2021, although still well below 2019 levels. EFT
benefited from improved domestic and international
withdrawal transactions resulting from the partial
lifting of travel restrictions across Europe.
epay and Money Transfer
epay delivered more than one billion dollars in
revenue for the first time in the segment’s history,
made possible by continued growth in digital media
and mobile content, together with the continued
expansion of the digital distribution channel.
Money Transfer growth resulted from 25%
growth in U.S.-outbound transactions, 72%
growth in direct-to-consumer digital transactions
and 21% growth in international-outbound
transactions — which was a combination of 30%
growth in international-outbound transactions,
partially offset by a decline of 18% in transactions
originated in Asia and the Middle East where
COVID lockdowns weighed significantly on
transactions during the second half of the year.
In addition to our traditional business segments,
we continued to see increasing demand for our
REN technology solutions. We have signed 21
agreements which we expect to deliver $78
million in revenue over the next six years.
These continued strong growth rates, together
with improving travel trends to benefit our EFT
segment, give us optimism that we can achieve
earnings in 2022 similar to those of 2019.
2021 Segment Economics
Revenue & Adjusted EBITDA Mix
The following charts represent the Revenue and
Adjusted EBITDA profiles of each segment
Revenue Mix*
2021 Revenue* | $3,003.6 M
46% Money Transfer
34% epay
20% EFT
Adjusted EBITDA Mix*
2021 Adjusted EBITDA* | $416.1 M Percent Margin | 12%
46% Money Transfer
14% Margin
32% epay
13% Margin
22% EFT
15% Margin
*Revenues, Adjusted EBITDA & Percent Adjusted EBITDA Margin by segment
excludes eliminations and expenses incurred by corporate services.
7
PAYMENTS PLATFORMS
STORIES REVEAL WHAT’S POSSIBLE WITH TECHNOLOGY
>
In an expansive, connected world where we now expect instant
access to news and entertainment, it is no surprise that consumers
are now demanding real-time access to their money — whether that be
in a bank account or from a money transfer sent across the world.
REN
The only constant: change
The REN payments platform
provides flexible and scalable
technology that gives
traditional financial institutions
and emerging fintechs the
freedom to evolve, grow and
go to market quickly.
REN is the primary payments platform that
enables our business segments to receive and
process digital and cash transactions from all
over the world. We also license REN to businesses
who are building their own payments solutions
such as traditional financial institutions, fintech
and digital wallet companies, digital and neo-
banks, governmental central banks and retailers.
And in most cases, the payments stories for these
businesses are about one common theme — change.
In the current era of smartphones, online
marketplaces, and touchless payments, they
must update the way they accept and process
payments now while maintaining the ability to
rapidly meet any evolving demands from their
customers for faster and more convenient
payment experiences in the future.
Introduced to the market several years ago,
REN’s flexible cloud architecture gained traction
during the year in the changing payments
landscape where the value of getting new
payments products to market quickly was
as important as the speed of the transaction
processing itself.
>
DIGITAL SOLUTIONS FOR A RAPIDLY EVOLVING PAYMENTS LANDSCAPE
Marker Trax, a Las Vegas company, is a first-of-its-
kind, regulatory-compliant and cashless alternative
to the traditional casino marker. In the Marker
Trax cloud environment, REN provides scalability
for a growing user base and transaction speed
for enhanced user experiences. REN also powers
many key features in the Marker Trax solution
including patron identity verifications, underwriting,
payments processing, settlement, reporting and
the enablement of communications between
Marker Trax and disparate credit bureaus, gaming
platforms, payment gateways and bank systems.
YOUTUBE WATCH NOW
8
Dandelion
• Global Reach —
This year we also introduced Dandelion, a first-
of-its-kind, real-time payments platform that
simplifies cross-border payments. A traditional
cross-border payment, particularly business
payments, have historically been slow, clunky
and have lacked transparency and accessibility.
No one had really focused on effectively
connecting all sides of the transaction with a
real-time solution — which left a huge gap in the
payments space.
Dandelion delivers real-time, global connectivity
to enable access to new markets as a turnkey
solution, eliminating the need for a massive
investment of resources and accelerating the
time to revenue for the customers of financial
platforms. Dandelion offers businesses a
platform that helps them better serve their
customers with:
– Dandelion provides
direct connections
to local payments rails
across 162 countries — even
difficult-to-reach emerging
markets — including four billion bank
and mobile wallet accounts.
– Cash delivery to more than 507,000 locations
– Business payments expected to reach more
than 100 countries by the end of Q1 2022.
• Real-time payments
• A single, easy-to-use technology integration
• Unparalleled transparency
• Integrated compliance capabilities
• Built-in settlement
Dandelion is unlike any other payments platform.
It has the broadest access to global markets and
the flexibility to plug into wallets and alternative
payments platforms. And, it has the largest real-
time bank network. Dandelion is a game changer
for businesses looking to make international
payments and we expect it to contribute to the
growth of our Money Transfer segment in the
coming years.
>
DANDELION DEMO
Our Dandelion real-time payments
platform delivers real-time global
connectivity to enable access to
new markets for both business and
consumer payments.
YOUTUBE WATCH NOW
9
BUSINESS SEGMENTS
ELECTRONIC FUNDS TRANSFER (EFT)
>
As we began to see the European borders open and quarantine require-
ments ease for European travelers, we re-activated our ATMs across
Europe — and the rebound in our transactions was nearly immediate,
particularly in destinations that could be reached by automobile.
Throughout the year, as the borders re-opened to certain countries
outside of Europe, we continued to invest in our ATM network by
adding about 3,350 new high-value Euronet ATMs during the year.
However, those numbers don’t tell the full picture.
While our transactions rose to within about 35%
of 2019 levels, the recovery of the EFT segment
profits was a bit more nuanced. We saw that our
lowest value transactions — domestic interchange
and domestic surcharge — recovered quickly as
the in-country movement restrictions were lifted.
Next, our international interchange transactions
recovered relatively well as these transactions
largely result from EU citizens traveling to
different countries within the EU. So, these tourists
were able to travel for most of the travel season.
Finally, transactions that apply to cardholders
with non-Euro bank accounts represent our most
profitable transactions. The uncertainty of the
border openings and quarantine requirements,
as well as the late decision to open the borders
to only certain travelers from outside of the EU,
caused a significant lag in non-EU card-based and
cross-currency transactions. These transactions
only recovered to about 40% of 2019 levels.
Our EFT business segment
that manages our ATMs
also provides electronic
payment solutions, including
card issuing and merchant
acquiring services.
Photo Credits:
Austria (above) | Yana Itskovich
Croatia (top right) | Aleksandar Bognar
Switzerland (right) | Marion Deck
10
Eager to travel
While the lackluster re-opening across Europe
caused a slower rebound of our most profitable
transactions, the good news is that the European
borders are now generally open to most
vaccinated travelers and people have had a year
to plan their 2022 summer vacation. Additionally,
we are starting to see certain countries in Asia
open their borders, which will further contribute
to next year’s recovery.
With the knowledge that our ATM model is not
only valid, but necessary in the post-COVID
world, combined with a positive outlook on travel
for the 2022 season, we are optimistic that, in our
view, 2022 will be a better year.
>
ATMS IN THE COMMUNITY
>
AMBER ALERTS LEAD TO MIRACLE MOMENTS
Euronet Worldwide established its ATMs in the
Community program in 2020 with the goal of
providing access to cash for people who live far
from large urban centers.
As an independent ATM provider, Euronet decided
to fill the vacancies left behind by the traditional
banks with the launch of this European-wide
program that ensures citizens and businesses
in these communities can safely access cash.
One of the first ATMs in the Community participants
was El Bruc a municipality in Catalonia, Spain.
YOUTUBE WATCH NOW
From an initial pilot program in 2019 in the
Netherlands, Euronet has expanded the publishing
of active missing persons alerts on its ATM screens
to include Spain, Greece, Portugal, Malta and Italy
through an agreement with AMBER Alert Europe, a
foundation that assists in finding and saving missing
people. The initiative has been a success! In Spain
alone, Euronet published 87 alerts that resulted in
eight persons being found in 2020 followed by 72
alerts that resulted in 11 persons being found in 2021.
Photo Credit:
Alan Bevk
11
BUSINESS SEGMENTS
epay enables merchants to
accept alternative payments
from digital wallets during
the checkout process, among
other services and solutions.
epay
>
Our epay segment continued to experience strong growth, delivering
record earnings in 2021. This was made possible by years of investment
in our products and systems.
Several years ago, epay disrupted the traditional
content distribution market by recognizing the
need to create digital distribution for items that
had traditionally been distributed as a physical
product — including gift cards, software and
gaming. epay re-imagined the way these things
were purchased around the world by digitizing
the code which eliminated the need for a physical
gift card or a CD to install new software or a
new game.
Customer-centric needs
Today, we see a major transition in the traditional
payments landscape.
Additionally, we have the technology in place to
connect with emerging fintechs to achieve real-
time payments and offer their customers more
value-added products. In some cases, we are even
doing two transactions in one. We are providing
the content that fintechs can offer their consumers
to purchase, and we are processing the real-time
payments of these transactions through our real-
time payments engine.
In addition to the digital delivery of all types of
content, epay developed an industry-leading
technology platform that could be leveraged
to deliver content to banks, mobile operators,
e-commerce sites or mobile wallets — all in
addition to traditional physical retail distribution.
We know that the future embraces digital. We
have superior technology and connections to
mobile wallets around the world which, combined
with our leading physical retail network, places
epay in the prime position to continue to grow
well into the future.
>
THE PARKING GARAGE OF THE FUTURE OPERATES WITHOUT BARRIERS
The basic parking garage is a thing
of the past! The first mobility hub
opened in Cologne, Germany, in
2021 and is set to catch on in other
areas of the world. epay technology
provides an end-to-end solution from
the recording of license plates to
automated contactless payments for
short- and long-term parkers. It is
also more economical to operate, as
no defect-prone barriers, tickets, or
coin-operated machines are involved.
YOUTUBE WATCH NOW
12
Enabling consumers to pay the way they want to pay
PayPal: When it comes to digital wallets, one of the most popular is PayPal with over 400 million
users worldwide. epay and REN enabled PayPal users throughout Germany (and soon other
European countries) to use their favorite digital payment method at epay retailers throughout the
country by adding it to their in-store terminals. Consumers can now pay using the familiar QR
code in their PayPal app while merchants also receive instant confirmation of transactions.
Euronet press release: ir.euronetworldwide.com/news-releases/news-release-details/euronet-worldwides-epay-division-announces-cooperation-paypal
>
MAKING MOBILE TOP UP PAYMENTS MORE SECURE
Topping up the minutes on your phone plan is now faster and
more secure at many retailers in Italy thanks to epay who
moved the entire process to the privacy of a smartphone.
YOUTUBE WATCH NOW
13
BUSINESS SEGMENTS
MONEY TRANSFER
>
Our Money Transfer business was not immune from the challenges
presented by COVID over the last couple of years, but our teams were
well positioned to address the changing needs and preferences of our
consumers. We continued to invest in our money transfer network
which resulted in exceptional network expansion.
Ria’s options include digital
money transfers through its
app as well as app-to-ATM
money transfers and a physical
send-and-receive network
featuring independent agents
and Ria-branded stores.
This year our physical network eclipsed 500,000
locations. But, the physical locations only
tell part of the story, as our digital network
also includes our app which now reaches 22
countries together with 3.7 billion bank accounts
and 439 million mobile wallet accounts. The
physical network combined with these digital
locations gives us the most far-reaching money
transfer network in the world.
Xe is a global authority in
currency information and a
provider of online and mobile
payments services to millions
of companies, customers, and
users all over the world.
A growth mindset
This best-in-class network is the key driver
behind our strong double-digit money transfer
growth for the year — with 25% growth in U.S.-
outbound transactions, 72% growth in direct-to-
consumer digital transactions and 21% growth
in international-outbound transactions. The
growth in international outbound transactions
included a 30% increase in international-outbound
transactions partially offset by a decline of 18% in
transactions originated in the Middle East and Asia
due to government-mandated COVID lockdowns.
We also made significant investments in our
network, our teams, our products and our
technology during 2021. We expect that these
investments will fuel double-digit operating
income growth in 2022.
14
>
FLEXIBLE MONEY TRANSFER OPTIONS
Ria offers customers the flexibility to
send money when and how they want.
YOUTUBE WATCH NOW
SEND PAYMENTS GLOBALLY WITH XE
>
>
DANDELION: CROSS-BORDER PAYMENT SOLUTIONS
By partnering with Xe, Microsoft
Dynamics 365 allows customers to
send payments globally, directly
from their software.
Dandelion: The first truly global
payments platform that modernizes
cross-border payments.
YOUTUBE WATCH NOW
YOUTUBE WATCH NOW
15
SHAREHOLDER LETTER
REASONS FOR OUR EXPANSIVE VIEW
>
We remain on a mission to continue to provide our customers the
ability to participate in the global economy in whatever manner is
most convenient for them. This year we validated our investments
and strategies across all of our business segments.
Our epay and Money Transfer segments continued
to deliver strong double-digit transaction growth
from continued expansion of our network and
product portfolios. And, the validation of our ATM
network in a post-COVID world together with
improving travel trends across the globe give us
optimism that we will continue to see strong
growth rates from the EFT business in 2022
and beyond.
Even more opportunity
We continue to be excited about the many
opportunities our businesses and our technology
present to us. The combination of our extensive
assets, our best-in-class employees and our
strong balance sheet will allow us to continue
to provide new and exciting products and
opportunities into the market. We are excited
to be on this journey.
Michael J. Brown
Chairman, CEO, and President
Euronet Worldwide, Inc.
“We have the potential for a long runway of growth ahead of us
through our sound strategies to grow each of our segments and
through our new technology that is transforming the way payments
are made. COVID has been a setback for growth, but it’s also given
us an opportunity to sharpen our focus to validate these strategies
and emerge stronger on the other side.”
16
EXECUTIVE SUMMARY
Executive Officers and Management
Directors
Michael J. Brown
Chairman, Chief Executive Officer and President
Rick L. Weller
Executive Vice President and Chief Financial Officer
Scott Claassen
General Counsel
Kevin J. Caponecchi
Executive Vice President and Chief Executive Officer,
epay, Software and EFT Asia Pacific Segment
Juan C. Bianchi
Executive Vice President and Chief Executive Officer,
Money Transfer Segment
Nikos Fountas
Executive Vice President and Chief Executive Officer,
EFT Americas, Europe, Middle East and Africa Division
Dr. Martin L. Brückner
Senior Vice President and Chief Technology Officer
Tony Warren
Managing Director, Payments Software
Contact the Board of Directors
To report complaints about Euronet’s financial reporting,
internal control procedures, auditing matters or other concerns
to the Board of Directors or the Audit Committee, write to:
Euronet Board of Directors
c/o The General Counsel
Euronet Worldwide, Inc.
11400 Tomahawk Creek Parkway, Suite 300
Leawood, KS 66211
or send an email to directors@eeft.com.
Investor Information
Copies of Euronet Worldwide, Inc.’s Annual Report on Form
10-K, quarterly reports on Form 10-Q and current reports
on Form 8-K, are filed with the Securities and Exchange
Commission (SEC), and are available without charge from
Euronet Investor Relations, 11400 Tomahawk Creek Parkway,
Suite 300, Leawood, KS 66211. In addition, the Company’s Form
10-K and other filings with the SEC are available at sec.gov or
through our website at euronetworldwide.com.
Michael J. Brown
Chairman, Chief Executive Officer and President
Euronet Worldwide, Inc.
Paul S. Althasen
Co-founder
epay
Mark Callegari
Founder and Chief Executive Officer
Callegenix LLC
Michael N. Frumkin
Founder and Leader
Google Accelerated Sciences Team
Thomas A. McDonnell
Retired President and Chief Executive Officer
DST Systems, Inc.
Dr. Andrzej Olechowski
Retired Professor
Vistula University, Warsaw, Poland
Andrew B. Schmitt
Retired Chairman and Chief Executive Officer
Layne Christensen Company
M. Jeannine Strandjord
Retired Senior Vice President
Sprint Corporation
Transfer Agent
Computershare Investor Services
P.O. Box 43078
Providence, RI 02940-3078
computershare.com
Corporate Headquarters
Euronet Worldwide, Inc.
11400 Tomahawk Creek Parkway, Suite 300
Leawood, KS 66211 USA
+1.913.327.4200
Stock Listing
U.S. NASDAQ: EEFT
17
> 2021 ANNUAL REPORT
10K
10K REPORT
18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-K
_________________________
(Mark One)
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number
001-31648
EURONET WORLDWIDE, INC.
(Exact name of Registrant as specified in its charter)
________________________
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Delaware
74-2806888
11400 Tomahawk Creek Parkway, Suite 300
Leawood, Kansas
(Address of principal executive offices)
66211
(Zip Code)
(913) 327-4200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock
1.375% Senior Notes due 2026
Trading
Symbol(s)
EEFT
EEFT26
Name of Each Exchange on Which Registered
Nasdaq Global Select Market
Nasdaq Global Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Securities registered pursuant to Section 12(g) of the Act: None
_________________________
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
19
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting
company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☑
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
As of June 30, 2021, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant
was approximately $6.8 billion. The aggregate market value was determined based on the closing price of the Common Stock on June
30, 2021.
As of February 18, 2022, the registrant had 51,158,186 shares of Common Stock outstanding.
Documents Incorporated By Reference
Portions of the registrant's Proxy Statement for its 2022 Annual Meeting of Stockholders, which will be filed with the Securities and
Exchange Commission no later than 120 days after December 31, 2021, are incorporated by reference into Part III of this Annual Report
on Form 10-K.
20
TABLE OF CONTENTS
ITEM DESCRIPTION
PAGE
ITEM
NUMBER
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
BUSINESS……………………………………………………………………………………………………...
RISK FACTORS……………………………………………………………………………………………….
UNRESOLVED STAFF COMMENTS……………………………………………………………………….
PROPERTIES………………………………………………………………………………………………….
LEGAL PROCEEDINGS……………………………………………………………………………………...
MINE SAFETY DISCLOSURES……………………………………………………………………………...
PART II
ITEM 5.
ITEM 6.
ITEM 7.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES………………………………………………………….
RESERVED……………………………………………………………………………………………………
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS………………………………………………………………………………………………….
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK……………………...
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA…………………………………………...
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
ITEM 9.
FINANCIAL DISCLOSURE………………………………………………………………………………….
CONTROLS AND PROCEDURES…………………………………………………………………………...
OTHER INFORMATION……………………………………………………………………………………...
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS……..……
ITEM 9A.
ITEM 9B.
ITEM 9C.
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
PART IV
ITEM 15.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE…………………………...
EXECUTIVE COMPENSATION……………………………………………………………………………...
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS……………………………………………………………………
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE..............................................................................................................................................
PRINCIPAL ACCOUNTING FEES AND SERVICES………………………………………………………
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES……………………………………………….
SIGNATURES…………………………………………………………………………………………………
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48
48
49
49
49
51
51
68
70
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ITEM 1. BUSINESS
PART I
References in this report to "we," "our," "us," the "Company" and "Euronet" refer to Euronet Worldwide, Inc. and its subsidiaries unless
the context indicates otherwise.
General Overview
BUSINESS OVERVIEW
Euronet is a leading electronic payments processing provider. We offer payment and transaction processing and distribution solutions
to financial institutions, agents, retailers, merchants, content 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 and cloud-based payment solutions; electronic distribution of electronic payment products; foreign exchange
services and international payment services.
Core Business Segments
We operate in the following three segments as of December 31, 2021:
The Electronic Fund Transfer ("EFT") Processing Segment processes transactions for a network of 42,713 ATMs and
approximately 438,000 POS terminals across Europe, Africa, the Middle East, Asia Pacific, and the United States. We provide
comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation,
outsourced ATM and POS management solutions, credit, debit and prepaid card outsourcing, and card issuing and merchant acquiring
services. In addition to our core business, we offer a variety of value-added services, including ATM and POS dynamic currency
conversion ("DCC"), domestic and international ATM surcharge, advertising, delivery of non-cash products ("digital content") via
ATMs, customer relationship management ("CRM"), mobile top-up, bill payment, fraud management, foreign remittance payout,
cardless payout, banknote recycling solutions and tax-refund services. Through this segment, we also offer a suite of integrated electronic
financial transaction software solutions for electronic payment and transaction delivery systems. In 2021, the EFT Processing Segment
accounted for approximately 20% of Euronet's consolidated revenues.
The epay Segment provides distribution and processing of prepaid mobile airtime and other electronic content and payment processing
services for various prepaid products, cards and services throughout our worldwide distribution network. We operate a network that
includes approximately 775,000 POS terminals that enable electronic processing of prepaid mobile airtime "top-up" services and other
digital media content in Europe, the Middle East, Asia Pacific, the United States and South America. We also provide vouchers and
physical gift fulfillment services in Europe, gift card distribution and processing services in most of our markets and digital code
distribution in a growing number of markets. In 2021, the epay Segment accounted for approximately 34% of Euronet's consolidated
revenues.
The Money Transfer Segment provides global consumer-to-consumer money transfer services, primarily under the brand names Ria,
AFEX, and IME, 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 510,000 locations. xe is a provider of foreign currency exchange information on its currency data
websites (www.xe.com and www.x-rates.com). We offer global account-to-account money transfer services through our websites
(www.xe.com and https://transferxe.com) and xe customer service representatives. In addition to money transfers, we offer customers
bill payment services (primarily in the U.S.), payment alternatives such as money orders, comprehensive check cashing services for a
wide variety of issued checks, along with competitive foreign currency exchange services and mobile top-up. Through xe, we offer cash
management solutions and foreign currency risk management services to small-and-medium sized businesses. We are one of the largest
global money transfer companies measured by revenues and transaction volumes. In 2021, the Money Transfer Segment accounted for
approximately 46% of Euronet's consolidated revenues.
22
Historical Perspective
• 1994 - Euronet was established as Euronet Bank Access Kft., a Hungarian limited liability company.
• 1997 - Euronet was reorganized in March 1997 in connection with its initial public offering, and at that time, our operating
entities became wholly owned subsidiaries of Euronet Services, Inc., a Delaware corporation.
• 1998 - In December 1998, we acquired Arkansas Systems, Inc. (now known as "Euronet USA"), a U.S.-based company that
produces electronic payment and transaction delivery systems software for retail banks internationally.
• 2001 - We changed our name from Euronet Services, Inc. to Euronet Worldwide, Inc. in August 2001.
• 2003 - We added a complementary business line through the acquisition of epay Limited (“epay”), which had offices in the
U.K. and Australia.
• 2007 - We established the Money Transfer Segment after completing the acquisition of Los Angeles-based Ria, one of the
largest global money transfer companies measured by revenues and transaction volumes.
• 2015 - We completed the acquisition of IME (M) Sdn Bhd ("IME") which provided Euronet with immediate entry into the
Asian and Middle East money transfer send markets. We also added a complementary business line through the acquisition of
xe Corporation ("xe"), which provides currency-related data and international payment services.
• 2019 – REN Ecosystem goes live and the migration of legacy software to the REN Ecosystem begins.
• Current - Euronet conducts business globally, serving customers in approximately 175 countries. As of December 31, 2021,
we have 13 transaction processing centers, six in Europe, five in Asia Pacific and two in North America. We also maintain
66 business offices that are located in 43 countries. Our corporate offices are located in Leawood, Kansas, USA.
BUSINESS SEGMENT OVERVIEW
For a discussion of operating results by segment, please see Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations, and Note 17, Business Segment Information, to the Consolidated Financial Statements.
EFT PROCESSING SEGMENT
OVERVIEW
Our EFT Processing Segment provides 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, card
issuing and merchant acquiring services. In addition to our core business, we offer a variety of value-added services, including ATM
and POS DCC, domestic and international surcharge, foreign currency dispensing, advertising, digital content sales at ATMs, CRM,
prepaid mobile top-up, bill payment, money transfer, fraud management, foreign remittance payout, cardless payout, banknote recycling
solutions and tax-refund services. We provide these services either through our Euronet-owned ATMs and POS terminals, through
contracts under which we operate ATMs and POS terminals on behalf of our customers or, for certain services, as stand-alone products.
Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and
transaction delivery systems.
SOURCES OF REVENUES
The primary sources of revenues generated by our ATM network are recurring monthly management fees, transaction-based fees,
surcharges and margins earned on DCC transactions. We receive fixed monthly fees under many of our outsourced management
contracts. The EFT Processing Segment also generates revenues from POS operations and merchant management, card network
management for credit, debit, prepaid and loyalty cards, prepaid mobile airtime recharge and other electronic content on ATMs and
ATM advertising. We primarily operate across Europe, Africa, the Middle East, Asia Pacific, and the United States. As of December 31,
2021, we operated 42,713 ATMs compared to 37,729 at December 31, 2020. The increase was largely due to the reactivation of
ATMs that were temporarily closed in response to the COVID-19 pandemic related tourism disruptions.
We monitor the number of transactions made by cardholders on our network. These include cash withdrawals, balance inquiries,
deposits, prepaid mobile airtime recharge purchases, DCC transactions and certain denied (unauthorized) transactions. We do not bill
certain transactions on our network to financial institutions, and we have excluded these transactions for reporting purposes. The number
of transactions processed over our networks has increased over the last five years at a compound annual growth rate ("CAGR") of
approximately 16.7% as indicated in the following table:
(in millions)
EFT Processing Segment transactions per year
2017
2,352
2018
2,721
2019
3,052
2020
3,275
2021
4,366
23
The increase in transactions for 2020 and 2021 is the result of a significant increase in the volume of lower value, digitally-initiated
payment processing transactions for an Asia Pacific customer's bank wallet and e-commerce site.
Our processing centers for the EFT Processing Segment are located in Germany, Hungary, India, China, and Pakistan. Our processing
centers run two types of proprietary transaction switching software: our legacy ITM software, which we have used and sold to financial
institutions since 1998 through our Software Solutions unit, and an innovative switching software package named "REN", which is
hosted in Germany and India, that was released in 2017. The processing centers operate 24 hours a day, seven days a week. We have
been progressively transitioning all of our networks to REN.
EFT PROCESSING PRODUCTS AND SERVICES
Outsourced Management Solutions
Euronet offers outsourced management solutions to financial institutions, merchants, mobile phone operators and other organizations
using our processing centers' electronic financial transaction processing software. Our outsourced management solutions include
management of existing ATM networks, development of new ATM networks, management of POS networks, management of automated
deposit terminals, management of credit, debit and prepaid card databases and other financial processing services. These solutions
include 24-hour monitoring of each ATM's status and cash condition, managing the cash levels in each ATM, coordinating the cash
delivery and providing automatic dispatches for necessary service calls. We also provide real-time transaction authorization, advanced
monitoring, network gateway access, network switching, 24-hour customer service, maintenance, cash settlement and reconciliation,
forecasting and reporting. Since our infrastructure can support a significant increase in transactions, new outsourced management
solutions agreements should provide additional revenue with lower incremental cost.
Our outsourced management solutions agreements generally provide for fixed monthly management fees and, in most cases, fees payable
for each transaction. The transaction fees under these agreements are generally lower than those under card acceptance agreements.
Euronet-Branded ATM Transaction Processing
Our Euronet-branded ATM networks, also known as IAD networks, are primarily managed by a processing center that uses our market-
leading internally developed software solutions. The ATMs in our IAD networks are able to process transactions for holders of credit,
debit and prepaid products issued by or bearing the logos of financial institutions and international card organizations such as American
Express®, Visa®, Mastercard®, JCB, Diners Club International®, Discover® and UnionPay International©, as well as international ATM
networks such as PLUS, CIRRUS and PULSE® or domestic networks such as NYCE, Shazam, AFFN, STAR and others across North
America. This is accomplished through our agreements and relationships with these institutions, international credit, debit and prepaid
card issuers, international card associations and domestic card associations.
When a bank cardholder conducts a transaction on a Euronet-owned ATM or automated deposit terminal, we receive a fee from the
cardholder's bank for that transaction. The bank pays us this fee either directly or indirectly through a central switching and settlement
network. When paid indirectly, this fee is referred to as the "interchange fee." We receive transaction processing fees for successful
transactions and, in certain circumstances, for transactions that are not completed because they fail to receive authorization. The fees
paid to us by the card issuers are independent of any fees charged by the card issuers to cardholders in connection with the ATM
transactions. In some cases, we may also charge a direct access fee or surcharge to cardholders at the ATM. The direct access fee is
added to the amount of the cash withdrawal and debited from the cardholder's account.
We generally receive fees or earn margin from our customers for six types of ATM transactions:
• Cash withdrawals;
• Cash deposits;
• Balance inquiries;
• Transactions not completed because the relevant card issuer does not give authorization;
• Dynamic currency conversion; and
• Prepaid mobile airtime recharges and other electronic content.
Card Acceptance or Sponsorship Agreements
Our agreements with financial institutions and international card organizations generally provide that all credit and debit cards issued
by the financial institution or organization may be used at all ATMs that we operate in a given market. In most markets, we operate
under sponsorship by our own e-money or payment service licensed entities. In some markets, we have agreements with a financial
institution under which we are designated as a service provider (which we refer to as "sponsorship agreements") for the acceptance of
24
domestic cards and/or cards bearing international logos, such as Visa® and Mastercard®. These card acceptance or sponsorship
agreements allow us to receive transaction authorization directly from the card issuing institution or international card organizations on
a stand-in basis. Our agreements generally provide for a term of three to seven years and renew automatically unless either party provides
notice of non-renewal prior to the termination date. In some cases, the agreements are terminable by either party upon six months' notice.
We are generally able to connect a financial institution to our network within 30 to 90 days of signing a card acceptance agreement. The
financial institution provides the cash needed to complete transactions on the ATM, but we provide a significant portion of the cash to
our IAD network to fund ATM transactions ourselves. Euronet is generally liable for the cash in the ATM networks.
Under our card acceptance agreements, the ATM transaction fees we charge vary depending on the type of transaction and the number
of transactions attributable to a particular card issuer. Our agreements generally provide for payment in local currency, though
transaction fees are sometimes denominated in euros or U.S. dollars. Transaction fees are billed to financial institutions and card
organizations with payment terms typically no longer than one month.
Dynamic Currency Conversion
We offer dynamic currency conversion, or DCC, over our IAD networks, ATM networks that we operate on an outsourced basis for
financial institutions, and over financial institutions' ATM networks or POS devices as a stand-alone service. DCC is a feature of the
underlying ATM or POS transaction that is offered to customers completing transactions using a foreign debit or credit card issued in a
country with a currency other than the currency where the ATM or POS is located. The customer is offered a choice between completing
the transaction in the local currency or in the customer's home currency via a DCC transaction. If a cardholder chooses to perform a
DCC transaction, the acquirer or processor performs the foreign exchange conversion at the time that the funds are delivered at an ATM
or the transactions are completed through the POS terminal, which results in a pre-defined amount of the customer's home currency
being charged to their card. Alternatively, the customer may have the transaction converted by the card issuing bank, in which the
amount of local currency is communicated to the card issuing bank and the card issuing bank makes the conversion to the customer's
home currency.
When a customer chooses DCC at an ATM or POS device and Euronet acts as the acquirer or processor, we receive all or a portion of
the foreign exchange margin on the conversion of the transaction. On our IAD ATMs, Euronet receives the entire foreign exchange
margin. If Euronet is not the acquirer or processor of the transaction, we share the DCC revenue with the sponsor bank. On ATMs or
POS devices that are operated for financial institutions, or where we offer DCC as a stand-alone service to financial institutions or
merchants, we share the foreign exchange margin. The foreign exchange margin on a DCC transaction increases the amount Euronet
earns from the underlying ATM or POS transaction and supports deployment of additional ATMs in new locations.
Other Products and Services
Our network of owned or operated ATMs allows for the sale of additional financial and other products or services at a low incremental
cost. We have developed value added services in addition to basic cash withdrawal and balance inquiry transactions. These value-added
services include mobile top-up, fraud management, bill payment, domestic and international surcharge, CRM, foreign remittance payout,
cardless payout, banknote recycling, electronic content, ticket and voucher, foreign currency withdrawal and advertising. We are
committed to the ongoing development of innovative new products and services to offer our EFT processing customers.
Euronet offers multinational merchants a Single European Payments Area ("SEPA")-compliant cross-border transaction processing
solution. SEPA is an area in which all electronic payments can be made and received in euros, whether between or within national
boundaries, under the same basic conditions, rights and obligations, regardless of the location. This single, centralized acquiring platform
enables merchants to benefit from cost savings and faster, more efficient payments transfer. Although many European countries are not
members of the eurozone, our platform can serve merchants in these countries as well, through our multi-currency functionality.
Software Solutions
We also offer a suite of integrated software solutions for electronic payments and transaction delivery systems. We generate revenues
for our software products from licensing, professional services and maintenance fees for software and sales of related hardware,
primarily to financial institutions around the world.
Our software products are an integral part of the EFT Processing Segment product lines, and our investment in research, development,
delivery and customer support reflects our ongoing commitment to an expanded customer base both internally and externally. Our
proprietary software is used by our processing centers in the EFT Processing Segment, resulting in cost savings and added value
compared to third-party license and maintenance options. Our proprietary software consists of our legacy ITM software, which we have
used and sold to financial institutions since 1998 through our Software Solutions unit, and an innovative switching software package
named REN that we released in 2017.
25
We currently operate REN in our processing center to process payments for our own networks in Europe and we are progressively
transitioning all our networks globally to REN. The private cloud architecture of REN allows us to simultaneously deploy REN across
multiple physical locations. REN is now operated for both internal resources and external customers with the launch of the REN
Foundation for Mozambique's National Payments Network in 2020. REN is scalable and will allow us to offer payment and digital
solutions to more third parties. In addition to payments processing, REN also supports other digital elements, including card issuing for
physical and virtual cards, loyalty services, Know Your Customer compliance, real time settlement, inventory management, risk and
fraud management and other services. REN will be used as a platform to connect Euronet assets to offer digital payment solutions, and
is currently utilized within the epay and Money Transfer Segments.
EFT PROCESSING SEGMENT STRATEGY
The EFT Processing Segment maintains a strategy to expand the network of ATMs and POS terminals into developed and developing
markets that have the greatest potential for growth. In addition, we follow a supporting strategy to increase the penetration of value
added (or complementary) services across our existing customer base, including DCC, surcharge, cardless payment, banknote recycling
solutions, tax refund services, advertising, fraud management, bill payment, mobile top-up, CRM and foreign remittance payout.
We continually strive to make our own ATM networks more efficient by eliminating underperforming ATMs and installing ATMs in
more desirable locations. We make selective additions to our own ATM network if we see market demand and profit opportunities. In
tourist locations, we also shut down ATMs during the winter season when tourist activity is low.
In recent years, the need for "all-in" services has increased. Banks, particularly smaller banks, are increasingly looking for integrated
ATM, POS and card issuing processing and management services. Euronet is well positioned for this opportunity as it can offer a full
end-to-end solution to the potential partners.
Additional growth opportunities are driven through financial institutions that are receptive to outsourcing the operation of their ATM,
POS and card networks. The operation of these devices requires expensive hardware and software and specialized personnel. These
resources are available to us, and we offer them to our customers under outsourcing contracts. The expansion and enhancement of our
outsourced management solutions in new and existing markets will remain an important business opportunity for Euronet. Increasing
the number of non-owned ATMs and POS terminals that we operate under management services agreements and continued development
of our credit, debit and prepaid card outsourcing business could provide continued growth while minimizing our capital investment.
Complementary services offered by our epay Segment, where we provide prepaid mobile top-up services through POS terminals,
strengthens the EFT Processing Segment's line of services. We plan to continue to expand our technology and business methods into
other markets where we operate and further leverage our relationships with mobile phone operators and financial institutions to facilitate
that expansion.
SEASONALITY
Our EFT Processing business experiences its heaviest demand for cash withdrawals and DCC during the third quarter of the fiscal year,
coinciding with the tourism season. It is also impacted by seasonality during the fourth quarter and first quarter of each year due to
higher transaction levels during the holiday season and lower levels after the holiday season. This seasonality is increased due to our
practice of seasonally deactivating ATMs in tourist locations that experience significantly higher traffic during the summer. Seasonally
deactivating involves shutting down the ATMs during the slower months and results in lower overall transaction volumes in the EFT
Processing Segment during those months. As we have expanded our IAD network in tourist locations, the financial impact of seasonally
deactivating has increased, because we continue to bear the expense of seasonally deactivated ATMs even though they do not generate
transactions during the slower months.
SIGNIFICANT CUSTOMERS AND GOVERNMENT CONTRACTS
No individual customer of the EFT Processing Segment makes up greater than 10% of total consolidated revenues. In India, Pakistan
and Indonesia we have contracts with banks and telecommunications companies that are majority-owned by the government to provide
certain ATM driving and transaction switching services, digital content distribution and mobile airtime recharge services. Additionally,
certain government-owned banks are members of our shared ATM network in India and we provide software services to financial
institutions partially owned by government-owned banks. In Austria, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Germany,
Hungary, Ireland, Italy, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and the United Kingdom, we lease land
and other property for certain ATM sites from companies that are majority-owned by the government. In China and Greece, we have
contracts with clients and financial institutions that are partially owned by the government.
26
COMPETITION
Our principal EFT Processing Segment competitors include ATM networks owned by financial institutions and national switches
consisting of consortiums of local banks that provide outsourcing and transaction services to financial institutions and independent ATM
deployers in a particular country. Additionally, large, well-financed companies that operate ATMs offer ATM network and outsourcing
services, and those that provide card outsourcing, POS processing and merchant acquiring services also compete with us in various
markets. Small local operators have also recently begun offering their services, particularly in the IAD market. None of these competitors
has a dominant market share in any of our markets. Competitive advantages in our EFT Processing Segment include breadth of service
offering, network availability and response time, price to both the financial institution and to its customers, ATM location and access to
other networks.
epay SEGMENT
OVERVIEW
We currently offer prepaid mobile airtime top-up services and other electronic content and payment processing services for various
prepaid products, cards and services on a network of approximately 775,000 POS terminals across approximately 335,000 retailer
locations in Europe, the Middle East, Asia Pacific, North America and South America. Our processing centers for the epay Segment are
located in the United Kingdom, Germany, Italy, and the United States.
Since 2003, we have expanded our prepaid business in new and existing markets by drawing upon our depth of experience to build and
expand relationships with content providers, mobile phone operators and retailers. We offer a wide range of products across our retail
networks, including prepaid mobile airtime, prepaid debit cards, prepaid gift cards, prepaid electronic content such as music, games and
software, prepaid vouchers, transport payments, lottery payments, prepaid long distance and bill payment processing assistance through
partnerships with various licensed money transmitters.
SOURCES OF REVENUES
The epay Segment generates commissions and processing fees from the distribution of electronic content and from telecommunications
service providers for the sale and distribution of prepaid mobile airtime. In 2021, approximately 70% of total revenues and
approximately 74% of gross profit for the epay Segment was from electronic content other than prepaid mobile airtime (digital media
products).
Customers purchase digital media prepaid content as a gift or for self-use. Content is generally purchased in two ways: (1) directly
online from the content provider using an online payment method, or (2) through physical retail stores, online retailers or other electronic
channels, including payment wallets, online banking, mobile applications and other sources.
Customers using mobile phones generally pay for usage in one of two ways: (1) through "postpaid" accounts, where usage is billed at
the end of each billing period, or (2) through "prepaid" accounts, where customers pay in advance by crediting their accounts prior to
usage.
Although mobile phone operators in the U.S. and certain European countries have provided service principally through postpaid
accounts, the norm in many other countries in Europe and the rest of the world is to offer wireless service on a prepaid basis.
Prepaid mobile phone credits are generally distributed using personal identification numbers ("PINs"). We distribute PINs in two ways.
First, we establish an electronic connection to the mobile operator and the retailer. When the sale to a customer is initiated, the terminal
requests the PIN from the mobile operator via our transaction processing platform. These transactions obtain the PIN directly from the
mobile operator. The customer pays the retailer and the retailer becomes obligated to make settlement to us of the purchased amount of
the mobile airtime. We maintain systems that know the amount of mobile top-up sold by the retailer which allows us in turn to bill that
retailer for the mobile top-up sold.
Second, we purchase PINs from the mobile operator which are electronically sent to our processing platform. We establish an electronic
connection with the POS terminals in retailer locations and our processing platform provides the terminal with a PIN when the mobile
top-up is purchased. We maintain systems that monitor transaction levels at each terminal. As sales of prepaid mobile airtime to
customers are completed, the inventory on the platform is reduced by the PIN purchased. The customer payment and settlement with
the retailer are the same as described above.
We expand our distribution networks by signing new contracts with retailers, and in some markets, by acquiring existing networks. We
continue to focus on growing our distribution network through independent sales organizations that contract directly with retailers in
their network to distribute prepaid mobile airtime or other digital media content from the retailers' POS terminals. We continue to
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increase our focus on direct relationships with chains of supermarkets, convenience stores, gas stations, and other larger scale retailers,
where we can negotiate multi-year agreements with the retailers. In addition to the sale of traditional mobile top-up volume described
above, we have expanded distribution into digital media products and other value-added services. We have leveraged our existing
technology infrastructure to sell digital media products, which have been sold through our traditional retailer network and new retailer
networks such as electronic channels. In the U.S., most prepaid digital media content is purchased for gifting; in markets outside the
U.S., consumers generally purchase prepaid digital media content for self-use.
epay PRODUCTS AND SERVICES
Prepaid Mobile Airtime Transaction Processing
We process prepaid mobile airtime top-up transactions on our international POS network for two types of clients: distributors and
retailers. Both types of client transactions start with a consumer in a retail store. The retailer uses a specially programmed POS terminal
in the store, the retailer's electronic cash register (ECR) system, or web-based POS device that is connected to our network to buy prepaid
mobile airtime. The consumer will select a predefined amount of mobile airtime from the carrier of choice, and the retailer enters the
selection into the POS terminal. The consumer will pay that amount to the retailer (in cash or other payment methods accepted by the
retailer). The POS device then transmits the selected transaction to our processing center. Using the electronic connection we maintain
with the mobile phone operator or drawing from our inventory of PINs, the purchased amount of mobile airtime will be either credited
to the consumer's account or delivered via a PIN printed by the terminal and given to the consumer. In the case of PINs printed by the
terminal, the consumer must then call the mobile phone operator's toll-free number to activate the purchased airtime to the consumer's
mobile account.
One difference in our relationships with various retailers and distributors is the way in which we charge for our services. For distributors
and certain very large retailers, we charge a processing fee. However, the majority of our transactions occur with smaller retailers. With
these clients, we receive a commission or discount on each transaction that is withheld from the payments made to the mobile phone
operator, and we share that commission/discount with the retailers.
Closed Loop Gift Cards
Closed loop (private-branded) gift cards are generally described as merchant-specific prepaid cards, used for purchases exclusively at a
particular merchant's locations. We distribute closed loop gift cards in various categories, including dining, retail, and digital media,
such as music, games and software. Generally, the gift card is activated when a consumer loads funds (with cash, debit or credit card
payment) or purchases a preloaded value gift card at a retail store location or online.
Open Loop Gift Cards
Open loop (network-branded) gift cards are prepaid gift cards associated with an electronic payment network (such as Visa® or
Mastercard®) and are honored at multiple, unaffiliated locations (wherever cards from these networks are generally accepted). They are
not merchant-specific. We distribute and issue single-use, non-reloadable open loop gift cards carrying the Visa® brand in our retail
channels. After the consumer purchases the preloaded value gift card at a retail store location or online, the consumer must call the toll-
free number on the back of the card to activate it.
Open Loop Reloadable
We distribute Visa® and Mastercard® issued debit cards provided by Green Dot, NetSpend and other card issuers. We also manage and
distribute a proprietary debit card that allows a retailer to issue its own reloadable store-branded card. Open loop reloadable cards have
features similar to a bank checking account, including direct deposit, purchasing capability wherever a credit card is accepted, bill
payment and ATM access. Fees are charged to consumers for the initial load and reload transactions, monthly account maintenance and
other transactions.
Other Products and Services
Our POS network is used for the distribution of other products and services, including games and software, bill payment, lottery tickets
and transportation products. Through our Cadooz subsidiary, we also distribute vouchers and physical gifts into the business-to-business
("B2B") channel principally for the purposes of employee and customer incentives and rewards. In certain locations, the terminals used
for prepaid services can also be used for electronic funds transfer to process credit, debit and prepaid card payments for retail
merchandise. We provide promotion and advertising for content providers of their prepaid content throughout our retail distribution
network. We also provide card production and processing services to some of our prepaid gift card partners and telecom content
providers.
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Retailer and Distributor Contracts
We provide our prepaid services through POS terminals or web-based POS devices installed in retail outlets or, in the case of major
retailers, through direct connections between their ECR systems and our processing centers. In markets where we operate proprietary
technology (the U.K., Germany, Australia, Poland, Ireland, New Zealand, Spain, Greece, India, Italy, Brazil and the U.S.), we generally
own and maintain the POS terminals. In certain countries in Europe, the terminals are sold to the retailers or to distributors who service
the retailer. Our agreements with major retailers for the POS services typically have one to three-year terms. These agreements include
terms regarding the connection of our networks to the respective retailer's registers or payment terminals or the maintenance of POS
terminals, and obligations concerning settlement and liability for transactions processed. Generally, our agreements with individual or
small retailers have shorter terms and provide that either party can terminate the agreement upon three to six months' notice.
In Germany, distributors are key intermediaries in the sale of mobile top-up. As a result, our business in Germany is substantially
concentrated in, and dependent upon, relationships with our major distributors. The termination of any of our agreements with major
distributors could materially and adversely affect our prepaid business in Germany. However, we have been establishing agreements
with independent German retailers in order to diversify our exposure to such distributors.
The number of transactions processed on our POS networks has increased over the last five years at a CAGR of approximately 27.4% as
indicated in the following table:
(in millions)
epay processing transactions per year
2017
1,186
2018
1,149
2019
1,542
2020
2,395
2021
3,120
Additional high-volume, low-margin digital media offerings in Asia contributed to an overall increase in processing transactions in 2020
and 2021.
epay SEGMENT STRATEGY
Mobile top-up transactions are declining in many developed markets and transaction fees for mobile transactions are being compressed
by the mobile operators. epay's strategy is to defend margins in developing markets by providing value added services to mobile
operators and to decrease our reliance on mobile top-up by increasing distribution of other electronic content. New product initiatives
focus on products such as gift card malls, prepaid debit cards, transport and electronic content, including music, software and games.
Strategic execution behind new products includes the development of relationships with global consumer product brands. This strategy
leverages the global scale of the epay business allowing global brands to be sold in many or all of the countries in which we have a
presence. Examples of global brands we distribute include iTunes, Google Play, Sony, and Microsoft.
Telecommunications companies and other content providers have a substantial opportunity to increase revenues by diversifying the
products and services currently offered to their retailers. epay is deploying additional content through its POS network to retailers and
distributors all over the world. The reach, capabilities and quality of the epay network are appealing as a global distribution channel.
We are one of the largest worldwide multi-country operators, and believe we have a distinct competitive advantage from the existing
relationships that we maintain with prepaid content providers and retailers.
SEASONALITY
As the product mix continues to change, the epay business is impacted by seasonality during the fourth quarter and first quarter of each
year due to the higher transaction levels during the holiday season and lower levels following the holiday season.
SIGNIFICANT CUSTOMERS AND GOVERNMENT CONTRACTS
No individual customer of our epay Segment makes up greater than 10% of total consolidated revenues. In Germany, epay has a contract
for the technology and distribution infrastructure for six state-owned lotteries, it deploys Know Your Customer (or KYC) technologies
on terminals indirectly owned by the Federal Republic of Germany and provides payment processing services for the state of Berlin and
the city of Stuttgart, and Cadooz has a contract with Deutsche Bahn, which is majority owned by the German state. In addition, epay has
contracts with Transurban Limited, the largest manager of toll road networks in Australia, Cubic, supporting New South Wales Transport
ticketing in Australia, and with New Zealand Transport Authority, which operates all toll roads in New Zealand. epay distributes mobile
top up in post offices in the United Kingdom, which are owned by the government. epay has contracts in the Middle East for the
processing of mobile airtime for companies that are majority owned by the Saudi government and the UAE government, and epay
distributes prepaid electronic content through companies that are owned by the Dubai government and Abu Dhabi government. In India,
the epay segment distributes prepaid content through the State Bank of India and distributes telecom airtime on behalf of Bharat
Sanchar Nigam, a government owned telecommunications provider based in New Delhi. There are no other government contracts in
the epay Segment.
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COMPETITION
We face competition in the prepaid business in all of our markets. We compete with a few multinational companies that operate in
several of our markets. In other markets, our competition is from smaller, local companies. The mobile operators in all of our markets
have retail distribution networks, and in some markets, on-line distribution of their own through which they offer top-up services for
their own products.
We believe our size and market share are competitive advantages in many markets. In addition, we believe our processing platforms are
a competitive advantage. We have extremely flexible technical platforms that enable us to tailor POS solutions to individual retailers
and mobile operator and digital media content provider requirements where appropriate. Our platforms are also able to provide value
added services other than processing which makes us a more valuable partner to the content providers and retailers. We have introduced
new digital products into the marketplace such as digital payment for online media subscriptions. Many of these products are not offered
by our competitors and in many countries, these are new products. We are capitalizing on being the first to market for these products.
The principal competitive factors in the epay Segment include price (that is, the level of commission paid to retailers for each
transaction), breadth of products and up-time offered on the system. Major retailers with high volumes are able to demand a larger share
of the commission, which increases the amount of competition among service providers. We are seeing signs that some mobile operators
are expanding their distribution networks to provide top-up services on-line or via mobile devices, which provides other alternatives for
consumers to use.
MONEY TRANSFER SEGMENT
OVERVIEW
We provide global money transfer services primarily under the brand names Ria, IME, AFEX, and xe. Ria and IME provide consumer-
to-consumer money transfer services through a global network of more than 510,000 locations and our websites riamoneytransfer.com
and online.imeremit.com. Most of our money transfers are originated through sending agents in approximately 48 countries, with money
transfer delivery completed in 165 countries. The initiation of a consumer money transfer occurs through retail agents, Company-owned
stores or online, while the delivery of money transfers can occur with bank correspondents, retailer agents or from certain ATMs. Our
websites allow consumers to send funds online, using a bank account or credit or debit card, for pay-out directly to a bank account or
for cash pickup.
In addition, we provide global account-to-account money transfer services under the brand name xe. We offer money transfer services
via our website (www.xe.com) and through customer service representatives. xe also provides foreign currency exchange information
on its currency data websites (www.xe.com and www.x-rates.com). Through xe, we offer cash management solutions and foreign
currency risk management services to small-and-medium sized businesses.
We monitor the number of transactions made through our money transfer networks. The number of transactions processed on our
network has increased over the last five years at a CAGR of approximately 10.0% as indicated in the following table:
(in millions)
Money transfer transactions per year
2017
92.2
2018
107.6
2019
114.5
2020
116.5
2021
135.1
Our sending agent network includes a variety of agents, including Walmart, large/medium size regional retailers, convenience stores,
bodegas, multi-service shops and phone centers, which are predominantly found in areas with a large immigrant population. Each Ria
money transfer transaction is processed using Euronet's proprietary software system and checked for security, completeness and
compliance with federal and state regulations at every step of the process. Senders can track the progress of their transfers through Ria's
customer service representatives, and funds are delivered quickly to their beneficiaries via our extensive payout network, which includes
large banks and non-bank financial institutions, post offices and large retailers. Our processing centers for the Money Transfer Segment
are located in the U.S., the U.K., New Zealand, and Malaysia.
We are one of the largest global money transfer companies measured by revenues and transaction volumes. Our Money Transfer
Segment processed approximately $63 billion in money transfers in 2021.
SOURCES OF REVENUES
Revenues in the Money Transfer Segment are derived through the charging of a transaction fee, as well as a margin earned from
purchasing foreign currency at wholesale exchange rates and selling the foreign currency to customers at retail exchange rates. Sending
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agents and receiving agents for consumer-to-consumer products each earn fees for cash collection and distribution
services. Euronet recognizes these fees as direct operating costs at the time of sale.
MONEY TRANSFER PRODUCTS AND SERVICES
Money transfer products and services are sold primarily through three channels: at agent locations, Company-owned stores and on
internet enabled devices at riamoneytransfer.com and xe.com. In an online transaction, customers send funds, using a bank account or
credit or debit card, for pay-out at most of our agent locations around the world or directly to a bank account.
Through our TeleRia service, customers connect to our call center from a telephone available at an agent location and a representative
collects the information over the telephone and enters it directly into our secure proprietary system. As soon as the data capture is
complete, our central system automatically faxes a confirmation receipt to the agent location for the customer to review and sign and
the customer pays the agent the money to be transferred, together with a fee. The agent then faxes the signed receipt back to Ria to
complete the transaction.
Through our Walmart-2-Walmart Money Transfer Service, which allows customers to transfer money to and from Walmart stores in
the U.S., our Ria business executes the transfers with Walmart serving as both the sending agent and payout correspondent. Ria earns a
significantly lower margin from these transactions than its traditional money transfers; however, the arrangement adds a significant
number of transactions to Ria's business. The agreement with Walmart establishes Ria as the only party through which Walmart will
sell U.S. domestic money transfers branded with Walmart marks. The agreement is effective until April 2026. Thereafter, it will
automatically renew for one-year terms unless either party provides notice to the contrary. The agreement imposes certain obligations
on each party, the most significant being service level requirements by Ria and money transfer compliance requirements by Walmart.
Any violation of these requirements by Ria could result in an obligation to indemnify Walmart or termination of the contract by Walmart.
However, the agreement allows the parties to resolve disputes by mutual agreement without termination of the agreement.
In addition to money transfers, Ria also offers customers bill payment services, payment alternatives such as money orders,
comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services
and mobile top-up. These services are all offered through our Company-owned stores while select services are offered through our
agents in certain markets.
Ria money orders are widely recognized and exchanged throughout the United States. Our check cashing services cover payroll and
personal checks, cashier checks, tax refund checks, government checks, insurance drafts and money orders. Our bill payment services
offer timely posting of customer bills for over 7,000 companies, including electric and gas utilities and telephone/wireless companies.
Bill payment services are offered primarily in the U.S.
xe offers account-to-account international payment service to high-income individuals and small-and-medium sized businesses,
complementing our existing consumer-to-consumer money transfer business. xe has a multi-channel platform which allows customers
to make transfers, track payments and manage their international payment activity online or through a customer service representative.
xe offers cash management solutions and foreign currency risk management services to small-and-medium sized businesses. xe also
offers foreign currency exchange subscriptions and advertising on its websites.
MONEY TRANSFER SEGMENT STRATEGY
The Money Transfer Segment's strategy is to increase the volume of money transfers processed by leveraging our existing banking and
merchant/retailer relationships to expand our agent and correspondent networks in existing corridors. In addition, we pursue expansion
into high-potential money transfer corridors from the U.S. and internationally beyond the traditional U.S. to Mexico corridor. Further,
we expect to continue to take advantage of cross-selling opportunities with our epay and EFT Processing Segments by providing prepaid
services through our stores and agents and offering our money transfer services at select prepaid retail locations and ATMs we operate
in key markets. We will continue to make investments in our systems to support this growth. Additionally, we are expanding our xe
business into new markets.
SEASONALITY
Our money transfer business is significantly impacted by seasonality that varies by region. In most of our markets, we experience
increased money transfer transaction levels during the month of May and in the fourth quarter of each year, coinciding with various
holidays. Additionally, in the U.S. to Mexico corridor, we usually experience our heaviest volume during the May through October time
frame, coinciding with the increase in worker migration patterns and various holidays, and our lowest volumes during the first quarter.
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SIGNIFICANT CUSTOMERS AND GOVERNMENT CONTRACTS
No individual customer of our Money Transfer Segment makes up greater than 10% of total consolidated revenues. The Money Transfer
Segment maintains correspondent relationships with a number of financial institutions whose ownership includes governments of the
correspondents' countries of origin. Those countries include Armenia, Austria, Bangladesh, Belarus, Belgium, Benin, Bhutan, Bolivia,
Bosnia-Herzegovina, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Costa Rica, Cote d'Ivoire, Cuba, Djibouti,
Dominican Republic, Ecuador, Egypt, El Salvador, Eritrea, Ethiopia, Fiji, Gabon, Gambia, Georgia, Ghana, Guatemala, Guinea, Guinea
- Bissau, Honduras, India, Indonesia, Italy, Jordan, Kenya, Kyrgyzstan, Laos, Liberia, Madagascar, Malaysia, Mali, Mauritania,
Mauritius, Mexico, Moldova, Morocco, Myanmar, Niger, Nigeria, Pakistan, Philippines, Poland, Romania, Russia, Rwanda, Saudi
Arabia, Serbia, Senegal, Sierra Leone, Sri Lanka, Suriname, Tanzania, Thailand, Togo, Tunisia, Turkey, Uganda, Ukraine, Uzbekistan,
Vietnam, Yemen, Zambia, and Zimbabwe.
COMPETITION
Our primary competitors in the money transfer and bill payment business include other large money transfer companies and electronic
money transmitters, together with hundreds of smaller registered and unregistered money transmitters, as well as certain major national
and regional banks, financial institutions and independent sales organizations. Our competition includes The Western Union Company,
the leading competitor with revenue approximately two times greater than our revenue. The Western Union Company has a significant
competitive advantage due to its greater resources and access to capital for expansion. This may allow them to offer better pricing terms
to customers, agents or correspondents, which may result in a loss of our current or potential customers or could force us to lower our
prices. In addition to traditional money payment services, new technologies are emerging that compete with traditional money payment
services, such as stored-value cards, debit networks, web-based services and digital currencies. Our continued growth also depends upon
our ability to compete effectively with these alternative technologies.
EMPLOYEES
We had approximately 8,800, 8,100 and 7,700 employees as of December 31, 2021, 2020, and 2019, respectively. We believe our future
success will depend in part on our ability to continue to recruit, retain and motivate qualified management, technical and administrative
employees. Currently, no union represents any of our employees, except in one of our Spanish subsidiaries. We experienced no work
stoppages or strikes by our workforce in 2021 and we consider relations with our employees to be good.
GOVERNMENT REGULATION
As discussed below, many of our business activities are subject to regulation in our current markets. In the Money Transfer Segment,
we are subject to a wide variety of laws and regulations of the U.S., individual U.S. states and foreign governments. These include
international, federal and state anti-money laundering and sanctions laws and regulations, money transfer and payment instrument
licensing laws, escheat laws, laws covering consumer privacy, data protection and information security and consumer disclosure and
consumer protection laws. Our operations have also been subject to increasingly strict requirements intended to help prevent and detect
a variety of illegal financial activity, including money laundering, terrorist financing, unauthorized access to personal customer data and
other illegal activities. The more significant of these laws and regulations are discussed below. Noncompliance with these laws and
requirements could result in the loss or suspension of licenses or registrations required to provide money transfer services through retail
agents, Company owned stores or online. For more discussion, see Item 1A - Risk Factors.
Any further expansion of our activity into areas that are qualified as "financial activity" under local legislation may subject us to licensing
and we may be required to comply with various conditions to obtain such licenses. Moreover, the interpretations of bank regulatory
authorities as to the activity we currently conduct might change in the future. We monitor our business for compliance with applicable
laws or regulations regarding financial activities.
Certain of our European product offerings, including in particular, our money transfer services, merchant acquiring and bill payment
products, are regulated payment services requiring a license under the Second Payment Services Directive, or PSD2, which replaced the
Payment Services Directive, or PSD, effective January 13, 2018. Key changes made by PSD2 include: creation of two new payment
service types, extension of PSD rules on transparency to additional transactions not previously covered by PSD; enhanced cooperation
and information exchange between authorities in the context of authorization and supervision of payment institutions and electronic
money institutions; and increased obligations around the management of operational and security risk and the notification of incidents,
increased obligations relating to complaints handling and additional requirements regarding payment security. PSD2 as implemented
in some member states also resulted in some of our European licensed institutions needing to go through a re-authorisation process.
PSD2 requires a license to perform certain defined "payment services" in a European Economic Area (“EEA”) Member State and such
license may be extended throughout other Member States of the EEA through passporting of the license (either on a freedom of service
or freedom of establishment basis). Conditions for obtaining the license include minimum capital requirements, establishment of
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procedures for safeguarding of funds, and certain governance and reporting requirements. In addition, certain obligations relating to
internal controls and the conduct of business, in particular, consumer disclosure requirements and certain rules regarding the timing and
settlement of payments, must be met. We have payment institution licenses in the U.K., France, Germany, and Spain and are complying
with these requirements. Traditionally, we passported our U.K., German and Spanish payment services authorizations to several Member
States. As a result of Brexit, our U.K, payment institution is no longer capable of passporting its license into the EEA and the relevant
EEA business was transferred to our other licenses prior to the end of the Brexit transition period. Additionally, in the U.K., we have
obtained an e-money license. The e-money license allows Euronet to issue e-money and provide the same payment services as a PSD2
licensee. The e-money license imposes certain requirements similar to those of the payment services license, including minimum capital
requirements, consumer disclosure and internal controls. Prior to the end of the Brexit transition period, our e-money license was
passported into over twenty-five EEA Member States. As a result of Brexit, we have restructured the regulated services provided by our
U.K. e-money institution in the EEA Member States and transitioned them to our other payment service licenses that can still operate in
the EEA. The e-money institution will continue to operate in the U.K. unchanged.
MONEY TRANSFER AND PAYMENT INSTRUMENT LICENSING
Licensing requirements in the U.S. are generally driven by the various state banking departments regulating the businesses of money
transfers and issuances of payment instruments. Typical requirements include the meeting of minimum net worth requirements,
maintaining permissible investments (e.g., cash, agent receivables, and government-backed securities) at levels commensurate with
outstanding payment obligations and the filing of a security instrument (typically in the form of a surety bond) to offset the risk of
default of trustee obligations by the license holder. We are required by many state regulators to submit ongoing reports of licensed
activity, most often on a quarterly or monthly basis, that address changes to agent and branch locations, operating and financial
performance, permissible investments and outstanding transmission liabilities. These periodic reports are utilized by the regulator to
monitor ongoing compliance with state licensing laws. A number of major state regulators also conduct periodic examinations of license
holders and their authorized delegates, generally with a frequency of every one to two years. Examinations are most often comprehensive
in nature, addressing both the safety and soundness and overall compliance by the license holder with regard to state and federal
regulations. Such examinations are typically performed on-site at the license holder's headquarters or operations center; however, certain
states may choose to perform examinations off-site as well.
Money transmitters, issuers of payment instruments and their agents are required to comply with U.S. federal, state and/or foreign anti-
money laundering laws and regulations. In summary, our Money Transfer Segment, as well as our agent network, is subject to regulations
issued by the different state and foreign national regulators who license us, the Office of Foreign Assets Control ("OFAC"), the Bank
Secrecy Act as amended by the USA PATRIOT Act ("BSA"), the Financial Crimes Enforcement Network ("FINCEN"), as well as any
existing or future regulations that impact any aspect of our money transfer business.
A similar set of regulations applies to our money transfer businesses in most of the foreign countries in which we originate transactions.
These laws and regulations include monetary limits for money transfers into or out of a country, rules regarding the foreign currency
exchange rates offered, as well as other limitations or rules for which we must maintain compliance.
Regulatory bodies in the U.S. and abroad may impose additional rules on the conduct of our Money Transfer Segment that could have
a significant impact on our operations and our agent network. In this regard, the U.S. federal government has implemented U.S. federal
regulations for electronic money transfers, including the Electronic Fund Transfer Act, which provides consumer protections for
international remittance transfers. The Consumer Financial Protection Bureau ("CFPB"), adopted a rule that provides additional
protections for consumers who transmit money internationally, including disclosure requirements, cancellation rights and error
resolution procedures for consumer complaints. Under U.S. federal law, it is unlawful for any provider of consumer financial products
or services to engage in unfair, deceptive or abusive acts or practices (collectively, "UDAAPs"). The CFPB has rule making and
enforcement authority to prevent UDAAPs in connection with transactions for consumer financial products or services. The CFPB audits
our compliance with these rules, and we may be subject to fines or penalties for violations of any of such rules.
ESCHEAT REGULATIONS
Our Money Transfer Segment is subject to the unclaimed or abandoned property (i.e., "escheat") regulations of the United States and
certain foreign countries in which we operate. These laws require us to turn over property held by Euronet on behalf of others remaining
unclaimed after specified periods of time (i.e., "dormancy" or "escheat" periods). Such abandoned property is generally attributable to
the failure of beneficiary parties to claim money transfers or the failure to negotiate money orders, a form of payment instrument. We
have policies and programs in place to help us monitor the required information relating to each money transfer or payment instrument
for possible eventual reporting to the jurisdiction from which the order was originally received. In the U.S., reporting of unclaimed
property by money service companies is performed annually, generally with a due date of on or before November 1. State banking
department regulators will typically include a review of Euronet escheat procedures and related filings as part of their examination
protocol.
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PRIVACY AND INFORMATION SECURITY REGULATIONS
Our operations involve the collection and storage of certain types of personal customer data that are subject to privacy and security laws
in the U.S. and abroad. In the United States, we are subject to the Gramm-Leach-Bliley Act ("GLBA") and various state laws including
California Consumer Privacy Act ("CCPA"), which requires that financial institutions have in place policies regarding the collection,
processing, storage and disclosure of information considered nonpublic personal information. Laws in other countries include the E.U.'s
General Data Protection Regulation (2016/679) ("GDPR"), which became effective from May 25, 2018, as well as the laws of other
countries.
The GDPR establishes stringent requirements for the collection and processing of personal information of individuals within the E.U.
The GDPR establishes certain rights of individuals regarding personal information processed by companies as well as requirements for
information security, and imposes significant fines that may be revenue-based for violation of its requirements. Any failure on our part
to meet the requirements of the GDPR could result in the imposition of fines and penalties that could affect our financial results.
We comply with the GLBA and state privacy provisions. In July 2020, the European Court of Justice invalidated the EU-US Privacy
Shield as a lawful mechanism for transferring personal data to the US as a result of concerns related to surveillance by law enforcement
agencies and a lack of judicial redress by individuals in the EU (known as the "Schrems II" decision). Despite the July 2020 ruling of
the European Court of Justice, we believe we remain in compliance with E.U. regulations regarding the transfer of personal data to the
United States and other jurisdictions.
Recently, as identity theft has been on the rise, there has been increased public attention to concerns about information security and
consumer privacy, accompanied by laws and regulations addressing the issue. We believe we are compliant with these laws and
regulations; however, this is a rapidly evolving area and there can be no assurance that we will continue to meet the existing and new
regulations, which could have a material, adverse impact on our Money Transfer Segment business.
ANTI-CORRUPTION AND BRIBERY
We are subject to the Foreign Corrupt Practices Act ("FCPA"), which prohibits U.S. and other business entities from making improper
payments to foreign government officials, political parties or political party officials. We are also subject to the applicable anti-corruption
laws in the jurisdictions in which we operate, such as the U.K. Bribery Act, thus potentially exposing us to liability and potential penalties
in multiple jurisdictions. The anti-corruption provisions of the FCPA are enforced by the United States Department of Justice. In
addition, the Securities and Exchange Commission ("SEC") requires strict compliance with certain accounting and internal control
standards set forth under the FCPA. Because our services are offered in many countries throughout the world and we do business with
a number of banks and other financial institutions owned or controlled by foreign governments, we face a higher risk associated with
FCPA, the U.K. Bribery Act and other similar laws than many other companies and we have policies and procedures in place to address
compliance with the FCPA, the U.K. Bribery Act and other similar laws. Any determination that we have violated these laws could have
an adverse effect on our business, financial position and results of operations. Failure to comply with our policies and procedures or the
FCPA and other laws can expose Euronet and/or individual employees to potentially severe criminal and civil penalties. Such penalties
could have a material adverse effect on our business, financial condition and results of operations.
SANCTIONS COMPLIANCE
In addition to anti-money laundering laws and regulations, our products and services are subject to economic and trade sanctions laws
and regulations promulgated by OFAC and other jurisdictions in which our products and services are offered. The sanctions laws and
regulations prohibit or restrict transactions to or from (or dealings with or involving) certain countries, regions, governments, and in
certain circumstances, specified foreign nationals, as well as with certain individuals and entities such as narcotics traffickers, terrorists,
and terrorist organizations. These sanctions laws and regulations require screening of transactions against government watch-lists,
including but not limited to, the watch-lists maintained by OFAC, and include transactional and other reporting to government agencies.
COMPLIANCE POLICIES AND PROGRAMS
We have developed risk-based policies and programs to comply with existing and new laws, regulations and other requirements outlined
above, including having dedicated compliance personnel, training programs, automated monitoring systems and support functions for
our offices and agents. To assist in managing and monitoring our money laundering and terrorist financing risks, we continue to have
our compliance programs, in many countries, independently examined on an annual basis. In addition, we continue to enhance our anti-
money laundering and counter-terrorist financing compliance policy, procedures and monitoring systems, as well as our consumer
protection policies and procedures.
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INTELLECTUAL PROPERTY
Each of our three operating segments utilizes intellectual property which is protected in varying degrees by a combination of trademark,
patent and copyright laws, as well as trade secret protection, license and confidentiality agreements.
The brand names of "Ria," "Ria Financial Services," "Ria Envia," "xe," "AFEX," "IME," derivations of those brand names and certain
other brand names are material to our Money Transfer Segment and are registered trademarks and/or service marks in most of the
markets in which our Money Transfer Segment operates. Consumer perception of these brand names is important to the growth prospects
of our money transfer business. We also hold a U.S. patent on a card-based money transfer and bill payment system that allows
transactions to be initiated primarily through POS terminals and integrated cash register systems.
With respect to our EFT Processing Segment, we have registered or applied for registration of our trademarks, including the names
"Euronet" and "Bankomat" and/or our blue diamond logo, as well as other trade names in most markets in which these trademarks are
used. Certain trademark authorities have notified us that they consider these trademarks to be generic and, therefore, not protected by
trademark laws. This determination does not affect our ability to use the Euronet trademark in those markets, but it would prevent us
from stopping other parties from using it in competition with Euronet. We have registered the "Euronet" trademark in the class of ATM
machines in Germany, the U.K. and certain other Western European countries. We have filed pending applications and/or obtained
patents for a number of our new software products and our processing technology, including certain top-up services and DCC services.
With respect to our epay Segment, we maintain registered trademarks for the "epay" brand and logo in the U.S., U.K., E.U. (through a
Community Trademark application, which provides enforceability of the epay trademark in all member states of the European Union),
Brazil, Singapore, India, Australia and New Zealand. We have filed trademark applications for additional iterations of the "epay” brand
in India, which are pending.
Additionally, we have filed a trademark application for the “epay” brand with the Madrid Protocol, which, if granted, will simplify the
process to extending the international protection of the epay trademark. We cannot be certain that we are entitled to use the epay
trademark in any markets other than those in which we have registered the trademark; however, before entering new markets, we conduct
searches to understand our usage rights. We have filed patent applications for certain POS top-up and other epay technology. Certain
patents have been granted while others have been refused or are still pending. We also hold a patent license covering certain of epay's
operations in the U.S.
Technology in the areas in which we operate is developing very rapidly, and we are aware that many other companies have filed patent
applications for products, processes and services similar to those we provide. The procedures of the U.S. patent office make it difficult
for us to predict whether our patent applications will be approved or will be granted priority dates that are earlier than other patents that
have been filed for similar products or services. Moreover, many "process patents" have been filed in the U.S. over recent years covering
processes that are in wide use in the money transfer, EFT and prepaid processing industries. If any of these patents are considered to
cover technology that has been incorporated into our systems, we may be required to obtain additional licenses and pay royalties to the
holders of such patents to continue to use the affected technology or be prohibited from continuing the offering of such services if
licenses are not obtained. This could materially and adversely affect our business.
The name, age, period of service and position held by each of our Executive Officers as of February 22, 2022, are as follows:
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Name
Age
Served Since
Position Held
Michael J. Brown
Rick L. Weller
Scott D. Claassen
Kevin J. Caponecchi
Juan C. Bianchi
Nikos Fountas
Martin L. Bruckner
65
64
55
55
51
58
46
July 1994
Chairman, Chief Executive Officer and President
November 2002 Executive Vice President - Chief Financial Officer
May 2020
General Counsel and Secretary
July 2007
April 2007
Executive Vice President - Chief Executive Officer, epay, Software and
EFT Asia Pacific Division
Executive Vice President - Chief Executive Officer, Money Transfer
Segment
September 2009
Executive Vice President - Chief Executive Officer, EFT Europe, Middle
East and Africa Division
January 2014
Senior Vice President - Chief Technology Officer
35
MICHAEL J. BROWN, Chairman, Chief Executive Officer and President. Mr. Brown is one of the founders of Euronet and has served
as our Chairman of the Board and Chief Executive Officer since 1996 and has served as President since December 2014. He also co-
founded our predecessor company in 1994. Mr. Brown has been a Director of Euronet since our incorporation in December 1996 and
previously served on the boards of Euronet's predecessor companies. In 1979, Mr. Brown founded Innovative Software, Inc., a computer
software company that was merged in 1988 with Informix. Mr. Brown served as President and Chief Operating Officer of Informix
from February 1988 to January 1989. He served as President of the Workstation Products Division of Informix from January 1989 until
April 1990. In 1993, Mr. Brown was a founding investor of Visual Tools, Inc. Visual Tools, Inc. was acquired by Sybase Software in
1996. Mr. Brown received a B.S. in Electrical Engineering from the University of Missouri - Columbia in 1979 and a M.S. in Molecular
and Cellular Biology at the University of Missouri - Kansas City in 1997.
RICK L. WELLER, Executive Vice President, Chief Financial Officer. Mr. Weller has been Executive Vice President and Chief
Financial Officer of Euronet since he joined Euronet in November 2002. From January 2002 to October 2002, he was the sole proprietor
of Pivotal Associates, a business development firm. From November 1999 to December 2001, Mr. Weller held the position of Chief
Operating Officer of ionex telecommunications, inc., a local exchange company. He is a certified public accountant and received his
B.S. in Accounting from the University of Central Missouri.
SCOTT D. CLAASSEN, General Counsel and Secretary. Mr. Claassen has been General Counsel and Secretary of Euronet since
joining the Company in May 2020. Prior to this, he practiced corporate law with Stinson LLP and Shook, Hardy and Bacon LLP. He is
a member of the Kansas and Missouri bars. He received a B.S. in Agriculture from Kansas State University, an MBA from the University
of Kansas and a law degree from Harvard Law School.
KEVIN J. CAPONECCHI, Executive Vice President, Chief Executive Officer, epay, Software and EFT Asia Pacific Division. Mr.
Caponecchi joined Euronet in July 2007 and served as President until assuming his current role in December 2014. Prior to joining
Euronet, Mr. Caponecchi served in various capacities with subsidiaries of General Electric Company for 17 years. From 2003 until June
2007, Mr. Caponecchi served as President of GE Global Signaling, a provider of products and services to freight, passenger and mass
transit systems. From 1998 through 2002, Mr. Caponecchi served as General Manager - Technology for GE Consumer & Industrial, a
provider of consumer appliances, lighting products and electrical products. Mr. Caponecchi holds degrees in physics from Franklin and
Marshall College and industrial engineering from Columbia University.
JUAN C. BIANCHI, Executive Vice President - Chief Executive Officer, Money Transfer Segment. Mr. Bianchi joined Euronet
subsequent to the acquisition of Ria in 2007. Prior to the acquisition, Mr. Bianchi served as the Chief Executive Officer of Ria and has
spent his entire career at either Ria or AFEX Money Express, a money transfer company purchased by Ria's founders. Mr. Bianchi
began his career at AFEX in Chile in 1992, joined AFEX USA's operations in 1996, and became chief operating officer of AFEX-Ria
in 2003. Mr. Bianchi studied business at the Universidad Andres Bello in Chile and completed the Executive Program in Management
at UCLA's John E. Anderson School of Business.
NIKOS FOUNTAS, Executive Vice President - Chief Executive Officer, EFT Europe, Middle East and Africa Division. Mr. Fountas
has been Executive Vice President of the Company's EFT Processing Segment in Europe since December 2012. Mr. Fountas joined
Euronet subsequent to the Company's 2005 acquisition of Instreamline S.A. (now Euronet Card Services) in Greece. He served as
managing director of the Company's Greece EFT subsidiary, responsible for Euronet's European card processing and cross-border
acquiring operations until September 2009. In September 2009, Mr. Fountas took over responsibilities as managing director of Euronet's
Europe EFT Processing Segment. Prior to joining Euronet, Mr. Fountas spent over 20 years working in management and executive-
level positions in the IT field for several companies, including IBM for 12 years. He has a degree in computer science (Honors) from
York University in Canada and post graduate studies in business administration from Henley Management School and IBM Business
Professional Institute.
MARTIN L. BRUCKNER, Senior Vice President - Chief Technology Officer. Mr. Bruckner has been Senior Vice President and Chief
Technology Officer of Euronet since January 2014. Mr. Bruckner joined Euronet in 2007 as head of software development and IT
operations for Transact GmbH. In 2009, he was promoted to Chief Technology Officer of Euronet's epay segment. Prior to joining
Euronet, Mr. Bruckner established his own IT company called MLB Development GmbH, where he developed software systems for
various European companies. Mr. Bruckner has more than 20 years of software development experience and published his first software
product (BBS systems) at the age of 15. He received a Doctorate of Law from the University of Rostock and a law degree from the
University of Bielefeld.
AVAILABILITY OF REPORTS, CERTAIN COMMITTEE CHARTERS AND OTHER INFORMATION
Our website addresses are www.euronetworldwide.com and www.eeft.com. We make available all SEC public filings, including our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports filed
or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act") on our Websites
free of charge as soon as reasonably practicable after these documents are electronically filed with, or furnished to, the SEC. The
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information on our Websites is not, and shall not be deemed to be, a part of this report or incorporated into any other filings we make
with the SEC. In addition, our SEC filings are made available via the SEC's EDGAR filing system accessible at www.sec.gov.
The charters for our Audit, Compensation, and Corporate Governance and Nominating Committees, as well as the Code of Business
Conduct & Ethics for our employees, including our Chief Executive Officer and Chief Financial Officer, are available on our Website
at www.euronetworldwide.com in the "For Investors" section under "Corporate Governance / Documents and Charters".
ITEM 1A. RISK FACTORS
Our operations are subject to a number of risks and uncertainties, including those described below. You should carefully consider the
risks described below before making an investment decision. The risks and uncertainties described below are not necessarily organized
in order of priority or probability.
If any of the following risks actually occurs, our business, financial condition or results of operations could be materially adversely
affected. In that case, the trading price of our Common Stock could decline substantially.
This Annual Report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described
below and elsewhere in this Annual Report.
GOVERNMENT AND REGULATION
Because we are a multinational company conducting a complex business in many markets worldwide, we are subject to legal
and operational risks related to a broad array of local legal and regulatory requirements which could adversely affect our
operations.
Operating outside of the U.S. creates difficulties associated with our international operations, as well as complying with local legal and
regulatory requirements. We operate financial transaction processing networks that offer new products and services to customers, and
the laws and regulations in the markets in which we operate evolve and are subject to rapid change. Although we have knowledgeable
local staff in countries in which we deem it appropriate, we cannot assure you that we will continue to be found to be operating in
compliance with all applicable customs, currency exchange control, data protection, anti-money laundering, sanctions, employment,
transfer pricing and other laws or regulations to which we may be subject. We also cannot assure you that these laws will not be modified
in ways that may adversely affect our business.
For our epay Segment, as we continue to expand our electronic payment product and service offerings, certain of those products and/or
services may become regulated by state, federal or foreign laws, rules and regulations. New payment product and/or service offerings
may trigger payment regulation within the jurisdiction in which we are offering such payment products and services which may require
licensure for epay and/or our partner entities distributing or processing such products. If such products become more highly regulated
and ultimately require licensure, our epay business may be adversely affected. Further, if regulations regarding the expiration of gift
vouchers change in the countries where we offer them, the revenue epay recognizes from unredeemed vouchers may be negatively
affected.
Our money transfer services are subject to regulation by the U.S. states in which we operate, by the U.S. federal government and the
governments of the other countries in which we operate. Changes in the laws, rules and regulations of these governmental entities, and
our ability to obtain or retain required licensure, could have a material adverse impact on our results of operations, financial condition
and cash flow.
Additionally, the evolving regulatory environment may change the competitive landscape across various jurisdictions and adversely
affect our financial results. If governments implement new laws or regulations, or organizations such as Visa ® and Mastercard® issue
new rules, that effectively limit our ability to provide DCC or set fees and/or foreign currency exchange spreads, then our business,
financial condition and results of operations could be materially and adversely affected. In addition, changes in regulatory interpretations
or practices could increase the risk of regulatory enforcement actions, fines and penalties and such changes may be replicated across
multiple jurisdictions.
In March 2018, the E.U. proposed additional regulations on cross border transactions within the E.U., including specific regulations on
DCC. In December 2018, the European Commission, European Council and European Parliament agreed to legislation that requires
disclosure of foreign exchange margins applicable to DCC transactions and eventual comparability between foreign exchange rates
offered by DCC providers and bank card issuers. The new legislation went into effect in April 2020. Such regulation could materially
and adversely impact our financial results, by reducing the number of DCC transactions performed over our networks and the level of
37
profit we generate from such transactions.
The E.U. has passed a regulation called the GDPR that establishes stringent requirements for the collection and processing of personal
information of individuals within the E.U. The GDPR came into effect across the E.U. on May 25, 2018. The GDPR established stringent
requirements for the collection and processing of personal information of individuals within the E.U., established certain rights of
individuals regarding personal information processed by companies as well as requirements for information security and imposed
significant fines that may be revenue-based for violation of its requirements. The GDPR applies to transfers of personal information
from the E.U. to countries outside the E.U., including the U.S. Any failure on our part to meet the requirements of the GDPR could
result in the imposition of fines and penalties that could materially and adversely affect our financial results.
We conduct a significant portion of our business in Central and Eastern European countries, and we have subsidiaries in the
Middle East, Asia Pacific, Africa and South America, where the risk of continued political, economic and regulatory change that
could impact our operating results is greater than in the U.S. or Western Europe.
We have subsidiaries in Central and Eastern Europe, the Middle East, Asia Pacific, Africa and South America. We expect to continue
to expand our operations to other countries in these regions. Some of these countries have undergone significant political, economic and
social change in recent years and the risk of new, unforeseen changes in these countries remains greater than in the U.S. or Western
Europe. Recent changes to the political climate in certain Eastern European countries increases the risk that a potential military conflict
may adversely impact our operations in that region and disrupt our ATM network. In particular, changes in laws or regulations or in the
interpretation of existing laws or regulations, whether caused by a change in government or otherwise, could materially adversely affect
our business, growth, financial condition or results of operations.
For example, currently there are no limitations in any of the countries in which we have subsidiaries on the repatriation of profits from
these countries, but foreign currency exchange control restrictions, taxes or limitations may be imposed or tightened in the future with
regard to repatriation of earnings and investments from these countries. If exchange control restrictions, taxes or limitations are imposed
or tightened, our ability to receive dividends or other payments from affected subsidiaries could be reduced, which may have a material
adverse effect on us. As discussed under "Liquidity and Capital Resources" in Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations, under existing U.S. tax laws, repatriation of certain assets to the U.S. could have adverse
tax consequences.
In addition, corporate, contract, property, insolvency, competition, securities and other laws and regulations in many of the countries in
which we operate have been, and continue to be, substantially revised. Therefore, the interpretation and procedural safeguards of the
new legal and regulatory systems are in the process of being developed and defined, and existing laws and regulations may be applied
inconsistently. Also, in some circumstances, it may not be possible to obtain the legal remedies provided for under these laws and
regulations in a reasonably timely manner, if at all.
We conduct business in many international markets with complex and evolving tax rules, including value added tax rules, which
subjects us to international tax compliance risks which could adversely affect our operating results.
While we obtain advice from legal and tax advisors as necessary to help assure compliance with tax and regulatory matters, most tax
jurisdictions that we operate in have complex and subjective rules regarding the valuation of intercompany services, cross-border
payments between affiliated companies and the related effects on income tax, value added tax (“VAT”), transfer tax and share
registration tax. Our foreign subsidiaries frequently undergo VAT reviews, and from time to time undergo comprehensive tax reviews
and may be required to make additional tax payments should the review result in different interpretations, allocations or valuations of
our products and services.
Additionally, as a result of economic downturns, tax receipts have decreased and/or government spending has increased in many of the
countries in which we operate. Consequently, governments may increase tax rates or implement new taxes in order to compensate for
gaps between tax revenues and expenditures. Governments may prohibit or restrict the use of certain legal structures designed to
minimize taxes. Any such tax increases, whether borne by us or our customers, could negatively impact our operating results or the
demand for our products and services.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act or other similar anti-corruption laws.
Our operations in countries outside the United States are subject to anti-corruption laws and regulations, including restrictions imposed
by the FCPA. The FCPA and similar anti-corruption laws in other jurisdictions, such as the U.K. Bribery Act, generally prohibit
companies and their intermediaries from making improper payments to government officials or employees of commercial enterprises
for the purpose of obtaining or retaining business. We operate in many parts of the world that have experienced corruption to some
degree and, in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.
38
Our employees and agents interact with government officials on our behalf, including as necessary to obtain licenses and other regulatory
approvals necessary to operate our business, import or export equipment, employ expatriates and resolve tax disputes. We also have a
number of contracts with foreign governments or entities owned or controlled by foreign governments. These interactions and contracts
create a risk of violation of the FCPA or other similar laws.
Although we have implemented policies and procedures designed to ensure compliance with local laws and regulations as well as U.S.
laws and regulations, including the FCPA, there can be no assurance that all of our employees, consultants, contractors and agents will
abide by our policies. If we are found to be liable for violations of the FCPA or similar anti-corruption laws in other jurisdictions, either
due to our own or others' acts or inadvertence, we could suffer from criminal or civil penalties which could have a material and adverse
effect on our results of operations, financial condition and cash flows.
Our operating results in the money transfer business may be harmed if there are adverse changes in worker immigration
patterns, our ability to expand our share of the existing electronic market and to expand into new markets and our ability to
continue complying with regulations issued by the OFAC, BSA, FINCEN, USA PATRIOT Act regulations, the Dodd-Frank Act
or any other existing or future regulations that impact any aspect of our money transfer business.
Our money transfer business primarily focuses on workers who migrate to foreign countries in search of employment and then send a
portion of their earnings to family members in their home countries. Changes in U.S. and foreign government policies or enforcement,
including changes that have been, or may be, implemented by the U.S. President or Congress, toward immigration may have a negative
effect on immigration in the U.S. and other countries, which could also have an adverse impact on our money transfer revenues.
Both U.S. and foreign regulators have become increasingly aggressive in the enforcement of the various regulatory regimes applicable
to our businesses and the imposition of fines and penalties in the event of violations. Our ability to continue complying with the
requirements of OFAC, BSA, FINCEN, the USA PATRIOT Act, the Dodd-Frank Act and other regulations (both U.S. and foreign) is
important to our success in achieving growth and an inability to do this could have an adverse impact on our revenues and earnings.
Anti-money laundering, sanctions, and consumer protection regulations require us to be responsible for the compliance by agents with
such regulations. Although we have training and compliance programs in place, we cannot be certain our agents will comply with such
regulations and we may be held responsible for their failure to comply, resulting in fines and penalties. Future growth and profitability
depend upon expansion within the markets in which we currently operate and the development of new markets for our money transfer
services. Our expansion into new markets is dependent upon our ability to successfully apply our existing technology or to develop new
applications to satisfy market demand. We may not have adequate financial and technological resources to expand our distribution
channels and product applications to satisfy these demands, which may have an adverse impact on our ability to achieve expected growth
in revenues and earnings.
SUPPLY CHAIN AND THIRD PARTIES
Because we typically enter into short-term contracts with content providers and retailers, our epay business is subject to the risk
of non-renewal of those contracts, or renewal under less favorable terms.
Our contracts with content providers to distribute and process content, including prepaid mobile airtime top-up services, typically have
terms of less than three years. Our contracts with content providers are not exclusive, so these providers may enter into contracts with
other service providers. In addition, our service contracts with major retailers typically have terms of one to three years. The cancellation
or non-renewal of one or more of our significant content provider or retail contracts, or of a large enough group of our contracts with
smaller retailers, could have a material adverse effect on our business, financial condition and results of operations. The renewal of
contracts under less favorable payment terms, margins or other terms could have a material adverse impact on our working capital
requirements and/or results from operations. In addition, our contracts generally permit content providers to reduce our margin or
commission at any time. Commission and margin revenue or fee reductions by any of the content providers could also have a material
adverse effect on our business, financial condition or results of operations.
The prepaid marketplace is currently experiencing high growth in the differentiation of product offerings. While our epay business is
focused on expanding and differentiating its suite of prepaid product offerings on a global basis, there can be no assurance that we will
be able to enter into relationships on favorable terms with additional content providers or renew or expand current relationships and
contracts on favorable terms. Inability to continue to grow our suite of electronic content and electronic payment product offerings could
have a material adverse effect on our business, financial condition and results of operations.
The stability and growth of our EFT Processing Segment may be adversely affected if we are unable to maintain our current
card acceptance and ATM management agreements with banks and international card organizations, and to secure new
arrangements for card acceptance and ATM management.
The stability and future growth of our EFT Processing Segment depends in part on our ability to sign card acceptance and ATM
39
management agreements with banks and international card organizations. Card acceptance agreements allow our ATMs to accept credit
and debit cards issued by banks and international card organizations. ATM management agreements generate service income from our
management of ATMs for banks.
These agreements have expiration dates, and banks and international card organizations are generally not obligated to renew them. Our
existing contracts generally have terms of five to seven years and a number of them expire or are up for renewal each year. In some
cases, banks may terminate their contracts prior to the expiration of their terms. We cannot assure you that we will be able to continue
to sign or maintain these agreements on terms and conditions acceptable to us or that international card organizations will continue to
permit our ATMs to accept their credit and debit cards. The inability to continue to sign or maintain these agreements, or to continue to
accept the credit and debit cards of local banks and international card organizations at our ATMs in the future, could have a material
adverse effect on our business, growth, financial condition or results of operations.
In some cases, we are dependent upon international card organizations and national transaction processing switches to provide
assistance in obtaining settlement from card issuers of funds relating to transactions on our ATMs, and any failure by them to
provide the required cooperation could result in our inability to obtain settlement of funds relating to transactions.
Our ATMs dispense cash relating to transactions on credit and debit cards issued by banks. We have in place arrangements for the
settlement to us of all of those transactions, but in some cases, we do not have a direct relationship with the card-issuing bank and rely
for settlement on the application of rules that are administered by international card associations (such as Visa® or Mastercard®) or
national transaction processing switching networks. If a bankcard issuer fails to settle transactions in accordance with those rules, we
are dependent upon cooperation from such associations or switching networks to enforce our right of settlement against such
associations. Failure by such organizations or switches to provide the required cooperation could result in our inability to obtain
settlement of funds relating to transactions and adversely affect our business. Moreover, international card associations and issuers of
their cards (and, in the case of Visa, member banks) have the ability to change or apply their rules in ways that could negatively impact
our business. As an example, DCC is not permitted on certain cards in certain geographic territories, and the scope of such restrictions
could be extended. Any such change or application of the rules of international card associations could materially and adversely affect
our business.
We could incur substantial losses if one of the third-party depository institutions or financial institutions we use in our operations
were to fail.
As part of our business operations, we maintain cash balances at third party depository institutions. We could incur substantial losses if
a financial institution in which we have significant deposits fails.
Our money transfer business involves transferring funds internationally and is dependent upon foreign and domestic financial
institutions, including our competitors, to execute funds transfers and foreign currency transactions. Changes to existing regulations of
financial institution operations, such as those designed to combat terrorism or money laundering, could require us to alter our operating
procedures in a manner that increases our cost of doing business or to terminate certain product offerings. In addition, as a result of
existing regulations and/or changes to those regulations, financial institutions could decide to cease providing the services on which we
depend, requiring us to terminate certain product offerings.
We are required under certain national laws and the rules of financial transaction switching networks in many of our markets
to have ''sponsors'' to operate ATMs and switch ATM transactions. Our failure to secure ''sponsor'' arrangements in any of
our markets that require bank sponsors could prevent us from doing business in that market.
Under the laws of some countries, only a licensed financial institution may operate ATMs. Because we are not a licensed financial
institution outside of the E.U. we are required to have a ''sponsor'' bank to conduct ATM operations in those countries. In addition, in
all of our non-E.U. markets, the rules governing national transaction switching networks owned or operated by banks, and other
international financial transaction switching networks operated by organizations such as Citibank, Visa® and Mastercard®, require any
company sending transactions through these switches to be a bank or a technical service processor that is approved and monitored by a
bank. As a result, the operation of our ATM network in many of our markets depends on our ability to secure these ''sponsor''
arrangements with financial institutions.
To date, we have been successful in reaching contractual arrangements that have permitted us to operate in all of our target markets.
However, we cannot assure you that we will continue to be successful in reaching these arrangements, and it is possible that our current
arrangements will not continue to be renewed. If we are unable to secure “sponsor” arrangements in any market, we could be prevented
from doing business in that market.
We rely on third party financial institutions to provide us with a portion of the cash required to operate our ATM networks in
certain countries. If these institutions were unable or unwilling to provide us with the cash necessary to operate our ATM
40
networks, we would be required to locate additional alternative sources of cash to operate these networks.
In our EFT Processing Segment, we primarily rely on third party financial institutions in certain countries in Europe and Asia Pacific to
provide us with the cash required to operate our ATM networks. Under our agreements with these providers, we pay fees or interest,
which is generally variable and could increase, based on the total amount of cash we are using from such provider at a given time, as
well as other costs such as bank fees and cash transportation costs. As of December 31, 2021, the amount of cash used in our ATM
networks under these supply agreements was approximately $558.1 million. Before the cash is disbursed to ATM customers,
beneficial ownership of the cash is generally retained by the cash providers, and we have no access or proprietary rights to the cash.
Our existing agreements with cash providers are generally multi-year agreements that expire at various times. However, each provider
may have the right to demand the return of all or any portion of its cash at any time upon the occurrence of certain events beyond our
control, including certain bankruptcy events affecting us or our subsidiaries, or a breach of the terms of our cash provider agreements.
If any of our cash supply providers were to demand return of their cash or terminate their agreements with us and remove their cash
from our ATM devices, or if they fail to provide us with the cash our operations require, our ability to operate the ATM networks to
which the provider supplies cash would be jeopardized, and we would need to locate additional alternative sources of cash, including,
potentially the increased use of our own cash. Under those circumstances, the terms and conditions of the new or renewed agreements
could potentially be less favorable to us, which would negatively impact our results of operations. Furthermore, restrictions on our
access to cash to supply our ATMs could severely restrict our ability to keep our ATMs operating, which could subject us to performance
penalties under our contracts with our customers.
We have encountered difficulty in obtaining cash supply arrangements in certain of our markets, including Greece, and directly provide
cash for our ATM transactions in those markets. While the amounts involved are currently well within our capabilities given our cash
flows and available financing, any failure to renew a major cash supply arrangement could require that we commit significant financial
resources to the supply of cash to our ATM networks, which could adversely impact our results of operations.
If we are unable to maintain our money transfer agent and correspondent networks, our business may be adversely affected.
Our consumer-to-consumer money transfer based revenues are primarily generated through the use of our agent and correspondent
networks. If agents or correspondents decide to leave our network or if we are unable to sign new agents or correspondents, our revenue
and profit growth rates may be adversely affected. Our agents and correspondents are also subject to a wide variety of laws and
regulations that vary significantly, depending on the legal jurisdiction. Changes in these laws and regulations could adversely affect our
ability to maintain the networks or the cost of providing money transfer services. In addition, agents may generate fewer transactions or
less revenue due to various factors, including increased competition. Because our agents and correspondents are third parties that may
sell products and provide services in addition to our money transfer services, they may encounter business difficulties unrelated to the
provision of our services, which may cause the agents or correspondents to reduce their number of locations or hours of operation, or
cease doing business altogether.
CORPORATE GROWTH STRATEGIES
Our business may suffer from risks related to acquisitions and potential future acquisitions.
A substantial portion of our growth has been due to acquisitions, and we continue to evaluate and engage in discussions concerning
potential acquisition opportunities, some of which could be material. We cannot assure you that we will be able to successfully integrate,
or otherwise realize anticipated benefits from, our recent acquisitions or any future acquisitions. Failure to successfully integrate or
otherwise realize the anticipated benefits of these acquisitions could adversely impact our long-term competitiveness and profitability.
The integration of any future acquisitions will involve a number of risks that could harm our financial condition, results of operations
and competitive position. In particular:
• The integration plans for our acquisitions are based on benefits that involve assumptions as to future events, including our
ability to successfully achieve anticipated synergies, leveraging our existing relationships, as well as general business and
industry conditions, many of which are beyond our control and may not materialize. Unforeseen factors may offset components
of our integration plans in whole or in part. As a result, our actual results may vary considerably, or be considerably delayed,
compared to our estimates;
• The integration process could disrupt the activities of the businesses that are being combined. The combination of companies
requires, among other things, coordination of administrative and other functions. In addition, the loss of key employees,
customers or vendors of acquired businesses could materially and adversely impact the integration of the acquired businesses;
• The execution of our integration plans may divert the attention of our management from other key responsibilities;
• We may assume unanticipated liabilities and contingencies; or
• Our acquisition targets could fail to perform in accordance with our expectations at the time of purchase.
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Future acquisitions may be affected through the issuance of our common stock or securities convertible into our common stock, which
could substantially dilute the ownership percentage of our current stockholders. In addition, shares issued in connection with future
acquisitions could be publicly tradable, which could result in a material decrease in the market price of our common stock. Certain
factors on which our ability to expand each of our divisions is dependent are set forth at Item 7, Management's Discussion and Analysis
of Financial Condition and Results of Operations - Opportunities and Challenges. If any of such factors impede our ability to expand
our businesses, our results of operations and financial condition could be materially and adversely affected.
Our operating results depend, in part, on the volume of transactions on ATMs in our network and the fees we can collect from
processing these transactions. We generally have little control over the ATM transaction fees established in the markets where
we operate, and therefore, cannot control any potential reductions in these fees which may adversely affect our results of
operations.
Transaction fees from banks, customers and international card organizations for transactions processed on our ATMs have historically
accounted for a substantial portion of our revenues. These fees are set by agreement among all banks in a particular market. The future
operating results of our ATM business depend on the following factors:
•
•
•
•
the acceptance of our ATM processing and management services in our target markets;
the maintenance of the level of transaction fees we receive;
the continued use of our ATMs by credit and debit cardholders; and
our ability to generate revenues from interchange fees and from other value-added services, including dynamic currency
conversion.
The amount of fees we receive per transaction is set in various ways in the markets in which we do business. We have card acceptance
agreements or ATM management agreements with some banks under which fees are set. However, we derive a significant portion of
our revenues in many markets from interchange fees, surcharges or cash withdrawal related services that are set by the central ATM
processing switch or various card organizations. The banks that participate in these switches or the card organizations that enable the
services or transactions set the interchange fee and/or establish the rules regarding the services allowed, and we are not in a position in
any market to greatly influence these fees or rules, which may change over time. A significant decrease in the interchange fee, or
limitations placed on our ability to offer value added services via our ATM network, in any market could adversely affect our results in
that market.
Although we believe that the volume of transactions in developing countries may increase due to growth in the number of cards being
issued by banks in these markets, we anticipate that transaction levels on any given ATM in developing markets will not increase
significantly. We can attempt to improve the levels of transactions on our ATM network overall by acquiring good sites for our ATMs,
eliminating poor locations, entering new, less-developed markets and adding new transactions, including new value-added services, to
the sets of transactions that are available on our ATMs. However, we may not be successful in materially increasing transaction levels
through these measures. Per-transaction fees paid by international card organizations have declined in certain markets in the past and
competitive factors have required us to reduce the transaction fees we charge customers. If we cannot continue to increase our transaction
levels and per-transaction fees generally decline, our results would be adversely affected.
If consumer confidence in our business or brands declines, our business may be adversely affected.
Our business relies on customer confidence in our brands and our ability to provide efficient and reliable products and services across
each of our segments. For our Money Transfer division, a decline in customer confidence in our business or brands, or in traditional
money transfer providers as a means to transfer money, may adversely impact transaction volumes which would, in turn, be expected to
adversely impact our business and possibly result in recording charges for the impairment of goodwill and/or other long-lived assets.
CAPITAL MARKETS AND ECONOMIC CONDITIONS
The outbreak of COVID-19 (coronavirus) has negatively impacted and could continue to negatively impact the global economy.
In addition, the COVID-19 pandemic could disrupt or otherwise negatively impact global credit markets and our operations,
including the demand for our products and services.
The significant outbreak of COVID-19 has resulted in a widespread health crisis, which has negatively impacted and could continue to
negatively impact the global economy. In addition, the global and regional impact of the outbreak, including official or unofficial
quarantines and governmental restrictions on activities taken in response to such event, has had, and could continue to have a negative
impact on our operations, reduced consumer demand for our products and services due to reduced consumer traffic in, or closure of,
retail and other locations where our products and services are offered, including voluntary or mandatory temporary closures of our
facilities or those of our agents or customers; interruptions in our supply chain, which could impact the cost or availability of equipment;
disruptions or restrictions on our ability to travel or to market and distribute our products and services; and labor shortages.
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For example, the COVID-19 pandemic has resulted in travel restrictions within and between countries, including mandatory quarantine
requirements for travelers from certain locations, and varying degrees of social distancing orders in most of the countries where we do
business. Although the majority of these orders went into effect in early 2020, new orders continue to be implemented, or reinstated, as
the pandemic spreads around the global and new variants emerge. These travel restrictions and orders, as well as increased
unemployment and general economic uncertainty caused by the pandemic, have negatively impacted our financial results. The EFT
operating segment has experienced declines in DCC and surcharge transaction volumes as the factors noted above have reduced these
high-margin transactions on our network of ATMs. For the epay and Money Transfer operating segments, the disruption in business of
the retailers and agents that offer our services and products may adversely affect their ability to remain in business and/or timely remit
payments owed to us. All of these factors, in turn, may not only impact our operations, financial condition and demand for our products
and services but our overall ability to react timely to mitigate the impact of this event.
The COVID-19 outbreak could disrupt or otherwise negatively impact credit markets, which could adversely affect the availability and
cost of capital. Such impacts could limit our ability to fund our operations and satisfy our obligations.
The extent and potential impact of the COVID-19 outbreak on our operational and financial performance will depend on future
developments, including the duration, severity and spread of the virus, the effectiveness of vaccines and treatments against variants of
the virus, actions that may be taken by governmental authorities and the impact on our supply chain, customers, operations, workforce
and the financial markets, all of which are highly uncertain and cannot be predicted. These and other potential impacts of an epidemic,
pandemic or other health crisis, such as COVID-19, could therefore materially and adversely affect our business, financial condition
and results of operations.
We are subject to business cycles, seasonality and other outside factors that may negatively affect our business.
A recessionary economic environment in any of our markets or other outside factors could have a negative impact on banks, mobile
phone operators, content providers, retailers and our individual customers and could reduce the level of transactions in all of our
divisions, which would, in turn, negatively impact our financial results. If banks, mobile phone operators and content providers
experience decreased demand for their products and services, or if the locations where we provide services decrease in number, we will
process fewer transactions, resulting in lower revenues. In addition, a recessionary economic environment could reduce the level of
transactions taking place on our networks, which will have a negative impact on our business.
Our experience is that the level of transactions on our networks is also subject to substantial seasonal variation. In the EFT Processing
Segment, mostly in Europe, we usually experience our heaviest demand for dynamic currency conversion during the third quarter of the
fiscal year, coinciding with the tourism season in Europe. As a result, our revenues earned in the third quarter of the year will usually
be greater than other quarters of the fiscal year. Additionally, transaction levels have consistently been higher in the fourth quarter of
the fiscal year due to increased use of ATMs, prepaid products and money transfer services during the holiday season. Generally, the
level of transactions drops in the first quarter, during which transaction levels are generally the lowest we experience during the year,
which reduces the level of revenues that we record. In the Money Transfer Segment, we experience increased transaction levels during
the May through October time frame, coinciding with certain holidays and the increase in worker migration patterns. As a result of these
seasonal variations, our quarterly operating results may fluctuate materially and could lead to volatility in the price of our shares.
Additionally, economic or political instability, wars, civil unrest, terrorism, epidemics and natural disasters may make money transfers
to, from or within a particular country more difficult. The inability to timely complete money transfers could adversely affect our
business.
Economic cycles may lead us to recognize impairment charges related to long-lived assets and goodwill recorded in connection with
our acquisitions, which would adversely impact our results of operations. Our total assets include approximately $739.4 million, or
16% of total assets, in goodwill and acquired intangible assets recorded as a result of acquisitions. We assess our goodwill, intangible
assets and other long-lived assets as and when required by accounting principles generally accepted in the U.S. to determine whether
they are impaired. We have had material impairment write-downs of goodwill and acquired intangible assets in the past and we may
have additional impairment write-downs in the future. If operating results in any of our key markets, including Australia, Germany,
Greece, Malaysia, India, New Zealand, the U.S., U.K., Poland and Romania, deteriorate or our plans do not progress as expected when
we acquired these entities, or if capital markets depress our value or that of similar companies, we may be required to record additional
impairment write-downs of goodwill, intangible assets or other long-lived assets. This could have a material adverse effect on our results
of operations and financial condition.
We have a substantial amount of debt and other contractual commitments, and while the cost of servicing those obligations is
not expected to adversely affect our business, the risk could increase if we incur more debt. We may be required to prepay our
obligations under the credit facility.
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As of December 31, 2021, total liabilities were $3,488.8 million, of which $1,420.1 million represents long-term debt obligations, and
total assets were $4,744.3 million. We may not have sufficient funds to satisfy all such obligations as a result of a variety of factors,
some of which may be beyond our control. If the opportunity of a strategic acquisition arises or if we enter into new contracts that
require the installation or servicing of infrastructure, such as processing centers, ATM machines or POS terminals on a faster pace than
anticipated, we may be required to incur additional debt for these purposes and to fund our working capital needs, including ATM
network cash, which we may not be able to obtain. The level of our indebtedness could have important consequences to investors,
including the following:
•
•
•
•
•
our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service
requirements or other purposes may be limited or financing may be unavailable;
a portion of our cash flows must be dedicated to the payment of principal and interest on our indebtedness and other
obligations and will not be available for use in our business;
our level of indebtedness could limit our flexibility in planning for, or reacting to, changes in our business and the markets in
which we operate;
our level of indebtedness will make us more vulnerable to changes in general economic conditions and/or a downturn in our
business, thereby making it more difficult for us to satisfy our obligations; and
because a portion of our debt bears interest at a variable rate of interest, our actual debt service obligations could increase as
a result of adverse changes in interest rates.
If we fail to make required debt payments, or if we fail to comply with other covenants in our debt service agreements, we would be in
default under the terms of these agreements. This default would permit the holders of the indebtedness to accelerate repayment of this
debt and could cause defaults under other indebtedness that we have.
Restrictive covenants in our credit facilities may adversely affect us. Our Credit Facility (as defined below) contains two financial
covenants that we must meet as defined in the agreement: (1) Consolidated Total Leverage Ratio, and (2) Consolidated Interest Coverage
Ratio. To remain in compliance with our debt covenants, we may be required to increase Earnings Before Interest, Taxes, Depreciation
and Amortization ("EBITDA"), repay debt, or both. We cannot assure you that we will have sufficient assets, liquidity or EBITDA to
meet or avoid these obligations, which could have an adverse impact on our financial condition.
Our ability to secure additional financing for growth or to refinance any of our existing debt is also dependent upon the availability of
credit in the marketplace, which has experienced severe disruptions in the past. If we are unable to secure additional financing or such
financing is not available at acceptable terms, we may be unable to secure financing for growth or refinance our debt obligations, if
necessary.
Because we derive our revenues from a multitude of countries with different currencies, our business may be adversely affected
by local inflation and foreign currency exchange rates and policies.
We report our results in U.S. dollars, although a majority of our income is realized in foreign currencies. As exchange rates among the
U.S. dollar, the euro, and other currencies fluctuate, the impact of these fluctuations may have a material adverse effect on our results
of operations or financial condition as reported in U.S. dollars.
A significant number of our ATMs are located in countries in the European Union that use the euro. From time to time, some of these
countries, have considered leaving the European Union and adopting another currency. If such an event were to occur, the conversion
of cash that we hold in banks and in our ATM network in that country from euros to another currency could have an adverse effect on
our financial condition or results of operations, either from initial conversion or from subsequent changes in currency exchange rates.
The magnitude of this risk increases when cash balances in our ATM network increase during the tourism season.
Our Money Transfer Segment is subject to foreign currency exchange risks because our customers deposit funds in one currency at our
retail and agent locations worldwide or in an online account and we typically deliver funds denominated in a different, destination
country currency. Although we use foreign currency derivative contracts to mitigate a portion of this risk, we cannot eliminate all of the
exposure to the impact of changes in foreign currency exchange rates for the period between collection and disbursement of the money
transfers.
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CYBER, PHYSICAL ASSET, AND DATA SECURITY
Our business may be adversely affected if recent developments to applicable data protection regulations in the European Union
require us to cease the transfer of personal data from the European Union to the United States.
In July 2020, the European Court of Justice invalidated the EU-US Privacy Shield as a lawful mechanism for transferring personal data
to the US as a result of concerns related to surveillance by law enforcement agencies and a lack of judicial redress by individuals in the
EU (known as the “Schrems II” decision). Euronet has relied on an alternate mechanism of personal data transfer, called the Standard
Contractual Clauses (“SCCs”), since the enforcement of GDPR in 2018. In November 2020, the European Data Protection Board issued
a series of recommendations regarding supplementary measures to the SCCs, which Euronet is currently implementing. Our money
transfer business relies on the transfer of personal data of individuals in the EU to the US to enable payment of money remittance
transactions to beneficiaries through our correspondent network. If we are unable to transfer personal data from the EU to the US or
other countries where we operate, then it could affect the manner in which we provide our services and adversely affect our financial
results.
Because our business is highly dependent on the proper operation of our computer networks and telecommunications
connections, significant technical disruptions to these systems would adversely affect our revenues and financial results.
Our business involves the operation and maintenance of sophisticated computer networks and telecommunications connections with
financial institutions, mobile phone operators, other content providers, retailers and agents. This, in turn, requires the maintenance of
computer equipment and infrastructure, including telecommunications and electrical systems, and the integration and enhancement of
complex software applications. There are operational risks inherent in this type of business that can result in the temporary shutdown of
part or all of our processing systems, such as failure of electrical supply, failure of computer hardware, security breaches and software
errors. Any operational problem in our processing centers may have a significant adverse impact on the operation of our networks. Even
with disaster recovery procedures in place, these risks cannot be eliminated entirely, and any technical failure that prevents operation of
our systems for a significant period of time will prevent us from processing transactions during that period of time and will directly and
adversely affect our revenues and financial results.
We are subject to security breaches of our systems. Any such breach may cause us to incur financial losses, liability, harm to
our reputation, litigation, regulatory enforcement actions and limitations on our ability to conduct our businesses.
We capture, transmit, handle and store sensitive information in conducting and managing electronic, financial and mobile transactions,
such as card information, PIN numbers and personal information of various types. These businesses involve certain inherent security
risks, in particular: the risk of electronic interception and theft of the information for use in fraudulent or other card transactions by
persons outside the Company, including third party vendors or by our own employees; and the use of fraudulent cards on our network
of owned or outsourced ATMs and POS devices. We incorporate industry-standard encryption technology and processing methodology
into our systems and software, and maintain controls and procedures regarding access to our computer systems by employees and others,
to maintain high levels of security. Although this technology and methodology decreases security risks, they cannot be eliminated
entirely as criminal elements apply increasingly sophisticated technology to attempt to obtain unauthorized access to the information
handled by ATM, money transfer and electronic financial transaction networks. Our services and infrastructure are increasingly reliant
on the Internet. Computer networks and the Internet are vulnerable to unauthorized access, computer viruses and other disruptive
problems such as denial of service attacks or other cyber-attacks carried out by cyber criminals or state-sponsored actors. Other potential
attacks include attempts to obtain unauthorized access to confidential information or destroy data, often through the introduction of
computer viruses, ransomware or malware, cyber-attacks and other means, which are constantly evolving and difficult to detect. Those
same parties may also attempt to fraudulently induce employees, customers, vendors, or other users of our systems through phishing
schemes or other methods to disclose sensitive information in order to gain access to our data or that of our customers or clients. In
addition, the cost and timeframes required for implementation of new technology may result in a time lag between availability of such
technology and our adoption of it. Further, our controls, procedures and technology may not be able to detect when there is a breach,
causing a delay in our ability to mitigate it. As previously disclosed in our SEC filings, we have been the subject of computer security
breaches, and we cannot exclude the possibility of additional breaches in the future.
Any breach in our security systems could result in the perpetration of fraudulent financial transactions for which we may bear the
liability. We are insured against various risks, including theft and negligence, but such insurance coverage is subject to deductibles,
exclusions and limits that may leave us bearing some or all of any losses arising from security breaches.
We also collect, transfer and retain personal data as part of our money transfer business. These activities are subject to certain privacy
laws and regulations in the U.S. and in other jurisdictions where our money transfer services are offered. We maintain technical and
operational safeguards designed to comply with applicable legal requirements. Despite these safeguards, there remains a risk that these
safeguards could be breached resulting in improper access to, and disclosure of, sensitive customer information. Under state, federal
and foreign laws requiring consumer notification of security breaches, the costs to remediate security breaches can be substantial.
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Breaches of our security policies or applicable legal requirements resulting in a compromise of customer data could expose us to
regulatory enforcement action, subject us to litigation, limit our ability to provide money transfer services and/or cause harm to our
reputation.
In addition to electronic fraud issues and breaches of our systems, the possible theft and vandalism of ATMs or cash in the ATMs present
risks for our ATM business. We install ATMs at high-traffic sites and consequently our ATMs are exposed to theft and vandalism, and
to attacks whereby the security of the ATM is breached electronically by transmitting a command to the ATM to dispense cash without
a card being present. We constantly monitor ATM security and take measures to protect our systems from such attacks and other
breaches, but we cannot be certain that our measures will be effective against new, rapidly developing methods used by criminal
elements. Although we are insured against such risks, deductibles, exclusions or limitations in such insurance may leave us bearing
some or all of any losses arising from theft or vandalism of ATMs or loss of cash due to security breaches of our ATM networks. In
addition, we have experienced increases in claims under our insurance, which has increased our insurance premiums.
Failures of third-party service providers we rely upon could lead to financial loss.
We rely on third party service providers to support key portions of our operations. We also rely on third party service providers to
provide part or all of certain services we deliver to customers. While we have selected these third-party vendors carefully, we do not
control their actions. A failure of these services by a third party could have a material impact upon our delivery of services to customers.
Such a failure could lead to damage claims, loss of customers, and reputational harm, depending on the duration and severity of the
failure. Third parties perform significant operational services on our behalf. These third-party vendors are subject to similar risks as us
relating to cybersecurity, breakdowns or failures of their own systems or employees. One or more of our vendors may experience a
cybersecurity event or operational disruption and, if any such event does occur, it may not be adequately addressed, either operationally
or financially, by the third-party vendor. Certain of our vendors may have limited indemnification obligations or may not have the
financial capacity to satisfy their indemnification obligations. If a critical vendor is unable to meet our needs in a timely manner or if
the services or products provided by such a vendor are terminated or otherwise delayed and if we are not able to develop alternative
sources for these services and products quickly and cost-effectively, our customers could be negatively impacted and it could have a
material adverse effect on our business.
COMPETITIVE LANDSCAPE
Our competition in the EFT Processing Segment, epay Segment and Money Transfer Segment includes large, well-financed
companies and financial institutions larger than us with earlier entry into the market. As a result, we may lack the financial
resources and access to capital needed to capture increased market share.
EFT Processing Segment - Our principal EFT Processing competitors include ATM networks owned by banks and national switches
consisting of consortiums of local banks that provide outsourcing and transaction services only to banks and independent ATM deployers
in that country. Large, well-financed companies offer ATM network and outsourcing services that compete with us in various markets.
In some cases, these companies also sell a broader range of card and processing services than we do, and are, in some cases, willing to
discount ATM services to obtain large contracts covering a broad range of services. Competitive factors in our EFT Processing Segment
include network availability and response time, breadth of service offering, price to both the bank and to its customers, ATM location
and access to other networks.
epay Segment - We face competition in the epay business in all of our markets. A few multinational companies operate in several of our
markets, and we therefore compete with them in a number of countries. In other markets, our competition is from smaller, local
companies. Major retailers with high volumes are in a position to demand a larger share of margin/commissions or to negotiate directly
with the content providers, which may compress our margins. Additionally, certain of our content providers, including mobile phone
operators have entered into direct contracts with retailers and/or have developed processing technology that diminishes or eliminates the
need for intermediate processors and distributors.
Money Transfer Segment - Our primary competitors in the money transfer and bill payment business include other large money transfer
companies and electronic money transmitters, as well as certain major national and regional banks, financial institutions and independent
sales organizations. Our competitors include The Western Union Company and MoneyGram International Inc. The Western Union
Company has a significant competitive advantage due to its greater resources and access to capital for expansion. This may allow them
to offer better pricing terms to customers, which may result in a loss of our current or potential customers or could force us to lower our
prices. Either of these actions could have an adverse impact on our revenues. In addition, our competitors may have the ability to devote
more financial and operational resources than we can to the development of new technologies that provide improved functionality and
features to their product and service offerings. If successful, their development efforts could render our product and service offerings
less desirable, resulting in the loss of customers or a reduction in the price we could demand for our services. In addition to traditional
money payment services, new technologies are emerging that may effectively compete with traditional money payment services, such
as stored-value cards, debit networks, web-based services and digital currencies. Our continued growth depends upon our ability to
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compete effectively with these alternative technologies.
Developments in payments could materially reduce our transaction levels and revenues.
Certain developments in the field of payments may reduce the need for ATMs, prepaid product POS terminals and money transfer
agents. An example of this type of development is the use of near field technology in retail transactions, which if widely accepted in a
market reduces the need for cash and can negatively impact the level of ATM transactions in that market. Advances in biometric payment
solutions could have similar adverse impacts. These developments may reduce the transaction levels that we experience on our networks
in the markets where they occur. Financial institutions, retailers and agents could elect to increase fees to their customers for using our
services, which may cause a decline in the use of our services and have an adverse effect on our revenues. If transaction levels over our
existing network of ATMs, POS terminals, agents and other distribution methods do not increase, growth in our revenues will depend
primarily on increased capital investment for new sites and developing new markets, which reduces the margin we realize from our
revenues.
The mobile phone industry is a rapidly evolving area, in which technological developments, in particular the development of new billing
models and distribution methods or services, may affect the demand for other services in a dramatic way. The development of any new
models or technology that reduce the need or demand for prepaid mobile airtime could materially and adversely affect our business.
Competition in our EFT Processing Segment has increased over the last several years, increasing the risk that certain of our
long-term bank outsourcing contracts may be terminated or not renewed upon expiration.
The developing markets in which we have done business have matured over the years, resulting in increasing competition. In addition,
as consolidation of financial institutions in Central and Eastern Europe continues, certain of our customers have established or are
establishing internal ATM management and processing capabilities. As a result of these developments, negotiations regarding renewal
of contracts have become increasingly challenging and in certain cases we have reduced fees to extend contracts beyond their original
terms. In certain other cases, contracts have been, and in the future may be, terminated by financial institutions resulting in a substantial
reduction in revenue. Contract termination payments, if any, may be inadequate to replace revenues and operating income associated
with these contracts.
GOVERNANCE MATTERS
We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate our stockholders' ability
to sell their shares for a premium in a change of control transaction.
Various provisions of our certificate of incorporation and bylaws and of Delaware corporate law may discourage, delay or prevent a
change in control or takeover attempt of our company by a third party which our management and board of directors opposes. Public
stockholders who might desire to participate in such a transaction may not have the opportunity to do so. These anti-takeover provisions
could substantially impede the ability of public stockholders to benefit from a change of control or change in our management and board
of directors. These provisions include:
• preferred stock that could be issued by our board of directors to make it more difficult for a third party to acquire, or to
discourage a third party from acquiring, a majority of our outstanding voting stock;
• classification of our directors into three classes with respect to the time for which they hold office;
• supermajority voting requirements to amend the provision in our certificate of incorporation providing for the classification of
our directors into three such classes;
• non-cumulative voting for directors;
• control by our board of directors of the size of our board of directors;
• limitations on the ability of stockholders to call special meetings of stockholders;
• advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that
can be acted upon by our stockholders at stockholder meetings; and
• an exclusive forum bylaw provision for all internal corporate claims.
Additionally, we are authorized to issue up to a total of 90 million shares of common stock, potentially diluting equity ownership of
current holders and the share price of our common stock. We believe that it is necessary to maintain a sufficient number of available
authorized shares of our common stock in order to provide us with the flexibility to issue common stock for business purposes that may
arise as deemed advisable by our Board. These purposes could include, among other things, (i) to declare future stock dividends or stock
splits, which may increase the liquidity of our shares; (ii) the sale of stock to obtain additional capital or to acquire other companies or
businesses, which could enhance our growth strategy or allow us to reduce debt if needed; (iii) use in additional stock incentive programs
and (iv) other bona fide purposes. Our Board of Directors may issue the available authorized shares of common stock without notice to,
or further action by, our stockholders, unless stockholder approval is required by law or the rules of the Nasdaq Global Select Market.
47
The issuance of additional shares of common stock may significantly dilute the equity ownership of the current holders of our common
stock. Further, over the course of time, all of the issued shares have the potential to be publicly traded, perhaps in large blocks. This
may result in dilution of the market price of the common stock.
An additional 13.5 million shares of common stock, representing approximately 26% of the shares outstanding as of
December 31, 2021, could be added to our total common stock outstanding through the exercise of options or the issuance of
additional shares of our common stock pursuant to existing convertible debt and other agreements. Once issued, these shares of
common stock could be traded into the market and result in a decrease in the market price of our common stock.
As of December 31, 2021, we had 4.3 million and 0.5 million options and restricted stock awards outstanding, respectively, held by our
directors, officers and employees, which entitle these holders to acquire an equal number of shares of our common stock. Of this amount,
1.5 million options are vested and exercisable as of December 31, 2021. Approximately 5.8 million additional shares of our common
stock may be issued in connection with our stock incentive and employee stock purchase plans. Accordingly, based on current trading
prices of our common stock, approximately 2.0 million shares could potentially be added to our total current common stock outstanding
through the exercise of options and the vesting of restricted stock awards, which could adversely impact the trading price for our stock.
Of the 4.8 million total options and restricted stock awards outstanding, an aggregate of 2.0 million options and restricted stock awards
are held by persons who may be deemed to be our affiliates and who would be subject to Rule 144. Thus, upon exercise of their options
or sale of shares for which restrictions have lapsed, these affiliates' shares would be subject to the trading restrictions imposed by Rule
144. The remainder of the common shares issuable under option and restricted stock award arrangements would be freely tradable in
the public market. Over the course of time, all of the issued shares have the potential to be publicly traded, perhaps in large blocks.
Upon the occurrence of certain events, another 2.8 million shares of common stock could be issued upon conversion of the Company's
convertible notes issued in March 2019; in certain situations, the number of shares issuable could be higher. While we have stated that
we intend to settle any conversion of these notes by issuing cash for the principal value of the notes and issuing shares of common stock
for the conversion value in excess of the principal, which would significantly reduce the number of shares issued upon conversion, if
our financial condition significantly and adversely changes, we may not be able to settle as intended should the notes be converted.
KEY PERSONNEL
Retaining the founder and key executives of our company, and of companies that we acquire, and finding and retaining qualified
personnel is important to our continued success, and any inability to attract and retain such personnel could harm our
operations.
The development and implementation of our strategy has depended in large part on the co-founder of our company, Michael J. Brown.
The retention of Mr. Brown is important to our continued success. In addition, the success of the expansion of businesses that we acquire
may depend in large part upon the retention of the founders or leaders of those businesses. Our success also depends in part on our
ability to hire and retain highly skilled and qualified management, operating, marketing, financial and technical personnel. The
competition for qualified personnel in the markets where we conduct our business is intense and, accordingly, we cannot assure you that
we will be able to continue to hire or retain the required personnel.
Our officers and some of our key personnel have entered into service or employment agreements containing non-competition, non-
disclosure and non-solicitation covenants, which grant incentive stock options and/or restricted stock with long-term vesting
requirements. However, most of these contracts do not guarantee that these individuals will continue their employment with us. The loss
of our key personnel could have a material adverse effect on our business, growth, financial condition or results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our executive offices are located in Leawood, Kansas. As of December 31, 2021, we also have 36 principal offices in Europe, 14 in
Asia Pacific, 10 in North America, three in the Middle East, two in South America and one in Africa. Our office leases generally provide
for initial terms ranging from two to twelve years.
Our processing centers for the EFT Processing Segment are located in Germany, Hungary, India, China, and Pakistan. Processing centers
we operate for the epay Segment are located in the U.K., Germany, Italy, and the U.S. Our processing centers for the Money Transfer
Segment are located in the U.S., the U.K., New Zealand, and Malaysia.
48
All of our processing centers are leased and have off-site real time backup processing centers that are capable of providing full or partial
processing services in the event of failure of the primary processing centers.
ITEM 3. LEGAL PROCEEDINGS
The Company is, from time to time, a party to legal or regulatory proceedings arising in the ordinary course of its business.
The discussion regarding litigation in Part II, Item 8 - Financial Statements and Supplementary Data and Note 19, Litigation and
Contingencies, to the Consolidated Financial Statements included elsewhere in this report is incorporated herein by reference.
Currently, there are no legal or regulatory proceedings that management believes, either individually or in the aggregate, would have a
material adverse effect upon the Consolidated Financial Statements of the Company. In accordance with U.S. Generally Accepted
Accounting Principles ("U.S. GAAP"), we record a liability when it is both probable that a liability has been incurred and the amount
of the loss can be reasonably estimated. These liabilities are reviewed at least quarterly and adjusted to reflect the impacts of negotiations,
settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case or proceeding.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
Our common stock, $0.02 par value per share, is quoted on the Nasdaq Global Select Market under the symbol EEFT.
DIVIDENDS
Since our inception, no dividends have been paid on our common stock. We do not intend to distribute dividends for the foreseeable
future.
HOLDERS
At December 31, 2021, we had 51 stockholders of record of our Common Stock, and none of our Preferred Stock was outstanding. This
figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage
firms and clearing agencies.
PRIVATE PLACEMENTS AND ISSUANCES OF EQUITY
During 2021, we did not issue any equity securities that were not registered under the Securities Act of 1933, which have not been
previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
49
STOCK PERFORMANCE GRAPH
The following graph compares Euronet Worldwide Inc.’s annual percentage change in cumulative total return on common shares over
the past five years with the cumulative total return of companies comprising the Nasdaq Composite index and the Nasdaq US Benchmark
Financial Services TR Index. This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2016,
and that dividends received were immediately invested in additional shares. The graph plots the value of the initial $100 investment at
one-year intervals for the fiscal years shown. The Nasdaq Composite index replaces the CRSP Nasdaq Stock Market (US Companies)
Index and the Nasdaq US Benchmark Financial Services TR Index replaces the CRSP Nasdaq Financial Index in this analysis and going
forward, as the CRSP Index data is no longer accessible. The CRSP indexes have been included with data through 2020.
The following performance graph and related text are being furnished to and not filed with the SEC, and will not be deemed to be
"soliciting material" or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act
and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to
the extent we specifically incorporate such information by reference into such filing.
EQUITY COMPENSATION PLAN INFORMATION
Refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 16, Stock Plans, and Part III, Item 12, Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters, for information related to our equity compensation
plans.
STOCK REPURCHASES
The following table provides information with respect to shares of the Company's Common Stock that were purchased during the three
months ended December 31, 2021.
Period
October 1 - October 31, 2021
November 1 - November 30, 2021
December 1 - December 31, 2021
Total
Total Number of
Shares Purchased
Average Price Paid per
Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Maximum Dollar Value
of Shares that May Yet
Be Purchased Under the
Programs (in
thousands) (1)
— $
1,000,000
1,000,000
2,000,000 $
—
110.56
117.20
113.88
— $
1,000,000
1,000,000
2,000,000
250,000
139,435
322,236
(1) 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. On December 8, 2021, the Company put a repurchase program in place
50
to repurchase up to $300 million in value, but not more than 5.0 million shares of common stock through December 8, 2023. 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.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes
included elsewhere in this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2021 and 2020 items and
year-to-year comparisons between 2021 and 2020. Discussions of 2019 items and year-to-year comparisons between 2020 and 2019
that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
COMPANY OVERVIEW, GEOGRAPHIC LOCATIONS AND PRINCIPAL PRODUCTS AND SERVICES
Euronet is a leading electronic payments provider. We offer payment and transaction processing and distribution solutions to financial
institutions, retailers, service providers and individual consumers. Our primary product offerings include comprehensive ATM, POS,
card outsourcing, card issuing and merchant acquiring services, software solutions, electronic distribution of prepaid mobile airtime and
other electronic payment products, foreign currency exchange services and global money transfer services. We operate in the following
three segments:
1) The EFT Processing Segment, which processes transactions for a network of 42,713 ATMs and approximately 438,000 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) The epay Segment, which provides distribution, processing and collection services for prepaid mobile airtime and other electronic
content. We operate a network of approximately 775,000 POS terminals providing electronic processing of prepaid mobile airtime top-
up services and other electronic content in Europe, the Middle East, Asia Pacific, the United States and South America. We also provide
vouchers and physical gift fulfillment services in Europe.
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 510,000 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). 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. Through our xe brand, we offer cash management solutions and foreign currency risk management services
to small-to-medium-sized businesses.
We have six processing centers in Europe, five in Asia Pacific and two in North America. We have 36 principal offices in Europe, 14 in
Asia Pacific, 10 in North America, three in the Middle East, two in South America and one in Africa. Our executive offices are located
in Leawood, Kansas, USA. With approximately 73% of our 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 1A - Risk Factors and Item 7A - Quantitative and Qualitative Disclosures About Market Risk).
SOURCES OF REVENUES AND CASH FLOW
Euronet earns revenues and income primarily from ATM management fees, transaction fees, commissions and foreign currency
exchange margin. Each operating segment's sources of revenues are described below.
EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 20% of total consolidated
revenues for the year ended December 31, 2021, are derived from fees charged for transactions made by cardholders on our proprietary
network of ATMs, fixed management fees and transaction fees we charge to customers for operating ATMs and processing debit and
credit cards under outsourcing and cross-border acquiring agreements, foreign currency exchange margin on DCC transactions, domestic
51
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 34% of total consolidated revenues for the year
ended December 31, 2021, are primarily derived from commissions or processing fees received from mobile phone operators for the
processing and distribution of prepaid mobile airtime and commissions earned from the distribution of other electronic content, vouchers,
and physical gifts. The proportion of epay Segment revenues earned from the distribution of prepaid mobile phone time as compared
with other electronic products has decreased over time, and digital media content now produces approximately 70% of epay Segment
revenues. Other electronic content offered by this segment includes digital content such as music, games and software, as well as, other
products including prepaid long distance calling card plans, prepaid Internet plans, prepaid debit cards, gift cards, vouchers, transport
payments, lottery payments, bill payment, and money transfer.
Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately 46% of total consolidated
revenues for the year ended December 31, 2021, 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.
The Company offers a money transfer product called Walmart-2-Walmart Money Transfer Service which allows customers to transfer
money to and from Walmart stores in the U.S. Our Ria business executes the transfers with Walmart serving as both the sending agent
and payout correspondent. Ria earns a lower margin from these transactions than its traditional money transfers; however, the
arrangement has added a significant number of transactions to Ria's business. The agreement with Walmart establishes Ria as the only
party through which Walmart will sell U.S. domestic money transfers branded with Walmart marks. The agreement is effective until
April 2026. Thereafter, it will automatically renew for subsequent one-year terms unless either party provides notice to the contrary.
The agreement imposes certain obligations on each party, the most significant being service level requirements by Ria and money
transfer compliance requirements by Walmart. Any violation of these requirements by Ria could result in an obligation to indemnify
Walmart or termination of the contract by Walmart. However, the agreement allows the parties to resolve disputes by mutual agreement
without termination of the agreement.
Corporate Services, Eliminations and Other — In addition to operating in our principal operating segments described above, our
"Corporate Services, Eliminations and Other" category includes non-operating activity, certain inter-segment eliminations and the cost
of providing corporate and other administrative services to the operating segments, including most share-based compensation expense.
These services are not directly identifiable with our reportable operating segments.
OPPORTUNITIES AND CHALLENGES
The global product markets in which we operate are large and fragmented, which poses both opportunities and challenges for our
technology to disrupt new and existing competition. As an organization, our focus is on increasing our market presence through both
physical (ATMs, POS terminals, company stores and agent correspondents) and digital assets and providing new and improved products
and services for customers through all of our channels, which may in turn drive an increase in the number of transactions on our networks.
Each of these opportunities also presents us with challenges, including differentiating our portfolio of products and services in highly
competitive markets, the successful development and implementation of our software products and access to financing for expansion.
1) The EFT Processing Segment opportunities include physical expansion into target markets, developing value added products or
services, increasing high value DCC and surcharge transactions and efficiently leveraging our portfolio of software solutions. Our
opportunities are dependent on renewing and expanding our card acceptance, ATM and POS management and outsourcing, cash supply
and other commercial agreements with customers and financial institutions. Operational challenges in the EFT Processing Segment
include obtaining and maintaining the required licenses and sponsorship agreements in markets in which we operate and navigating
frequently changing rules imposed by international card organizations, such as Visa® and Mastercard®, that govern ATM interchange
fees, direct access fees and other restrictions. Our profitability is dependent on the laws and regulations that govern DCC transactions,
specifically in the E.U., as well as the laws and regulations of each country that we operate in that may impact the volume of cross-
border and cross-currency transactions. The timing and amount of revenues in the EFT Processing Segment is uncertain and
unpredictable due to inherent limitations in managing our estate of ATMs, which is dependent on contracts that cover large numbers of
ATMs, which are complicated by legal and regulatory considerations of local countries, as well as our customers' decisions whether to
outsource ATMs.
52
2) The epay Segment opportunities include renewing existing and negotiating new agreements in target markets in which we operate,
primarily with mobile operators, digital content providers, financial institutions and retailers. The overall growth rate in the prepaid
mobile phone and digital media content markets, shifts between prepaid and postpaid services, and our market share in those respective
markets will have a significant impact on our ability to maintain and grow the epay Segment revenues. There is significant competition
in these markets that may impact our ability to grow organically and increase the margin we earn and the margin that we pay to retailers.
The profitability of the epay Segment is dependent on our ability to adapt to new technologies that may compete with POS distribution
of digital content and prepaid mobile airtime, as well as our ability to leverage cross-selling opportunities with our EFT and Money
Transfer Segments. The epay Segment opportunities may be impacted by government-imposed restrictions on retailers and/or content
providers with whom we partner in countries in which we have a presence, and corresponding licensure requirements mandated upon
such parties to legally operate in such countries.
3)The Money Transfer Segment opportunities include expanding our portfolio of products and services to new and existing customers
around the globe, which in turn may lead to an increase in transaction volumes. The opportunities to expand are contingent on our ability
to effectively leverage our network of bank accounts for digital money transfer delivery, maintaining our physical agent network, cross
selling opportunities with our EFT and epay segments and our penetration into high growth money transfer corridors. The challenges
inherit in these opportunities include maintaining compliance with all regulatory requirements, maintaining all required licenses,
ensuring the recoverability of funds advanced to agents and the continued reliance on the technologies required to operate our business.
The volume of transactions processed on our network is impacted by shifts in our customer base, which can change rapidly with worker
migration patterns and changes in unbanked populations across the globe. Foreign regulations that impact cross-border migration
patterns and the money transfer markets can significantly impact our ability to grow the number of transactions on our network.
For all segments, our continued expansion may involve additional acquisitions that could divert our resources and management time
and require integration of new assets with our existing networks and services. Our ability to effectively manage our growth has required
us to expand our operating systems and employee base, particularly at the management level, which has added incremental operating
costs. An inability to continue to effectively manage expansion could have a material adverse effect on our business, growth, financial
condition or results of operations. 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.
COVID-19
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. 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 Transfer 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 and decreasing capital expenditures.
SEGMENT REVENUES AND OPERATING INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(in thousands)
EFT Processing
epay
Money Transfer
Total
Revenues
Operating Income (Expense)
2021
591,138 $ 468,726 $
2020
$
2021
(501 ) $
1,011,482
835,517
123,037
1,400,957
3,003,577
1,183,849
2,488,092
119,595
242,131
2020
(66,711 )
96,678
59,709
89,676
Corporate services, eliminations and other
(8,134 )
(5,392 )
(58,115 )
(43,054 )
Total
SUMMARY
$ 2,995,443 $ 2,482,700 $
184,016 $
46,622
53
Our annual consolidated revenues increased by 21% for 2021 compared to 2020. The increase in revenues for 2021 was primarily due
to the easing of COVID-19 related travel restrictions in 2021 compared to 2020, which led to an increase in demand for DCC, domestic
and international surcharge and other value-added services in our EFT Processing Segment as well as growth in the number of money
transfers processed by the core Ria business and the number of transactions processed by our epay subsidiaries.
Our annual consolidated operating income increased by 295% for 2021 compared to 2020. 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.
Impact of changes in foreign currency exchange rates
Our revenues and local expenses are recorded in the functional currencies of our operating entities, and then are translated into U.S.
dollars for reporting purposes; therefore, amounts we earn outside the U.S. are negatively impacted by a stronger U.S. dollar and
positively impacted by a weaker U.S. dollar. 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. 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.
To provide further perspective on the impact of foreign currency exchange rates, the following table shows the changes in values relative
to the U.S. dollar during 2021 and 2020, of the currencies of the countries in which we have our most significant operations:
Currency
Australian dollar
British pound
Canadian dollar
euro
Hungarian forint
Indian rupee
Malaysian ringgit
New Zealand dollar
Polish zloty
Average Translation Rate Year
Ended December 31,
2021
2020
2021 Increase
Percent
$
$
$
$
$
$
$
$
$
0.7513 $
0.6904
1.3755 $
1.2835
0.7979 $
0.7464
1.1830 $
1.1412
0.0033 $
0.0033
0.0135 $
0.0135
0.2415 $
0.2383
0.7073 $
0.6504
0.2595 $
0.2571
9 %
7 %
7 %
4 %
0 %
0 %
1 %
9 %
1 %
54
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 – BY
OPERATING SEGMENT
EFT PROCESSING SEGMENT
The following table summarizes the results of operations for our EFT Processing Segment for the years ended December 31, 2021 and
2020:
(dollar amounts in thousands)
Total revenues
Operating expenses:
Direct operating costs
Salaries and benefits
Selling, general and administrative
Goodwill impairment
Depreciation and amortization
Total operating expenses
Operating loss
Transactions processed (millions)
Active ATMs as of December 31
Average active ATMs
_________________
n/m: not meaningful
Revenues
Year Ended December 31,
2021
591,138 $
2020
468,726 $
$
Year-over-Year Change
Increase
(Decrease)
Percent
Increase
(Decrease)
Amount
122,412
26 %
354,254
302,637
51,617
98,584
47,832
—
90,969
591,639
(501 ) $
4,366
42,713
41,461
91,526
35,388
21,861
84,025
535,437
(66,711 ) $
3,275
37,729
42,126
7,058
12,444
(21,861 )
6,944
56,202
66,210
1,091
4,984
(665 )
$
17 %
8 %
35 %
n/m
8 %
10 %
(99 )%
33 %
13 %
(2 )%
EFT Processing Segment total revenues were $591.1 million for the year ended December 31, 2021, an increase of $122.4 million or
26% 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 December 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 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.
Average monthly revenues per ATM increased to $1,188 for the year ended December 31, 2021, compared to $927 for the same period
in 2020. Revenues per transaction was $0.14 for both years ended December 31, 2021 and 2020. 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
EFT Processing Segment direct operating costs were $354.3 million for the year ended December 31, 2021, an increase of
$51.6 million or 17% compared to the same period in 2020. Direct operating costs primarily consist of site rental fees, cash delivery
costs, cash supply costs, maintenance, insurance, telecommunications, payment scheme processing fees, data center operations-related
personnel, as well as the processing centers’ facility-related costs and other processing center-related expenses and commissions paid
to retail merchants, banks and card processors involved with POS DCC transactions. For the year ended December 31, 2021, the increase
in direct operating costs was primarily due to the increase in transaction volumes, and costs associated with modifying our estate of
55
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
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. Gross
profit as a percentage of revenues (“gross margin”) increased to 40.1% for the year ended December 31, 2021, compared to 35.4% for
the same period in 2020. 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.
Salaries and benefits
Salaries and benefits expenses were $98.6 million for the year ended December 31, 2021, an increase of $7.1 million or 8% compared
to the same period in 2020. 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. As a percentage of revenues, these expenses decreased to 16.7% for the year ended December 31,
2021, compared to 19.5% for the same period in 2020.
Selling, general and administrative
Selling, general and administrative expenses were $47.8 million for the year ended December 31, 2021, an increase of $12.4 million or
35% compared to the same period in 2020. 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.
Depreciation and amortization
Depreciation and amortization expenses were $91.0 million for the year ended December 31, 2021, an increase of $6.9 million or
8% compared to the same period in 2020. 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. As a percentage of revenues, these expenses decreased to 15.4% for the year ended December 31,
2021, compared to 17.9% for the same period in 2020.
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. Operating 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.
56
epay SEGMENT
The following table summarizes the results of operations for our epay Segment for the years ended December 31, 2021 and 2020:
(dollar amounts in thousands)
Total revenues
Operating expenses:
Direct operating costs
Salaries and benefits
Selling, general and administrative
Depreciation and amortization
Total operating expenses
Operating income
Transactions processed (billions)
Revenues
Year Ended December 31,
Year-over-Year Change
2021
2020
Increase
Amount
Increase
Percent
$ 1,011,482 $ 835,517 $ 175,965
21 %
760,891
630,391
130,500
79,451
39,602
8,501
64,769
35,789
7,890
888,445
738,839
14,682
3,813
611
149,606
$
123,037 $
96,678 $
26,359
3.12
2.40
0.72
21 %
23 %
11 %
8 %
20 %
27 %
30 %
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 increased 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.
Revenues per transaction decreased to $0.32 for the year ended December 31, 2021, compared to $0.35 for the same period in 2020.
The decrease in revenues per transaction was primarily driven by the increase in the number of mobile transactions processed in a region
where we generally earn lower revenues per transaction.
Direct operating costs
epay Segment direct operating costs were $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. 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
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.
Salaries and benefits
Salaries and benefits expenses were $79.5 million for the year ended December 31, 2021, an increase of $14.7 million or
23% 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 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. As
57
a percentage of revenues, these expenses increased to 7.9% for the year ended December 31, 2021, compared to 7.8% for the year ended
December 31, 2020.
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. As a percentage of revenues, these expenses decreased to 3.9% for the
year ended December 31, 2021, compared to 4.3% for the same period in 2020.
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 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
0.8% for the year ended December 31, 2021, compared to 0.9% for the same period in 2020.
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% compared 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.
MONEY TRANSFER SEGMENT
The following table summarizes the results of operations for our Money Transfer Segment for the years ended December 31, 2021 and
2020:
(dollar amounts in thousands)
Total revenues
Operating expenses:
Direct operating costs
Acquired contract cost impairment
Salaries and benefits
Selling, general and administrative
Year Ended December 31,
Year-over-Year Change
2021
2020
Increase
(Decrease)
Amount
Increase
(Decrease)
Percent
$ 1,400,957 $ 1,183,849 $ 217,108
18 %
793,218
649,033
144,185
38,634
—
255,816
213,511
157,955
142,161
38,634
42,305
15,794
22 %
n/a
20 %
11 %
Goodwill and acquired intangible assets impairment
—
84,741
(84,741 )
(100 )%
Depreciation and amortization
Total operating expenses
Operating income
35,739
34,694
1,281,362 1,124,140
$
119,595 $
59,709 $
1,045
157,222
59,886
Transactions processed (millions)
135.1
116.5
18.6
3 %
14 %
100 %
16 %
Revenues
Money Transfer Segment total revenues were $1,401.0 million for the year ended December 31, 2021, an increase of $217.1 million or
18% 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 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.
58
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. 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 $15.3 million for the year ended
December 31, 2021, compared to the same period in 2020.
Acquired contract cost impairment
During the fourth quarter of 2021, we identified certain contract assets that had a carrying balance greater than the estimated remaining
cash flows in the contracts and recorded a corresponding $38.6 million non-cash impairment of costs to fulfill a contract. 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
Gross profit was $569.1 million for the year ended December 31, 2021, an increase of $34.3 million or 6% compared to $534.8
million for the same period in 2020. 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.
Salaries and benefits
Salaries and benefits expenses were $255.8 million for the year ended December 31, 2021, an increase of $42.3 million or
20% 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 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. As
a percentage of revenues, these expenses increased to 18.3% for the year ended December 31, 2021, compared to 18.0% for the same
period in 2020.
Selling, general and administrative
Selling, general and administrative expenses were $158.0 million for the year ended December 31, 2021, an increase of $15.8 million or
11% compared to the same period in 2020. 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.
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 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 2.6% for the year ended December 31, 2021, compared to 2.9% for the same period in 2020.
59
Operating income
Money Transfer Segment operating income was $119.6 million for the year ended December 31, 2021, an increase of $59.9 million or
100% compared to the same period in 2020. Operating margin increased to 8.5% for the year ended December 31, 2021, compared to
5.0% for the same period in 2020. Operating income per transaction increased to $0.89 for the year ended December 31, 2021, compared
to $0.51 for the same period in 2020. 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.
CORPORATE SERVICES
The following table summarizes the results of operations for Corporate Services for the years ended December 31, 2021 and 2020:
(dollar amounts in thousands)
Salaries and benefits
Selling, general and administrative
Depreciation and amortization
Total operating expenses
Corporate operating expenses
Year Ended December 31,
Year-over-Year Change
2021
2020
Increase
(Decrease)
Amount
Increase
(Decrease)
Percent
$
50,988 $
34,336 $
16,652
6,582
545
8,306
(1,724 )
412
133
$
58,115 $
43,054 $
15,061
48 %
(21 )%
32 %
35 %
Total Corporate operating expenses were $58.1 million for the year ended December 31, 2021, an increase of $15.1 million or
35%, compared to the same period in 2020. 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.
OTHER EXPENSE, NET
(dollar amounts in thousands)
Interest income
Interest expense
Foreign currency exchange loss, net
Other gains, net
Other expense, net
Foreign currency exchange loss, net
Year Ended December 31,
Year-over-Year Change
2021
2020
(Decrease) Amount
Increase
(Decrease) Percent
$
664 $ 1,040 $
(38,198 )
(36,604 )
(10,866 )
59
(3,756 )
869
$ (48,341 ) $ (38,451 ) $
(376 )
(1,594 )
(7,110 )
(810 )
(9,890 )
(36 )%
4 %
189 %
(93 )%
26 %
Foreign currency exchange activity includes gains and losses on certain foreign currency exchange derivative contracts and the impact
of remeasurement of assets and liabilities denominated in foreign currencies. 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. 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. For example, we make intercompany loans
based in euros from our corporate division, which is composed of U.S. dollar functional currency entities, to certain European entities
that use the euro as the functional currency. As the U.S. dollar strengthens against the euro, foreign currency exchange losses are
recognized by our corporate entities because the number of euros to be received in settlement of the loans decreases in U.S. dollar terms.
Conversely, in this example, in periods where the U.S. dollar weakens, our corporate entities will record foreign currency exchange
gains.
60
We recorded a net foreign currency exchange loss of $10.9 million for the year ended December 31, 2021, compared to a net foreign
currency exchange loss of $3.8 million for the same period in 2020. These realized and unrealized foreign currency exchange losses
reflect the fluctuation in the value of the U.S. dollar against the currencies of the countries in which we operated during the respective
periods.
INCOME TAX EXPENSE
Our effective income tax rates as reported and as adjusted are calculated below:
(dollar amounts in thousands)
Income before income taxes
Income tax expense
Net income
Effective income tax rate
Income before income taxes
Adjust: Goodwill and acquired intangible assets impairment
Adjust: Acquired contract cost impairment
Adjust: Other gains, net
Adjust: Foreign currency exchange (loss) gain, net
Income before income taxes, as adjusted
Income tax expense
Adjust: Income tax benefit attributable to foreign currency exchange loss, net
Income tax expense, as adjusted
Effective income tax rate, as adjusted
Year Ended December 31,
2021
2020
$ 135,675 $
8,171
(65,088 )
(11,475 )
$
70,587 $
(3,304 )
48.0 %
140.4 %
$ 135,675 $
8,171
—
(106,602 )
(38,634 )
59
(10,866 )
—
869
(3,756 )
$ 185,116 $ 117,660
$
(65,088 )
$
(11,475 )
1,716
4,055
$
(66,804 )
$
(15,530 )
36.1 %
13.2 %
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% and 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. 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.
Based on our interpretation of such laws, and considering the evidence of available facts and circumstances and baseline operating
forecasts, we have accrued the estimated income tax effects of certain transactions, business ventures, contract and organizational
structures, and the estimated future reversal of timing differences. Should a taxing jurisdiction change its laws or dispute our conclusions,
or should management become aware of new facts or other evidence that could alter our conclusions, the resulting impact to our estimates
could have a material adverse effect on our results of operations and financial condition.
Income before income taxes, as adjusted, income tax expense, as adjusted and effective income tax rate, as adjusted, are non-U.S. GAAP
financial measures that management believes are useful for understanding why our effective income tax rates are significantly different
than would be expected. These non-U.S. GAAP measures are used by management to conduct and evaluate its business during its regular
review of operating results for the periods presented.
Our total liability for uncertain tax positions under Accounting Standards Codification ("ASC") 740-10-25 and -30 was $41.0 million as
of December 31, 2021. The application of ASC 740-10-25 and -30 requires significant judgment in assessing the outcome of future
income tax examinations and their potential impact on the Company's estimated effective income tax rate and the value of deferred tax
61
assets, such as those related to the Company's net operating loss carryforwards. It is reasonably possible that the balance of gross
unrecognized tax benefits could significantly change within the next twelve months, as a result of the resolution of audit examinations
and expirations of certain statutes of limitations and, accordingly, materially affect our Consolidated Financial Statements. At this time,
it is not possible to estimate the range of change due to the uncertainty of potential outcomes.
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Noncontrolling interests represent the elimination of net income or loss attributable to the minority shareholders' portion of the following
consolidated subsidiaries that are not wholly owned:
Subsidiary
Movilcarga
Euronet China
Euronet Pakistan
Euronet Infinitium Solutions
Percent Owned
Segment - Country
95%
85%
70%
65%
epay - Spain
EFT - China
EFT - Pakistan
EFT - India
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.
TRANSLATION ADJUSTMENT
Translation gains and losses are the result of translating our foreign entities' balance sheets from local functional currency to the U.S.
dollar reporting currency prior to consolidation and are recorded in comprehensive (loss) income. As required by U.S. GAAP, during
this translation process, asset and liability accounts are translated at current foreign currency exchange rates and equity accounts are
translated at historical rates. Historical rates represent the rates in effect when the balances in our equity accounts were originally created.
By using this mix of rates to convert the balance sheet from functional currency to U.S. 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. dollar strengthened compared to key foreign currencies, resulting in translation losses which were recorded in comprehensive (loss)
income. In 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
Working capital
As of December 31, 2021, we had working capital of $1,455.8 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 $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. Our ratio of current assets to current
liabilities was 1.79 and 1.81 at December 31, 2021, and December 31, 2020, respectively.
We require substantial working capital to finance operations. The Money Transfer Segment funds the payout of the majority of our
consumer-to-consumer money transfer services before receiving the benefit of amounts collected from customers by agents. Working
capital needs increase due to weekends and banking holidays. As a result, we may report more or less working capital for the Money
Transfer Segment based solely upon the day on which the reporting period ends. The epay Segment produces positive working capital,
but much of it is restricted in connection with the administration of its customer collection and vendor remittance activities. In our EFT
Processing Segment, we obtain a significant portion of the cash required to operate our ATMs through various cash supply arrangements,
62
the amount of which is not recorded on Euronet's Consolidated Balance Sheets. 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 December 31,
2021, we had approximately $543.4 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 $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.
The Company has $1,260.5 million of unrestricted cash as of December 31, 2021, compared to $1,420.3 million as of December 31,
2020. 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 million. 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.
We had cash, cash equivalents and restricted cash of $2,086.1 million as of December 31, 2021, of which $1,558.2 million was held
outside of the U.S. and is expected to be indefinitely reinvested for continued use in foreign operations. Repatriation of these assets to
the U.S. could have negative tax consequences.
The following table identifies cash and cash equivalents provided by/(used in) our operating, investing and financing activities for the
years ended December 31, 2021 and 2020 (in thousands):
Liquidity
Cash and cash equivalents and restricted cash provided by (used in):
Operating activities
Investing activities
Financing activities
Year Ended December 31,
2021
2020
$
406,576 $
253,505
(98,109 )
(105,531 )
(212,236 )
35,398
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash
(109,637 )
(Decrease) increase in cash and cash equivalents and restricted cash
$
(13,406 ) $
98,757
282,129
Operating cash flow
Cash flows provided by operating activities were $406.6 million for the year ended December 31, 2021, compared to $253.5 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.
Investing activity cash flow
Cash flows used in investing activities were $98.1 million for the year ended December 31, 2021, compared to $105.5 million for the
same period in 2020. 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.
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. We repurchased $229.9 million of common stock during the year ended December 31, 2021, compared to repurchases
of $241.5 million for the same period in 2020. $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
63
operate. We received proceeds of $10.8 million and $18.1 million during the year ended December 31, 2021 and 2020, respectively, for
the issuance of stock in connection with our Stock Incentive Plan.
Other sources of capital
Credit Facility - On October 17, 2018, the Company entered into a $1.0 billion unsecured credit agreement (the "Credit Facility") that
expires on October 17, 2023. 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. dollars. 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.
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. 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. 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”). The Senior Notes accrue interest at a rate of 1.375% per year, payable
annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of December 31, 2021, the Company has
outstanding €600 million ($682.1 million) principal amount of the Senior Notes. In addition, the Company may redeem some or all of
these notes on or after February 22, 2026, at their principal amount plus any accrued and unpaid interest.
Other debt obligations — Certain of our subsidiaries have available credit lines and overdraft facilities to generally supplement short-
term working capital requirements, when necessary. There were $0.9 million outstanding under these other obligation arrangements as
of both December 31, 2021 and December 31, 2020.
Other uses of capital
Capital expenditures and needs — Total capital expenditures for 2021 were $92.2 million. These capital expenditures were primarily
for the purchase of ATMs to expand our IAD network in Europe, the purchase and installation of ATMs in key under-penetrated markets,
the purchase of POS terminals for the epay and Money Transfer Segments, and office, data center and company store computer
equipment and software. Total capital expenditures for 2022 are currently estimated to be approximately $95 million to $100 million.
Contractual lease obligations — The Company has entered into contractually binding operating and finance lease commitments to
operate the business. Operating lease expenses were $55.6 million and $83.1 million for the years ended December 31, 2021 and 2020,
respectively. Finance lease expenses were not material for 2021 or 2020. For additional information on operating and finance lease
obligations, see Note 13, Leases, to the Consolidated Financial Statements.
At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts
available under our Credit Facility and other existing and potential future financings will be sufficient to meet our debt, leasing, and
capital expenditure obligations. If our capital resources are not sufficient to meet these obligations, we will seek to refinance our debt
and/or issue additional equity under terms acceptable to us. However, we can offer no assurances that we will be able to obtain favorable
terms for the refinancing of any of our debt or other obligations or for the issuance of additional equity.
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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, the 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. 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. Currently, we do not believe that inflation will have a significant effect on our results
of operations or financial position. We continually review inflation and the functional currency in each of the countries where we operate.
Off-balance sheet arrangements
We have certain significant off-balance sheet items described in Note 20, Commitments, to the Consolidated Financial Statements. On
occasion, we grant guarantees of the obligations of our subsidiaries and we sometimes enter into agreements with unaffiliated third
parties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective
agreement. Our liability under such indemnification provisions may be subject to time and materiality limitations, monetary caps and
other conditions and defenses. 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 December 31, 2021.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with U.S. GAAP which requires management to make estimates, judgments and
assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Management considers
an accounting policy and estimate to be critical if it requires the use of assumptions that were uncertain at the time the estimate was
made and if changes in the estimate or selection of a different estimate could have a material effect on the Company's financial condition
and results of operations. Our most critical estimates and assumptions are used for computing income taxes, allocating the purchase
price to assets acquired and liabilities assumed in acquisitions, and potential impairment of intangible assets and goodwill. We base our
estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ materially from these estimates. For a summary of all of the Company's significant accounting
policies, see Note 3, Summary of Significant Accounting Policies and Practices, to the accompanying Consolidated Financial
Statements.
Accounting for income taxes
The deferred income tax effects of transactions reported in different periods for financial reporting and income tax return purposes are
recorded under the asset and liability method prescribed under ASC Topic 740, Income Taxes ("ASC 740"). This method gives
consideration to the future tax consequences of deferred income or expense items and immediately recognizes changes in income tax
laws upon enactment. The consolidated statement of operations effect is generally derived from changes in deferred income taxes, net
of valuation allowances, on the balance sheet as measured by differences in the book and tax bases of our assets and liabilities.
We have significant tax loss carryforwards, and other temporary differences, which are recorded as deferred tax assets and liabilities.
Deferred tax assets realizable in future periods are recorded net of a valuation allowance based on an assessment of each entity's, or
group of entities', ability to generate sufficient taxable income within an appropriate period, in a specific tax jurisdiction.
In assessing the recognition of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred
tax assets will be realized. As more fully described in Note 14, Income Taxes, to the Consolidated Financial Statements, gross deferred
tax assets were $270.9 million as of December 31, 2021, partially offset by a valuation allowance of $100.5 million. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. We make judgments and estimates on the scheduled reversal of deferred tax liabilities, historical and
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projected future taxable income in each country in which we operate, and tax planning strategies in making this assessment.
Based upon the level of historical taxable income and current projections for future taxable income over the periods in which the deferred
tax assets are deductible, we believe it is more likely than not that we will realize the benefits of these deductible differences, net of the
existing valuation allowance at December 31, 2021. If we have a history of generating taxable income in a certain country in which we
operate, and baseline forecasts project continued taxable income in this country, we will reduce the valuation allowance for those
deferred tax assets that we expect to realize.
Additionally, we follow the provisions of ASC 740-10-25 and -30 to account for uncertainty in income tax positions. Applying the
standard requires substantial management judgment and use of estimates in determining whether the impact of a tax position is "more
likely than not" of being sustained on audit by the relevant taxing authority. We consider many factors when evaluating and estimating
our tax positions, which may require periodic adjustments and which may not accurately anticipate actual outcomes. It is reasonably
possible that amounts reserved for potential exposure could change significantly as a result of the conclusion of tax examinations and,
accordingly, materially affect our operating results.
Business combinations
In accordance with ASC Topic 805, Business Combinations ("ASC 805"), we allocate the acquisition purchase price of an acquired
entity to the assets acquired, including identifiable intangibles, and liabilities assumed based on their estimated fair values at the date of
acquisition. Management applies various valuation methodologies to these acquired assets and assumed liabilities which often involve
a significant degree of judgment, particularly when liquid markets do not exist for the particular item being valued. Examples of such
items include loans, deposits, identifiable intangible assets and certain other assets and liabilities acquired or assumed in business
combinations. Management uses significant estimates and assumptions to value such items, including, projected cash flows and discount
rates. For larger or more complex acquisitions, we generally obtain third-party valuations to assist us in estimating fair values. The use
of different valuation techniques and assumptions could change the amounts and useful lives assigned to the assets and liabilities
acquired and related amortization expense. During the measurement period, which is not to exceed one year from the acquisition date,
we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion
of the measurement period, any subsequent adjustments are recorded to earnings.
Goodwill and intangible assets
In accordance with ASC Topic 350, Intangibles - Goodwill and Other (“ASC 350”), we evaluate the carrying value of our indefinite-
lived assets, including goodwill, at least annually or more frequently whenever events or changes in circumstances indicate that the asset
may be impaired, or in the case of goodwill, that the fair value of the reporting unit may be less than its carrying amount. Our annual
impairment tests are performed during the fourth quarter and are performed at the reporting unit level. Our annual process for evaluating
goodwill allows us to perform a qualitative assessment for all reporting units, and then perform a quantitative goodwill impairment test
for those reporting units in which it is deemed necessary. The qualitative factors evaluated by the Company include: economic conditions
of the local business environment, overall financial performance, sensitivity analysis from the most recent quantitative test, and other
entity specific factors as deemed appropriate. If we determine a quantitative goodwill impairment test is appropriate, the test involves
comparing the fair value of a reporting unit to its carrying amount, including goodwill, after any long-lived asset impairment charges.
Generally, the fair value is determined using discounted projected future cash flows and market multiple of earnings. If the carrying
amount of the reporting unit exceeds the fair value of the reporting unit, a goodwill impairment loss is recognized in an amount equal
to the excess. Determining the fair value of reporting units requires significant management judgment in estimating future cash flows
and assessing potential market and economic conditions. 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
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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.
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. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows
the assets are expected to generate. If such review indicates that the carrying amount of intangible assets is not recoverable, the carrying
amount of such assets is reduced to its fair value. In addition to the recoverability assessment, we routinely review the remaining
estimated useful lives of our finite-lived intangible assets. If we reduce the estimated useful life assumption for any asset, the remaining
unamortized balance would be amortized over the revised estimated useful life.
As of December 31, 2021, the Consolidated Balance Sheet includes goodwill of $641.6 million and acquired intangible assets, net of
accumulated amortization, of $97.8 million. For the year ended December 31, 2021, no impairment of goodwill or acquired intangible
assets has been identified.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
See Item 8 of Part II, "Financial Statements and Supplementary Data - Note 3 - Summary of Significant Accounting Policies and
Practices.
FORWARD-LOOKING STATEMENTS
This document contains statements that constitute forward-looking statements within the meaning of section 27A of the Securities Act
of 1933 and section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). Generally, the words "believe," "expect,"
"anticipate," "intend," "estimate," "will" and similar expressions identify forward-looking statements. However, the absence of these
words or similar expressions does not mean the statement is not forward-looking. All statements other than statements of historical facts
included in this document are forward-looking statements, including, but not limited to, statements regarding the following:
• our business plans and financing plans and requirements;
• trends affecting our business plans and financing plans and requirements;
• trends affecting our business;
• the adequacy of capital to meet our capital requirements and expansion plans;
• the assumptions underlying our business plans;
• our ability to repay indebtedness;
• our estimated capital expenditures;
• the potential outcome of loss contingencies;
• our expectations regarding the closing of any pending acquisitions;
• business strategy;
• government regulatory action;
• the expected effects of changes in laws or accounting standards;
• the impact of the COVID-19 pandemic, including its variants on our results of operations and financial position;
• technological advances; and
• projected costs and revenues.
Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that
these expectations will prove to be correct.
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Investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties.
Actual results may materially differ from those in the forward-looking statements as a result of various factors, including, but not limited
to, 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 effects in Europe of the U.K.'s departure from the E.U. and
economic conditions in specific countries and regions; technological developments affecting the market for our products and services;
our ability to successfully introduce new products and services; foreign currency exchange rate fluctuations; the effects of any breach
of our computer systems or those of our customers or vendors, including our financial processing networks or those of other third parties;
interruptions in any of our systems or those of our vendors or other third parties; our ability to renew existing contracts at profitable
rates; 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; 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; competition; 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. Any forward-looking statements made in this Form 10-K speak only as of the date of this report. Except as required by
law, we do not intend, and do not undertake, any obligation to update any forward-looking statements to reflect future events or
circumstances after the date of such statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk
As of December 31, 2021, our total debt outstanding, excluding unamortized debt issuance costs, was $1,434.6 million. Of this amount,
$468.2 million, net of debt discounts, or 33% of our total debt obligations, relates to our contingent Convertible Notes that have a fixed
coupon rate. Our $525.0 million outstanding principal amount of Convertible Notes accrue cash interest at a rate of 0.75% of the principal
amount per annum. Based on quoted market prices, as of December 31, 2021, the fair value of our fixed rate Convertible Notes
was $589.3 million, compared to a carrying value of $468.2 million. Interest expense for the Convertible Notes, including accretion and
amortization of deferred debt issuance costs, has a weighted average interest rate of 4.4% annually. Further, as of December 31,
2021, we had $283.4 million outstanding under our Credit Facility, or 20% of our total debt obligations. Additionally, $682.1 million,
or 47% of our total debt obligations, relates to Senior Notes having a fixed coupon rate. Our €600 million outstanding principal amount
of Senior Notes accrue cash interest at a rate of 1.375% of the principal per annum. Based on quoted market prices, as of December 31,
2021, the fair value of our fixed rate Senior Notes was $696.1 million, compared to a carrying value of $682.1 million. The remaining
$0.9 million, or less than 0.1% of our total debt obligations, is related to borrowings by certain subsidiaries to fund, from time to time,
working capital requirements. These arrangements generally are due within one year and accrue interest at variable rates.
Additionally, as of December 31, 2021, we had approximately $7.0 million of finance leases with fixed payment and interest terms that
expire between the years of 2022 and 2026.
Our excess cash is invested in instruments with original maturities of three months or less or in certificates of deposit that may be
withdrawn at any time without penalty; therefore, as investments mature and are reinvested, the amount we earn will increase or decrease
with changes in the underlying short-term interest rates.
Foreign currency exchange rate risk
For the years ended December 31, 2021 and 2020, 73% and 71% of our revenues, respectively, were generated in non-U.S. dollar
countries. We expect to continue generating a significant portion of our revenues in countries with currencies other than the U.S. dollar.
We are particularly vulnerable to fluctuations in exchange rates of the U.S. dollar to the currencies of countries in which we have
significant operations, primarily the euro, British pound, Australian dollar, Polish zloty, Indian rupee, New Zealand dollar, Malaysian
ringgit and Hungarian forint. As of December 31, 2021, we estimate that a 10% fluctuation in these foreign currency exchange rates
would have the combined annualized effect on reported net income and working capital of approximately $40 million to $45 million.
This effect is estimated by applying a 10% adjustment factor to our non-U.S. dollar results from operations, intercompany loans that
generate foreign currency gains or losses and working capital balances that require translation from the respective functional currency
to the U.S. dollar reporting currency.
Additionally, we have other non-current, non-U.S. dollar assets and liabilities on our balance sheet that are translated to the U.S. dollar
during consolidation. These items primarily represent goodwill and intangible assets recorded in connection with acquisitions in
countries other than the U.S. We estimate that a 10% fluctuation in foreign currency exchange rates would have a non-cash impact on
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total comprehensive (loss) income of approximately $165 million to $170 million as a result of the change in value of these items during
translation to the U.S. dollar. For the fluctuations described above, a strengthening U.S. dollar produces a financial loss, while a
weakening U.S. dollar produces a financial gain.
We believe this quantitative measure has inherent limitations and does not take into account any governmental actions or changes in
either customer purchasing patterns or our financing or operating strategies. Because a majority of our revenues and expenses are
incurred in the functional currencies of our international operating entities, the profits we earn in foreign currencies are positively
impacted by a weakening of the U.S. dollar and negatively impacted by a strengthening of the U.S. dollar. Additionally, our debt
obligations are primarily in U.S. dollars; therefore, as foreign currency exchange rates fluctuate, the amount available for repayment of
debt will also increase or decrease.
We use derivatives to minimize our exposures related to changes in foreign currency exchange rates and to facilitate foreign currency
risk management services by writing derivatives to customers. Derivatives are used to manage the overall market risk associated with
foreign currency exchange rates; however, we do not perform the extensive record-keeping required to account for the derivative
transactions as hedges. Due to the relatively short duration of the derivative contracts, we use the derivatives primarily as economic
hedges. Since we do not designate foreign currency derivatives as hedging instruments pursuant to the accounting standards, we record
gains and losses on foreign exchange derivatives in earnings in the period of change.
A majority of our consumer-to-consumer money transfer operations involve receiving and disbursing different currencies, in which we
earn a foreign currency spread based on the difference between buying currency at wholesale exchange rates and selling the currency to
consumers at retail exchange rates. We enter into foreign currency forward and cross-currency swap contracts to minimize exposure
related to fluctuations in foreign currency exchange rates. The changes in fair value related to these contracts are recorded in foreign
currency exchange (loss) gain, net on the Consolidated Statements of Operations. As of December 31, 2021, we had foreign currency
derivative contracts outstanding with a notional value of $222.1 million, primarily in Australian dollars, British pounds, Canadian
dollars, euros and Mexican pesos, that were not designated as hedges and mature within a few days.
For derivative instruments our xe operations write to customers, we aggregate the foreign currency exposure arising from customer
contracts, and hedge the resulting net currency risks by entering into offsetting contracts with established financial institution
counterparties as part of a broader foreign currency portfolio. The changes in fair value related to the total portfolio of positions are
recorded in Revenues on the Consolidated Statements of Operations. As of December 31, 2021, we held foreign currency derivative
contracts outstanding with a notional value of $1.0 billion, primarily in U.S. dollars, euros, British pounds, Australian dollars and New
Zealand dollars, that were not designated as hedges and for which the majority mature within the next twelve months.
We use longer-term foreign currency forward contracts to mitigate risks associated with changes in foreign currency exchange rates on
certain foreign currency denominated other asset and liability positions. As of December 31, 2021, the Company had foreign currency
forward contracts outstanding with a notional value of $216.1 million, primarily in euros.
See Note 12, Derivative Instruments and Hedging Activities to our Consolidated Financial Statements for additional information.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Report of Independent Registered Public Accounting Firm……………………………………………………..……………...
Consolidated Financial Statements………………………………………………………………………………………………
Consolidated Balance Sheets…………………………………………………………………………………………………….
Consolidated Statements of Operations………………………………………………………………………………………….
Consolidated Statements of Comprehensive (Loss) Income…………………………………………………………………….
Consolidated Statements of Changes in Equity………………………………………………………………………………….
Consolidated Statements of Cash Flows…………………………………………………………………………………………
Notes to the Consolidated Financial Statements………………………………………………………………………………...
(1) Organization………………………………………………………………………………………………………………..
(2) Basis of Preparation………………………………………………………………………………………………………..
(3) Summary of Significant Accounting Policies and Practices……………………………………………………………….
(4) Settlement Assets and Obligations…………………………………………………………………………………………
(5) Stockholders' Equity……………………………………………………………………………………………………….
(6) Acquisitions………………………………………………………………………………………………………………..
(7) Restricted Cash…………………………………………………………………………………………………………….
(8) Property and Equipment, Net………………………………………………………………………………………………
(9) Goodwill and Acquired Intangible Assets, Net……………………………………………………………………………
(10) Accrued Expenses and Other Current Liabilities…………………………………………………………………………
(11) Debt Obligations………………………………………………………………………………………………………….
(12) Derivative Instruments and Hedging Activities…………………………………………………………………………..
(13) Leases……………………………………………………………………………………………………………………..
(14) Income Taxes……………………………………………………………………………………………………………..
(15) Valuation and Qualifying Accounts………………………………………………………………………………………
(16) Stock Plans………………………………………………………………………………………………………………..
(17) Business Segment Information…………………………………………………………………………………………...
(18) Financial Instruments and Fair Value Measurements…………………………………………………………………….
(19) Litigation and Contingencies……………………………………………………………………………………………..
(20) Commitments……………………………………………………………………………………………………………..
(21) Related Party Transactions………………………………………………………………………………………………..
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Euronet Worldwide, Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Euronet Worldwide, Inc. and subsidiaries (the Company) as of
December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and
cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated
financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021 based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report On Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s
consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are
a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matters or on the
accounts or disclosures to which it relates.
Sufficiency of audit evidence over revenue
As discussed in Note 3 to the consolidated financial statements, the Company earned $3.0 billion of revenue in 2021. The Company
earned revenue by payment and transaction processing and distribution solutions to financial institutions, retailers, service
providers and individual consumers (collectively services). The services were provided to customers in approximately 175
countries through 66 different business offices in 43 countries within 3 different reportable operating segments.
We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. The company’s
geographical dispersion of services worldwide, amongst various business lines required especially subjective auditor judgment in
evaluating the sufficiency of audit evidence over revenue. Further, our audit team consisted of auditors located in various countries
worldwide. This required especially challenging auditor judgment in the level of audit procedures and supervision applied at each
country.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to
determine the nature and extent of procedures to be performed over revenue, including the determination of locations at which
those procedures were to be performed. At each Company location selected, we:
— evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s revenue process,
including controls over the accurate recording of revenue amounts
— assessed the training and experience of the auditors on our audit team that were in countries other than the United States
— tested a sample of individual revenue transactions by comparing amounts recognized by the Company to relevant contracts and
or payment and transaction support.
We evaluated the sufficiency of audit evidence obtained over revenue by assessing the results of procedures performed, including
the appropriateness of such evidence.
/s/ KPMG LLP
We have served as the Company's auditor since 2003.
Kansas City, Missouri
February 22, 2022
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CONSOLIDATED FINANCIAL STATEMENTS
EURONET WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
ATM cash
Restricted cash
Settlement assets
Trade accounts receivable, net of credit loss allowance of $4,469 and $5,926
Prepaid expenses and other current assets
Total current assets
Operating right of use lease assets
Property and equipment, net of accumulated depreciation of $532,631 and $490,429
Goodwill
Acquired intangible assets, net of accumulated amortization of $185,054 and $175,210
Other assets, net of accumulated amortization of $62,349 and $55,710
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Settlement obligations
Trade accounts payable
Accrued expenses and other current liabilities
Current portion of operating lease obligations
Short-term debt obligations and current maturities of long-term debt obligations
Income taxes payable
Deferred revenue
Total current liabilities
Debt obligations, net of current portion
Operating lease obligations, net of current portion
Deferred income taxes
Other long-term liabilities
Total liabilities
Equity:
Euronet Worldwide, Inc. stockholders' equity:
December 31,
2021
2020
$ 1,260,466 $ 1,420,255
543,422
411,054
3,693
3,334
1,102,389
1,140,875
203,010
117,517
195,443
272,900
3,308,423
3,365,935
161,494
162,074
345,381
378,441
641,605
665,821
97,793
121,883
189,580
232,557
$ 4,744,276 $ 4,926,711
$ 1,102,389 $ 1,140,875
193,529
147,593
367,692
404,021
52,136
52,436
821
59,037
77,037
797
36,359
73,360
1,852,641
1,855,441
1,420,085
1,437,589
111,355
106,502
46,505
58,166
37,875
43,401
3,488,752
3,480,808
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; 0 issued
—
—
Common Stock, $0.02 par value. 90,000,000 shares authorized; shares issued 63,779,009 and 63,366,010
1,275
1,267
Additional paid-in capital
Treasury stock, at cost, shares issued 12,631,125 and 10,631,961
Retained earnings
Accumulated other comprehensive loss
Total Euronet Worldwide, Inc. stockholders' equity
Noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to the Consolidated Financial Statements.
1,274,118
1,228,446
(931,212 )
(703,032 )
1,083,882
1,013,155
(172,582 )
(94,214 )
1,255,481
1,445,622
43
281
1,255,524
1,445,903
$ 4,744,276 $ 4,926,711
73
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Revenues
Operating expenses:
Direct operating costs
Acquired contract cost impairment
Salaries and benefits
Selling, general and administrative
Goodwill and acquired intangible assets impairment
Depreciation and amortization
Total operating expenses
Operating income
Other income (expense):
Interest income
Interest expense
Foreign currency exchange (loss) gain, net
Other gains (losses), net
Other expense, net
Income before income taxes
Income tax expense
Net income (loss)
Less: Net loss (income) attributable to noncontrolling interests
Net income (loss) attributable to Euronet Worldwide, Inc.
Earnings (loss) per share attributable to Euronet Worldwide, Inc. stockholders:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
Year Ended December 31,
2021
2020
2019
$ 2,995,443 $ 2,482,700 $ 2,750,109
1,900,267 1,576,699 1,556,483
38,634
—
—
484,839
404,142
394,744
251,933
221,614
211,944
—
106,602
—
127,021
135,754
111,744
2,811,427 2,436,078 2,274,915
475,194
184,016
46,622
664
1,040
1,969
(38,198 )
(36,604 )
(10,866 )
59
(48,341 )
135,675
(65,088 )
70,587
140
(3,756 )
869
(38,451 )
8,171
(11,475 )
(3,304 )
(36,237 )
2,701
(9,820 )
(41,387 )
433,807
(87,112 )
346,695
(95 )
54
$ 70,727 $
(3,399 ) $ 346,749
$
$
1.34 $
1.32 $
(0.06 ) $
(0.06 ) $
6.49
6.31
52,585,674 52,659,551 53,449,834
53,529,576 52,659,551 54,913,887
See accompanying notes to the Consolidated Financial Statements.
74
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
Net income (loss)
Other comprehensive (loss) income
Translation adjustment
Comprehensive (loss) income
Comprehensive loss (income) attributable to noncontrolling interests
Year Ended December 31,
2021
$ 70,587 $
2020
2019
(3,304 ) $ 346,695
(78,466 )
(7,879 )
238
70,794
67,490 332,801
(13,894 )
(213 )
101
Comprehensive (loss) income attributable to Euronet Worldwide, Inc.
$
(7,641 ) $ 67,277 $ 332,902
See accompanying notes to the Consolidated Financial Statements.
75
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands, except share data)
Balance as of December 31, 2018
Net income (loss)
Other comprehensive loss
Stock issued under employee stock plans
Share-based compensation
Issuance of convertible notes, net of tax
Repurchase of shares
Number
of Shares
Outstanding
(Common
and
Treasury)
Common
Stock
Additional
Paid-in
Capital
Treasury
Stock
51,819,998 $
1,198 $ 1,104,264 $ (391,551 )
405,617
8
13,216
(1,277 )
21,439
71,659
(493,010 )
(70,876 )
Redemptions and conversions of convertible notes, net of tax
2,488,249
50
(20,517 )
Other
Balance as of December 31, 2019
Net (loss) income
Other comprehensive income
Stock issued under employee stock plans
Share-based compensation
Repurchase of shares
Balance as of December 31, 2020
Net income (loss)
Other comprehensive loss
54,220,854
(3 )
1,256 1,190,058
(463,704 )
608,878
11
16,437
435
21,951
(2,095,683 )
52,734,049
1,267 1,228,446
(239,763 )
(703,032 )
Stock issued under employee stock plans
413,835
8
9,132
(416 )
Share-based compensation
Repurchase of shares
Balance as of December 31, 2021
36,540
(2,000,000 )
51,147,884 $
(227,764 )
1,275 $ 1,274,118 $ (931,212 )
See accompanying notes to the Consolidated Financial Statements.
76
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
(in thousands)
Balance as of December 31, 2018
Net income (loss)
Other comprehensive loss
Stock issued under employee stock plans
Share-based compensation
Issuance of convertible notes, net of tax
Repurchase of shares
Redemptions and conversions of convertible notes, net of tax
Other
Balance as of December 31, 2019
Net (loss) income
Other comprehensive income
Stock issued under employee stock plans
Share-based compensation
Repurchase of shares
Balance as of December 31, 2020
Net income (loss)
Other comprehensive loss
Stock issued under employee stock plans
Share-based compensation
Repurchase of shares
Balance as of December 31, 2021
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Noncontrolling
Interests
Total
$ 669,805 $
(151,043 ) $
169 $ 1,232,842
346,749
(13,847 )
(54 )
346,695
(47 )
(13,894 )
1,016,554
(164,890 )
(3,399 )
70,676
68
95
118
11,947
21,439
71,659
(70,876 )
(20,467 )
(3 )
1,579,342
(3,304 )
70,794
16,883
21,951
1,013,155
(94,214 )
70,727
(78,368 )
$ 1,083,882 $
(172,582 ) $
(239,763 )
281 1,445,903
(140 )
70,587
(98 )
(78,466 )
8,724
36,540
(227,764 )
43 $ 1,255,524
See accompanying notes to the Consolidated Financial Statements.
77
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
Share-based compensation
Unrealized foreign exchange loss (gain), net
Non-cash impairment of goodwill and acquired intangible assets
Deferred income taxes
Loss on early retirement of debt
Year Ended December 31,
2021
2020
2019
$ 70,587 $
(3,304 ) $ 346,695
135,754
127,021
111,744
36,540
10,866
—
21,951
3,756
106,602
(2,255 )
(23,946 )
—
—
21,439
(2,701 )
—
17,113
9,831
Accretion of convertible debt discount and amortization of debt issuance costs
20,239
18,924
17,088
Changes in working capital, net of amounts acquired:
Income taxes payable, net
Trade accounts receivable
Prepaid expenses and other current assets
Trade accounts payable
Deferred revenue
Accrued expenses and other current liabilities
Changes in non-current assets and liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Acquisitions, net of cash acquired
Purchases of property and equipment
Purchases of other long-term assets
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of shares
Repurchase of shares
Borrowings from revolving credit agreements
Repayments of revolving credit agreements
Repayments of long-term debt obligations
Net borrowings (repayments) from short-term debt obligations
Proceeds from long-term debt obligations
Debt issuance costs
Other, net
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents and restricted cash
(Decrease) increase in cash and cash equivalents and restricted cash
23,912
(107,478 )
93,475
(33,218 )
7,472
93,040
57,642
406,576
(16,823 )
63,629
(168,256 )
13,177
(87,882 )
(68,945 )
88,687
53,550
132
10,945
98,459
118,618
(94,299 )
(25,212 )
253,505 504,488
—
(92,207)
(7,752)
1,850
(98,109)
(1,100 )
(94,187 )
(97,628 )
(131,287 )
(7,770 )
(7,274 )
967
(105,531 )
3,721
(229,027 )
10,848
(229,877 )
18,101
(241,518 )
14,979
(74,456 )
5,074,000 3,113,800 2,498,298
(5,061,000 ) (2,843,400 ) (2,714,203 )
—
52
—
—
(6,259 )
(212,236 )
(109,637 )
(13,406 )
—
(5,157 )
(446,702 )
(32,091 )
(17,947 )
— 1,194,900
—
(6,428 )
35,398
98,757
282,129
(6,480 )
416,298
(5,332 )
686,427
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents and restricted cash at end of period
2,099,508 1,817,379 1,130,952
$ 2,086,102 $ 2,099,508 $ 1,817,379
78
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
Year Ended December 31,
Supplemental Cash Flow Disclosures:
Interest paid during the period
Income taxes paid during the period
2021
2020
$ 18,503 $ 17,319 $ 13,125
2019
$ 48,688 $ 60,170 $ 74,086
See accompanying notes to the Consolidated Financial Statements.
79
EURONET WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
Euronet Worldwide, Inc. (the "Company" or "Euronet") was established as a Delaware corporation on December 13, 1996, and
succeeded Euronet Holding N.V. as the group holding company, which was founded and established in 1994. Euronet is a leading
electronic payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions,
retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive ATM, POS, card
outsourcing, card issuing and merchant acquiring services, electronic distribution of prepaid mobile airtime and other electronic payment
products, and international payment services.
(2) BASIS OF PREPARATION
The Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United
States ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Consolidated
Financial Statements include the accounts of Euronet and its wholly owned and majority owned subsidiaries and all significant
intercompany balances and transactions have been eliminated. Euronet's investments in companies that it does not control, but has the
ability to significantly influence, are accounted for under the equity method. Euronet has no variable interest entities. Results from
operations related to entities acquired during the periods covered by the Consolidated Financial Statements are reflected from the
effective date of acquisition.
The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires that management make a number of
estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and
the reported amounts of revenues and expenses. Significant items subject to such estimates and assumptions include computing income
taxes, contingent purchase price consideration, estimating the useful lives and potential impairment of long-lived assets and goodwill,
as well as allocating the purchase price to assets acquired and liabilities assumed in acquisitions and revenue recognition. Actual results
could differ from those estimates.
Seasonality
Euronet’s EFT Processing Segment normally experiences its heaviest demand for DCC services during the third quarter of the fiscal
year, normally coinciding with the tourism season. Additionally, the EFT Processing and epay Segments are normally impacted by
seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower
levels following the holiday season. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet
usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year,
coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter
of the year.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
Foreign currencies
Assets and liabilities denominated in currencies other than the functional currency of a subsidiary are remeasured at rates of exchange
on the balance sheet date. Resulting gains and losses on foreign currency transactions are included in the Consolidated Statements of
Operations. 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.
The financial statements of foreign subsidiaries where the functional currency is not the U.S. dollar are translated to U.S. dollars using
(i) exchange rates in effect at period end for assets and liabilities, and (ii) weighted average exchange rates during the period for revenues
and expenses. Adjustments resulting from translation of such financial statements are reflected in accumulated other comprehensive
(loss) income as a separate component of consolidated equity.
Cash equivalents
The Company considers all highly liquid investments, with an original maturity of three months or less, and certificates of deposit,
which may be withdrawn at any time at the discretion of the Company without penalty, to be cash equivalents.
80
ATM cash
ATM cash represents cash within the ATM network either included within ATMs, within dedicated accounts, or in-transit to ATMs.
Settlement assets and obligations
Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled
prepaid transactions. See Note 4, Settlement Assets and Obligations, to the Consolidated Financial Statements for further discussion on
settlement assets and obligations.
Property and equipment
Property and equipment are stated at cost, less accumulated depreciation. Property and equipment acquired in acquisitions have been
recorded at estimated fair values as of the acquisition date.
Depreciation is generally calculated using the straight-line method over the estimated useful lives of the respective assets.
Depreciation and amortization rates are generally as follows:
ATMs or ATM upgrades
Computers and software
POS terminals
Vehicles and office equipment
Leasehold improvements
Goodwill and other intangible assets
5 - 7 years
3 - 5 years
3 - 5 years
3 - 10 years
Over the lesser of the lease term or estimated useful life
Goodwill - The Company accounts for goodwill and other intangible assets in accordance with Financial Accounting Standards Board
("FASB") Accounting Standards Codification ("ASC") Topic 350, Intangibles - Goodwill and Other ("ASC 350"). In accordance with
the requirements of ASC 350 the Company tests for impairment on an annual basis in the fourth quarter and whenever events or
circumstances dictate. Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an
operating segment or one level below an operating segment.
ASC 350 provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances
leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its
carrying amount. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the
entity is then required to perform the existing quantitative impairment test (described below), otherwise no further analysis is required.
An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. The
Company has a policy for its annual review of goodwill to perform the qualitative assessment for all reporting units not subjected directly
to the quantitative impairment test.
Under the qualitative assessment, various events and circumstances (or factors) that would affect the estimated fair value of a reporting
unit are identified (similar to impairment indicators). These factors are then classified by the type of impact they would have on the
estimated fair value using positive, neutral, and adverse categories based on current business conditions. Furthermore, the Company
considers the results of the most recent quantitative impairment test completed for a reporting unit and compares, among other factors,
the weighted average cost of capital ("WACC") between the current and prior years for each reporting unit.
Under the quantitative impairment test, the evaluation of impairment involves comparing the current fair value of each reporting unit to
its carrying value, including goodwill. The Company uses weighted results from the income approach or the discounted cash flow model
("DCF model") and guideline public company method ("Market Approach model") to estimate the current fair value of its reporting
units when testing for impairment, as management believes forecasted cash flows and EBITDA are the best indicators of such fair value.
A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows,
including sales volumes, gross margins, tax rates, capital spending, discount rates and working capital changes. Most of these
assumptions vary significantly among the reporting units. Significant assumptions in the Market Approach model are projected
EBITDA, selected market multiple, and the estimated control premium. If the carrying value of goodwill exceeds its fair value, an
impairment loss equal to such excess would be recognized. 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.
81
Other Intangible Assets - In accordance with ASC 350, intangible assets with finite lives are amortized over their estimated useful lives.
Unless otherwise noted, amortization is calculated using the straight-line method over the estimated useful lives of the assets as follows:
Non-compete agreements
Trademarks and trade names
Software
Customer relationships
2 - 5 years
2 - 20 years
3 - 10 years
6 - 20 years
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. If such events or changes in circumstances are present, a loss is recognized if the carrying
value of the asset is in excess of the sum of the undiscounted cash flows expected to result from the use of the asset and its eventual
disposition. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.
See Note 9, Goodwill and Acquired Intangible Assets, Net, to the Consolidated Financial Statements for additional information regarding
the impairment of goodwill and other intangible assets.
Other assets
Other assets include capitalized software development costs and capitalized payments for new or renewed contracts. Euronet capitalizes
initial payments for new or renewed contracts to the extent recoverable through future operations, contractual minimums and/or penalties
in the case of early termination. The Company's accounting policy is to limit the amount of capitalized costs for a given contract to the
lesser of the estimated ongoing net future cash flows related to the contract or the termination fees the Company would receive in the
event of early termination of the contract by the customer.
ASC Topic 340, Other Assets and Deferred Costs ("ASC 340") requires the deferral of incremental costs to fulfill customer contracts,
known as contract assets, which are then amortized to expense as part of direct operating costs over the respective periods of expected
benefit. Deferred contract costs are reported on our balance sheet within current or non-current other assets based on the expected life
of the related contract. At December 31, 2021 and 2020, we had $96.4 million and $143.5 million, respectively, of deferred contract
costs. For the years ended December 31, 2021, 2020 and 2019, we had $33.3 million, $17.2 million and $6.9 million of amortization
related to these costs, respectively. On a quarterly basis we evaluate the carrying amount of contract assets recognized to determine if
there are contracts that may have a carrying amount in excess of the remaining future consideration to be received from the contract.
During the fourth quarter of 2021, we identified certain contract assets that had carrying balances greater than the estimated remaining
cash flows in the contracts and recorded a corresponding $38.6 million non-cash impairment. The impairment charge is the result of
lower-than-expected customer transaction volume related to these specific contracts, stemming primarily from COVID-19 related
disruptions. This non-cash impairment charge is included in the Money Transfer Segment.
Convertible notes
The Company accounts for its convertible debt instruments that may be settled in cash upon conversion in accordance with ASC Topic
470, Debt ("ASC 470"), which requires the proceeds from the issuance of such convertible debt instruments to be allocated between
debt and equity components so that debt is discounted to reflect the Company's nonconvertible debt borrowing rate. Further, the
Company applies ASC 470-20-35-13, which requires the debt discount to be amortized over the period the convertible debt is expected
to be outstanding as additional non-cash interest expense.
Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
In accordance with ASC Topic 740, Income Taxes ("ASC 740"), the Company's policy is to record estimated interest and penalties
related to the underpayment of income taxes as income tax expense in the Consolidated Statements of Operations. See Note 14, Income
Taxes, to the Consolidated Financial Statements for further discussion regarding these provisions.
82
Presentation of taxes collected and remitted to governmental authorities
The Company presents taxes collected and remitted to governmental authorities on a net basis in the accompanying Consolidated
Statements of Operations.
Fair value measurements
The Company applies the provisions of ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), regarding fair value
measurements for assets and liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value and requires certain
disclosures about fair value measurements. The provisions apply whenever other accounting pronouncements require or permit fair
value measurements. See Note 18, Financial Instruments and Fair Value Measurements, to the Consolidated Financial Statements for
the required fair value disclosures.
Accounting for derivative instruments and hedging activities
The Company accounts for derivative instruments and hedging activities in accordance with ASC Topic 815, Derivatives and Hedging
("ASC 815"), which requires that all derivative instruments be recognized as either assets or liabilities on the balance sheet at fair value.
Primarily in the Money Transfer Segment, the Company enters into foreign currency derivative contracts, mainly forward contracts, to
offset foreign currency exposure related to money transfer settlement assets and liabilities in currencies other than the U.S. dollar,
derivative contracts written to its customers arising from its cross-currency money transfer services and certain assets and liability
positions denominated in currencies other than the U.S. dollar. These contracts are considered derivative instruments under the
provisions of ASC 815; however, the Company does not designate such instruments as hedges for accounting purposes. Accordingly,
changes in the value of these contracts are recognized immediately as a component of foreign currency exchange gain (loss), net in the
Consolidated Statements of Operations.
Cash flows resulting from derivative instruments are included in operating activities in the Company's Consolidated Statements of Cash
Flows. The Company enters into derivative instruments with highly credit-worthy financial institutions and does not use derivative
instruments for trading or speculative purposes. See Note 12, Derivative Instruments and Hedging Activities, to the Consolidated
Financial Statements for further discussion of derivative instruments.
Share-based compensation
The Company follows the provisions of ASC Topic 718, Compensation - Stock Compensation ("ASC 718"), for equity classified awards,
which requires the determination of the fair value of the share-based compensation at the grant date and subsequent recognition of the
related expense over the period in which the share-based compensation is earned ("requisite service period").
The amount of future compensation expense related to awards of nonvested shares or nonvested share units ("restricted stock") is based
on the market price for Euronet Common Stock at the grant date. The grant date is the date at which all key terms and conditions of the
grant have been determined and the Company becomes contingently obligated to transfer equity to the employee who renders the
requisite service, generally the date at which grants are approved by the Company's Board of Directors or Compensation Committee
thereof. Share-based compensation expense for awards with only service conditions is generally recognized as expense on a "straight-
line" basis over the requisite service period. For awards that vest based on achieving periodic performance conditions, expense is
recognized on a "graded attribution method." The graded attribution method results in expense recognition on a straight-line basis over
the requisite service period for each separately vesting portion of an award. The Company has elected to use the "with and without
method" when calculating the income tax benefit associated with its share-based payment arrangements. See Note 16, Stock Plans, for
further disclosure.
Revenue recognition
The Company recognizes revenue when control of the promised goods or services is transferred to our customers, in an amount that
reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Sales and usage-based
taxes are excluded from revenues. A description of the major components of revenue by business segment is as follows:
EFT Processing - Revenues in the EFT Processing Segment are primarily derived from transaction and management fees and foreign
currency exchange margin from owned and outsourced ATM, POS and card processing networks and from the sale of EFT software
solutions for electronic payment and transaction delivery systems, and fees or margin earned from value added services, including
dynamic currency conversion and domestic and international surcharge.
Transaction-based fees include charges for cash withdrawals, debit or credit card transactions, balance inquiries, transactions not
completed because the relevant card issuer does not give authorization and prepaid mobile airtime recharges. Outsourcing services are
83
generally billed on the basis of a fixed monthly fee per ATM, plus a transaction-based fee. Transaction-based fees are recognized at the
time the transactions are processed and outsourcing management fees are recognized ratably over the contract period.
Certain of the Company's non-cancelable customer contracts provide for the receipt of up-front fees from the customer and/or decreasing
or increasing fee schedules over the agreement term for substantially the same level of services to be provided by the Company. The
Company recognizes revenue under these contracts based on proportional performance of services over the term of the contract. This
generally results in "straight-line" (i.e., consistent value per period) revenue recognition of the contracts' total cash flows, including any
up-front payment received from the customer, which is recorded as deferred revenue upon receipt.
epay - Revenue generated in the epay Segment is primarily derived from commissions or processing fees associated with distribution
and/or processing of prepaid mobile airtime and digital media products. These fees and commissions are received from mobile operators,
content vendors or distributors or from retailers. Commissions are recognized as revenue during the period in which the Company
provides the service. The portion of the commission that is paid to retailers is generally recorded as a direct operating cost. In selling
certain products, the Company is the principle obligor in the arrangements; accordingly, the gross sales value of the products is recorded
as revenue and the purchase cost as direct operating cost. Transactions are processed through a network of POS terminals and direct
connections to the electronic payment systems of retailers. Transaction processing fees are recognized at the time the transactions are
processed.
Money Transfer - Revenues for money transfer and other services represent a transaction fee in addition to a margin earned from
purchasing currency at wholesale exchange rates and selling the currency to customers at retail exchange rates. Revenues and the
associated direct operating cost are recognized at the time the transaction is processed. The Company has origination and distribution
agents in place, which each earn a fee for the respective service. These fees are reflected as direct operating costs.
Revenues
Deferred Revenues - The Company records deferred revenues when cash payments are received or due in advance of its performance.
The increase in the deferred revenue balance for the year ended December 31, 2021, is primarily driven by $58.2 million of cash
payments received in the current year for which the Company has not yet satisfied the performance obligations, partially offset
by $54.5 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2020.
Disaggregation of Revenues - The following table presents the Company's revenues disaggregated by segment and region. The Company
believes disaggregation by segment and region best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows
are affected by economic factors. The disaggregation of revenues by segment and region is based on management's assessment of
segment performance together with allocation of financial resources, both capital and operating support costs, on a segment and regional
level. Both segments and regions benefit from synergies achieved through concentration of operations and are influenced by macro-
economic, regulatory and political factors in the respective segment and region. The Company recognizes foreign exchange revenues
from derivative instruments in its xe operations in accordance with ASC Topic 815 and not ASC Topic 606. These revenues are not
significant to the Company's consolidated revenues and are included in the following tables.
84
(in thousands)
Europe
North America
Asia Pacific
Other
Eliminations
Total
(in thousands)
Europe
North America
Asia Pacific
Other
Eliminations
Total
(in thousands)
Europe
North America
Asia Pacific
Other
Eliminations
Total
For the Year Ended December 31, 2021
EFT
Processing
epay
Money
Transfer
Total
$
420,181 $
669,297 $
576,640 $ 1,666,118
63,368
139,759
667,738
870,865
107,020
158,122
105,086
370,228
569
44,304
51,493
96,366
—
(8,134)
591,138 $ 1,011,482 $ 1,400,957 $ 2,995,443
—
—
$
For the Year Ended December 31, 2020
EFT
Processing
epay
Money
Transfer
Total
$
313,953 $ 561,514 $ 449,299 $ 1,324,766
56,447
144,613
577,845
778,905
98,313
100,917
124,413
323,643
13
—
28,473
32,292
60,778
—
—
(5,392 )
$
468,726 $ 835,517 $ 1,183,849 $ 2,482,700
For the Year Ended December 31, 2019
EFT
Processing
epay
Money
Transfer
Total
$
724,163 $ 524,907 $ 373,302 $ 1,622,372
35,461
151,016
573,016
759,493
129,060
76,491
124,934
330,485
28
—
16,915
24,974
41,917
—
—
(4,158 )
$
888,712 $ 769,329 $ 1,096,226 $ 2,750,109
Recently issued accounting pronouncements
In August 2020, the FASB issued ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity's Own
Equity" which simplifies the accounting for convertible instruments by eliminating certain accounting models when the conversion
features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial
premiums accounted for as paid-in-capital. Under this ASU, certain debt instruments with embedded conversion features will be
accounted for as a single liability measured at its amortized cost. Additionally, this ASU eliminates the treasury stock method to calculate
diluted earnings per share for convertible instruments. The new guidance is effective for annual periods beginning after December 15,
2021, including interim periods within those fiscal years. We plan to adopt the new standard during the first quarter of 2022 using the
modified retrospective approach and expect to record a $99.7 million decrease to additional paid-in capital, a $56.8 million decrease in
debt discounts and a $42.9 million increase in retained earnings.
(4) SETTLEMENT ASSETS AND OBLIGATIONS
Settlement assets represent funds received or to be received from agents for unsettled money transfers and from merchants for unsettled
prepaid transactions. The Company records corresponding settlement obligations relating to accounts payable. Settlement assets consist
of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. The settlement cash
held at the Company is primarily generated from the monies remitted by consumers through Company agents and financial institutions
in payment of the face value of the payment service or foreign currency purchased and the related fees charged to purchase the currency.
85
The Company uses its cash and cash equivalents to pay the face value of the payment service product upon presentation by the recipient.
Cash received by Company agents and merchants generally becomes available to the Company within two weeks after initial receipt by
the business partner. Receivables from business partners represent funds collected by such business partners that are in transit to the
Company.
Settlement obligations consist of accrued expenses for money transfers, content providers, and EFT customer deposits and accounts
payable to agents and content providers. Money transfer accrued expenses represent amounts to be paid to transferees when they request
funds. Most agents typically settle with transferees first then obtain reimbursement from the Company. Money order accrued expenses
represent amounts not yet presented for payment. Due to the agent funding and settlement process, accrued expenses to agents represent
amounts due to agents for money transfers that have not been settled with transferees.
(in thousands)
Settlement assets:
Settlement cash and cash equivalents
Settlement restricted cash
Account receivables, net of credit loss allowance of $27,341 and $35,800
Prepaid expenses and other current assets
Total settlement assets
Settlement obligations:
Trade account payables
Accrued expenses and other current liabilities
Total settlement obligations
As of December 31,
2021
As of December 31,
2020
$
203,624 $
74,897
619,738
204,130
188,191
76,674
641,955
234,055
$
$
$
1,102,389 $
1,140,875
461,135 $
641,254
571,175
569,700
1,102,389 $
1,140,875
The table below reconciles cash and cash equivalents, restricted cash, ATM cash, settlement cash and cash equivalents, and settlement
restricted cash as presented within "Cash and cash equivalents and restricted cash" in the Consolidated Statement of Cash Flows.
(in thousands)
Cash and cash equivalents
Restricted cash
ATM cash
Settlement cash and cash equivalents
Settlement restricted cash
As of
December 31,
2021
December 31,
2020
December 31,
2019
$ 1,260,466 $ 1,420,255 $
786,081
3,693
543,422
203,624
74,897
3,334
411,054
188,191
76,674
34,301
665,641
282,188
49,168
Cash and cash equivalents and restricted cash at end of period
$ 2,086,102 $ 2,099,508 $ 1,817,379
(5) STOCKHOLDER’S EQUITY
Earnings Per Share
Basic earnings per share has been computed by dividing earnings available to common stockholders by the weighted average number
of common shares outstanding during the respective period. Diluted earnings per share has been computed by dividing earnings available
to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for the potential
dilution of options to purchase the Company's Common Stock, assumed vesting of restricted stock and the assumed conversion of the
Company's convertible debt.
86
The following table provides the computation of diluted weighted average number of common shares outstanding:
Year Ended December 31,
2021
2020
2019
Computation of diluted weighted average shares outstanding:
Basic weighted average shares outstanding
52,585,674 52,659,551 53,449,834
Incremental shares from assumed exercise of stock options and vesting of restricted
stock
Diluted weighted average shares outstanding
943,902
— 1,464,053
53,529,576 52,659,551 54,913,887
The table includes all stock options and restricted stock that are dilutive to the Company's weighted average common shares outstanding
during the period. The calculation of diluted earnings per share excludes stock options or shares of restricted stock that are anti-dilutive
to the Company's weighted average common shares outstanding for the years ended December 31, 2021, 2020 and 2019 of
approximately 1,668,000, 2,073,000 and 380,000, respectively.
The Company issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019 and retired the existing
convertible notes ("Retired Convertible Notes") that would have matured in 2044 on May 28, 2019. The Company's Convertible Notes
currently have, and the Retired Convertible Notes had, a settlement feature requiring the Company upon conversion to settle the principal
amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of the
Company's common stock or a combination thereof, at the Company's option. The Company has stated its intent to settle any conversion
of these notes by paying cash for the principal value and issuing common stock for any conversion premium. Accordingly, the
Convertible Notes and the Retired Convertible Notes were included in the calculation of diluted earnings per share if their inclusion was
dilutive. The dilutive effect increases the more the market price exceeds the conversion price. The Convertible Notes would only have
a dilutive effect if the market price per share of common stock exceeds the conversion price of $188.73 per share. Therefore, according
to ASC Topic 260, Earnings per Share ("ASC 260"), there was no dilutive effect of the assumed conversion of the debentures as of
December 31, 2021, 2020 and 2019. See Note 11, Debt Obligations, to the Consolidated Financial Statements for more information
about the Convertible Notes and Retired Convertible Notes.
Share repurchases
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 common stock through March 31, 2020. 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. 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. 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. 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. For the years ended December 31, 2021,
2020 and 2019 the Company repurchased $227.8 million, $239.8 million, and $70.9 million, respectively, in value of Euronet common
stock under the repurchase programs.
Preferred Stock
The Company has the authority to issue up to 10 million shares of preferred stock, of which no shares are currently issued or outstanding.
Accumulated other comprehensive loss
As of December 31, 2021 and 2020, accumulated other comprehensive loss consists entirely of foreign currency translation adjustments.
The Company recorded a foreign currency translation loss of $78.5 million, a gain of $70.8 million and a loss of $13.9 million for the
years ended December 31, 2021, 2020, and 2019, respectively. There were no reclassifications of foreign currency translation into the
Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019.
Dividends
No dividends were paid on any class of the Company's stock during 2021, 2020, and 2019.
87
(6) ACQUISITIONS
In accordance with ASC 805, the Company allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible
assets acquired based on fair values. Any excess purchase price over those fair values is recorded as goodwill. The fair value assigned
to intangible assets acquired is supported by valuations using estimates and assumptions provided by management. For certain large
acquisitions, management engages an appraiser to assist in the valuation process.
Pending Acquisitions
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 million. The proposed arrangement will include separate commercial agreements for a long-
term strategic partnership with Piraeus Bank for collaborative product distribution, processing and customer referrals. The acquisition
will expand the Company’s omnichannel payments strategy and position the Company in Greece’s growing market for merchant
acquiring services. 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.
2019 Acquisitions
On November 30, 2019,
approximately 1,800 ATMs.
the Company completed
the acquisition of a North American based ATM operator with
The purchase price was $92.5 million in cash. The purchase price was allocated to the assets acquired and liabilities assumed, including
identifiable intangible assets, based on their respective fair values at the date of acquisition. The acquisition has been accounted for as
business combinations in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in
the EFT Processing Segment. The historical revenue and earnings were not significant for the purpose of presenting pro forma
information for the pre-acquisition periods.
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date.
(in thousands)
Cash and cash equivalents
Trade accounts receivable
Other current assets
Property and equipment
Intangible assets
Total assets acquired
Trade accounts payable
Accrued expenses and other current liabilities
Total liabilities assumed
Goodwill
Net assets acquired
As of November 30, 2019
$
$
$
$
5,325
2,167
798
16,542
39,000
63,832
(6,790 )
(80 )
(6,870 )
35,540
$
92,502
The Company acquired customer relationship intangible assets with a fair value of $39.0 million, which are being amortized on a
straight-line basis over 20 years.
Goodwill, with a value of $35.5 million, arising from the acquisition was included in the EFT Processing Segment and was attributable
to expected growth opportunities in the United States. Goodwill and intangible assets associated with this acquisition are deductible for
tax purposes.
88
Other
The Company completed three additional acquisitions in 2019 for immaterial amounts.
(7) RESTRICTED CASH
The restricted cash balances as of December 31, 2021 and 2020 were as follows:
(in thousands)
Cash held in trust and/or cash held on behalf of others
Restricted cash
Cash held in trust and/or cash held on behalf of others
Collateral on bank credit arrangements and other
Restricted cash included within settlement assets
Total Restricted Cash
As of December 31,
2021
2020
$
$
3,693 $
3,693 $
3,334
3,334
$
62,077 $
64,489
12,820
12,185
$
74,897 $
76,674
$
78,590 $
80,008
Cash held in trust and/or cash held on behalf of others is in connection with the administration of the customer collection and vendor
remittance activities by certain subsidiaries within the Company's epay and EFT Processing Segments. Amounts collected on behalf of
certain mobile phone operators and/or merchants are deposited into a restricted cash account. The bank credit arrangements primarily
represent cash collateral on deposit with commercial banks to cover guarantees.
(8) PROPERTY AND EQUIPMENT, NET
The components of property and equipment, net of accumulated depreciation and amortization as of December 31, 2021 and 2020 are
as follows:
(in thousands)
ATMs
POS terminals
Vehicles and office equipment
Computers and software
Land and buildings
Less accumulated depreciation
Total
As of December 31,
2021
2020
$
560,310 $
554,508
31,321
75,331
33,258
75,936
210,363
203,883
687
1,285
878,012
868,870
(532,631 )
(490,429 )
$
345,381 $
378,441
Depreciation expense related to property and equipment, including property and equipment recorded under finance leases, for the years
ended December 31, 2021, 2020 and 2019 was $104.7 million, $96.1 million and $83.5 million, respectively.
89
(9) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET
The following table summarizes intangible assets as of December 31, 2021 and 2020:
(in thousands)
Customer relationships
Trademarks and trade names
Software
Non-compete agreements
Total
As of December 31, 2021
As of December 31, 2020
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
$
176,024 $
(103,713 ) $
186,749 $
(99,131 )
45,445
60,118
1,260
(32,596 )
(47,485 )
(1,260 )
46,762
61,602
1,980
(31,327 )
(42,772 )
(1,980 )
$
282,847 $
(185,054 ) $
297,093 $
(175,210 )
The following table summarizes the goodwill and amortizable intangible assets activity for the years ended December 31, 2021 and
2020:
(in thousands)
Balance as of January 1, 2020
Increases (decreases):
Acquisitions (see footnote 6)
Impairment
Amortization
Other (primarily changes in foreign currency exchange rates)
Balance as of December 31, 2020
Increases (decreases):
Amortization
Other (primarily changes in foreign currency exchange rates)
Acquired
Intangible Assets Goodwill
Total Intangible
Assets
$
141,847 $
743,823 $
885,670
1,575
(265)
1,310
(2,048)
(104,554 )
(106,602)
(22,867 )
3,376
121,883
—
26,817
665,821
(23,059 )
—
(1,031 )
(24,216 )
(22,867 )
30,193
787,704
(23,059 )
(25,247 )
Balance as of December 31, 2021
$
97,793 $
641,605 $
739,398
Impairment Charges
The COVID-19 pandemic and subsequent mitigation efforts, which include global business shutdowns, the closing of borders and the
implementation of mandatory social distancing requirements, has 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 a decline in
revenues, earnings, and necessitated changes to our forecasted outlook. The Company 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. The Company concluded
a triggering event had occurred for six reporting units, resulting in quantitative impairment tests. Three reporting units were within the
EFT segment, two reporting units were within the Money Transfer segment, and one reporting unit was within the epay segment. As a
result, the Company recorded a non-cash goodwill impairment charge of $104.6 million with respect to the xe, Innova and Pure
Commerce reporting units. $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.
During the second half of 2020, the Company recorded a $2.0 million non-cash impairment charge for acquired intangible assets,
specifically related to customer lists in the xe reporting unit.
Of the total goodwill balance of $641.6 million as of December 31, 2021, $392.3 million relates to the Money Transfer Segment, $129.1
million relates to the epay Segment and the remaining $120.2 million relates to the EFT Processing Segment. Amortization expense for
intangible assets with finite lives was $23.1 million, $22.9 million and $20.4 million for the years ended December 31, 2021, 2020 and
2019, respectively. Estimated annual amortization expense on intangible assets with finite lives as of December 31, 2021, is expected
to total $21.7 million for 2022, $16.7 million for 2023, $9.9 million for 2024, $6.5 million for 2025, and $6.1 million for 2026.
90
(10) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The balances as of December 31, 2021 and 2020 were as follows:
(in thousands)
Accrued expenses
Derivative liabilities
Accrued payroll expenses
Current portion of finance lease obligations
Total
(11) DEBT OBLIGATIONS
Debt obligations consist of the following as of December 31, 2021 and 2020:
(in thousands)
Credit Facility:
Revolving credit agreement
Convertible Debt:
0.75% convertible notes, unsecured, due 2049
1.375% Senior Notes, due 2026
Other obligations
Total debt obligations
Unamortized debt issuance costs
Carrying value of debt
Short-term debt obligations and current maturities of long-term debt obligations
Long-term debt obligations
As of December 31,
2021
2020
$
285,098 $ 288,996
23,285
55,162
4,147
65,905
42,717
6,403
$
367,692 $ 404,021
As of December 31,
2021
2020
$ 283,400 $ 270,400
468,235
452,228
682,080
732,840
920
850
$ 1,434,635 $ 1,456,318
(13,729 )
(17,932 )
$ 1,420,906 $ 1,438,386
(821 )
(797 )
$ 1,420,085 $ 1,437,589
As of December 31, 2021, aggregate annual maturities of long-term debt are $0.8 million in 2022, $283.5 million due in 2023, no
maturities in 2024, $468.2 million due in 2025, and $682.1 million thereafter. This maturity schedule reflects the revolving credit facility
maturing in 2023 and the Convertible Notes maturing in 2025, coinciding with the terms of the initial put option by holders of the
Convertible Notes. It also reflects the maturing of the 1.375% Senior Notes of €600 million ($682.1 million) due in 2026.
Credit Facility
On October 17, 2018, the Company entered into an unsecured revolving credit agreement (the "Credit Facility") for $1.0 billion that
expires on October 17, 2023. Fees and interest on borrowings are based upon the Company's corporate credit rating and are based, in
the case of letter of credit fees, on a margin, and in the case of interest, on a margin over London Inter-Bank Offered Rate ("LIBOR")
or a margin over the base rate, as selected by the Company, with the applicable margin ranging from 1.125% to 2.0% (or 0.175% to
1.0% for base rate loans). 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. dollars. 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.
The weighted average interest rate of the Company's borrowings under the Credit Facility was 1.2% as of December 31, 2021.
As of December 31, 2021 and 2020, the Company had stand-by letters of credit/bank guarantees outstanding under the Credit Facility
of $57.3 million and $60.8 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, 2021 and 2020,
the stand-by letters of credit interest charges were each 1.1% per annum. Borrowing capacity under the Credit Facility as of December
31, 2021, was $689.3 million.
91
The Credit Facility contains customary affirmative and negative covenants, events of default and financial covenants, including: (i) as
of the end of each fiscal quarter ended on March 31, September 30 and December 31, a Consolidated Total Leverage Ratio not to be
greater than 3.5 to 1.0; (ii) as of the end of each fiscal quarter ended on June 30, a Consolidated Total Leverage Ratio (as defined in the
Credit Facility) not to be greater than 4.0 to 1.0; provided that, not more than two times prior to the expiration date, that a Material
Acquisition has been consummated, for any period of four consecutive fiscal quarters following such Material Acquisition, the
Consolidated Total Leverage Ratio will be not greater than 4.0 to 1.0 for fiscal quarters ended on March 31, September 30 and December
31 and not greater than 4.5 to 1.0 for fiscal quarters ended on June 30; provided, further, that following such four consecutive fiscal
quarters for which the maximum Consolidated Total Leverage Ratio is increased, the maximum Consolidated Total Leverage Ratio
shall revert to the levels set forth in clauses (i) and (ii) above for not fewer than two fiscal quarters before a subsequent Increase Notice
is delivered to the syndicate of financial institutions; and (iii) a Consolidated Interest Coverage Ratio (as defined in the Credit Facility)
not less than 4.0 to 1.0. Subject to meeting certain leverage ratio and liquidity requirements as contained in the unsecured credit
agreement, the Company is permitted to pay dividends, repurchase common stock and repurchase subordinated debt. On September 17,
2020, the Company and certain of its subsidiaries entered into an amendment (the "Amendment") to the Credit Facility. Under the
Amendment, the Consolidated Total Leverage Ratio, as defined in the Credit Facility, was modified to reduce the amount of consolidated
funded debt by the amount of cash and cash equivalents on the Company's consolidated balance sheet and the Consolidated Interest
Coverage Ratio now includes a one-time option to reduce the ratio to 3.5 to 1.0 from 4.0 to 1.0 for a period of up to three consecutive
quarters. The Company was in compliance with all debt covenants as of December 31, 2021.
Uncommitted Line of Credit
On September 4, 2019, the Company entered into an Uncommitted Loan Agreement with Bank of America which provided Euronet up
to $100.0 million under an uncommitted line of credit. Interest on borrowings was equal to LIBOR plus 0.65% and the agreement was
set to expire September 4, 2020. During the three months ended June 30, 2020, the Company and Bank of America mutually agreed to
terminate the Uncommitted Loan Agreement.
Convertible Debt
On March 18, 2019, the Company completed the sale of $525.0 million of Convertible Senior Notes ("Convertible Notes"). The
Convertible Notes mature in March 2049 unless redeemed or converted prior to such date, 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 price of
Euronet Common Stock exceeding certain thresholds for specified periods). Holders of the Convertible Notes have the option to require
the Company to purchase their notes on each of March 15, 2025, March 15, 2029, March 15, 2034, March 15, 2039, and March 15,
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, the Company recorded
$12.8 million in debt issuance costs, which are being amortized through March 1, 2025.
The Company may not redeem the Convertible Notes prior to September 20, 2022. The Company may redeem for cash all or any portion
of the Convertible Notes, at its option, (i) on or after September 20, 2022 if the closing sale price of the Company's Common Stock has
been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30
consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately
preceding the date on which the Company provides notice of redemption and (ii) on or after March 20, 2025 and prior to the maturity
date, regardless of the foregoing sale price condition, in each case at a redemption price equal to 100% of the principal amount of the
Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided
for the Convertible Notes. In addition, if a fundamental change, as defined in the Indenture, occurs prior to the maturity date, holders
may require the Company to repurchase for cash all or part of their Convertible Notes 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 fundamental change
repurchase date. As of December 31, 2021, the conversion threshold was not met.
In accordance with ASC 470-20-30-27, proceeds from the issuance of convertible debt is allocated between debt and equity components
so that debt is discounted to reflect the Company's nonconvertible debt borrowing rate. ASC 470-20-35-13 requires the debt discount to
be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. The allocation
resulted in an increase to additional paid-in capital of $99.7 million for the Convertible Notes.
The Company used $94.2 million of the net proceeds from the issuance of the Convertible Notes to repurchase $49.0 million aggregate
principal amount of the Company's 1.5% Convertible Senior Notes due 2044 (the "Retired Convertible Notes") from a limited number
of holders in privately negotiated transactions.
On March 18, 2019, the Company provided a notice of redemption to the trustee of the indenture governing the Retired Convertible
Notes (the "Existing Indenture"), pursuant to which the Company would redeem all of the remaining principal amount outstanding of
the Retired Convertible Notes on May 28, 2019 (the "Redemption Date") for cash at a redemption price equal to 100% of the principal
92
amount of the Retired Convertible Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date.
The issuance of the Convertible Notes and the conversion of the Retired Convertible Notes, resulted in a $25.6 million recognition and
a $34.2 million reversal of deferred tax liabilities within the additional paid-in capital as of December 31, 2019, respectively.
Prior to the Redemption Date, approximately $352.4 million principal amount of the Retired Convertible Notes were submitted for
conversion. The Company elected to settle the conversion of such Retired Convertible Notes through a combination of cash and stock.
The Company paid cash equal to $1,000 for each $1,000 principal amount of Retired Convertible Notes submitted for conversion and
satisfied the remainder of the conversion obligation by issuing shares of the Company's Common Stock valued at $147.24 per share. As
a result, the Company paid cash of $352.4 million and issued approximately 2.5 million shares of its Common Stock. In accordance
with ASC 470, the Company recognized a loss of $9.8 million on the conversion and redemption for the year ended December 31, 2019,
representing the difference between the fair value of the Retired Convertible Notes converted and the carrying value of the bonds at the
time of conversion. The Company is using the remainder of the net proceeds from the issuance of the Convertible Notes to finance the
further growth of the business.
Contractual interest expense for the Retired Convertible Notes was $1.5 million for the year ended December 31, 2019, and accretion
expense was $4.6 million for the year ended December 31, 2019.
Contractual interest expense for the Convertible Notes was $3.9 million, $3.9 million, and $3.1 million for the years ended December
31, 2021, 2020 and 2019, respectively. Accretion expense was $16.0 million, $15.3 million and $11.6 million for the years ended
December 31, 2021, 2020 and 2019, respectively. The effective interest rate was 4.4% for the year ended December 31, 2021. As of
December 31, 2021, the unamortized discount was $56.8 million and will be amortized through March 2025.
1.375% Senior Notes due 2026
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. As of December 31, 2021, the Company has outstanding €600 million
($682.1 million) principal amount of the Senior Notes. In addition, the Company may redeem some or all of these notes on or after
February 22, 2026, at their principal amount plus any accrued and unpaid interest. As of December 31, 2021, the Company had $5.4
million of unamortized debt issuance costs related to the Senior Notes.
Other obligations
Certain of the Company's subsidiaries have available lines of credit and overdraft credit facilities that generally provide for short-term
borrowings that are used from time to time for working capital purposes. As of December 31, 2021 and 2020, borrowings under these
arrangements were $0.9 million and $0.9 million, respectively. As of December 31, 2021, there was $0.8 million due in 2022 under
these other obligation arrangements.
(12) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer
transactions in currencies other than the U.S. dollar, (ii) derivative contracts written to its customers in connection with providing cross-
currency money transfer services and (iii) certain foreign currency denominated other asset and liability positions. The Company enters
into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure
related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these
activities are economic hedges and are not designated as hedges under ASC 815, primarily due to either the relatively short duration of
the contract term or the effects of fluctuations in currency exchange rates being reflected concurrently in earnings for both the derivative
instrument and the transaction and have an offsetting effect.
Foreign currency exchange contracts - Ria Operations and Corporate
In the United States, the Company uses short-duration foreign currency forward contracts, generally with maturities up to 14 days, to
offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction
and its settlement. Due to the short duration of these contracts and the Company's credit profile, the Company is generally not required
to post collateral with respect to these foreign currency forward contracts. Most derivative contracts executed with counterparties in the
U.S. are governed by an International Swaps and Derivatives Association agreement that includes standard netting arrangements;
therefore, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are
net settled upon maturity. As of December 31, 2021 and 2020, the Company had foreign currency forward contracts outstanding in the
U.S. with a notional value of $222.1 million and $246.0 million, respectively. The foreign currency forward contracts consist primarily
in Australian dollars, Canadian dollars, British pounds, euros and Mexican pesos.
93
In addition, the Company uses forward contracts, typically with maturities from a few days to less than one year, to offset foreign
exchange rate fluctuations on certain short-term borrowings that are payable in currencies other than the U.S dollar. As of December
31, 2021 and 2020, the Company had foreign currency forward contracts outstanding with a notional value of $216.1 million and
$454.3 million, respectively, primarily in euros.
Foreign currency exchange contracts - xe Operations
xe, writes derivative instruments, primarily foreign currency forward contracts and cross-currency swaps, mostly with counterparties
comprised of individuals and small-to-medium size businesses and derives a currency margin from this activity as part of its operations.
xe aggregates its foreign currency exposures arising from customer contracts and hedges the resulting net currency risks by entering into
offsetting contracts with established financial institution counterparties. Foreign exchange revenues from xe's total portfolio of positions
were $79.5 million, $68.2 million and $71.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. All of the
derivative contracts used in the Company' s xe operations are economic hedges and are not designated as hedges under ASC 815. The
duration of these derivative contracts is generally less than one year.
The fair value of xe's total portfolio of positions can change significantly from period to period based on, among other factors, market
movements and changes in customer contract positions. xe manages counterparty credit risk (the risk that counterparties will default and
not make payments according to the terms of the agreements) on an individual counterparty basis. It mitigates this risk by entering into
contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting
periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. xe does not expect any
significant losses from counterparty defaults.
The aggregate equivalent U.S. dollar notional amounts of foreign currency derivative customer contracts held by the Company in its xe
operations as of December 31, 2021 and 2020, was approximately $1.0 billion and $1.3 billion, respectively. The significant majority
of customer contracts are written in major currencies such as the euro, U.S. dollar, British pound, Australian dollar and New Zealand
dollar.
The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the
dates below:
(in thousands)
Derivatives not designated as hedging
instruments
Foreign currency exchange contracts
Asset Derivatives
Liability Derivatives
Fair Value
Fair Value
Balance
Sheet
Location
December
31, 2021
December
31, 2020
Balance
Sheet
Location
December
31, 2021
December
31, 2020
Other
current
assets
$
27,582 $ 80,879
Other
current
liabilities $
(23,285 ) $ (65,905 )
94
Balance Sheet Presentation
The following tables summarize the gross and net fair value of derivative assets and liabilities as of December 31, 2021 and 2020 (in
thousands):
Offsetting of Derivative Assets
Gross Amounts Not Offset
in the Consolidated Balance
Sheet
Gross
Amounts of
Recognized
Assets
Gross
Amounts
Offset in the
Consolidated
Balance Sheet
Net Amounts
Presented in
the
Consolidated
Balance Sheet
Financial
Instruments
Cash
Collateral
Received
Net
Amounts
$
27,582 $
— $
27,582 $
(14,875 ) $
(2,284 ) $ 10,423
$
80,879 $
— $
80,879 $
(44,893 ) $
(2,778 ) $ 33,208
Gross Amounts Not Offset
in the Consolidated
Balance Sheet
Gross
Amounts of
Recognized
Liabilities
Gross
Amounts
Offset in the
Consolidated
Balance Sheet
Net Amounts
Presented in
the
Consolidated
Balance Sheet
Financial
Instruments
Cash
Collateral
Paid
Net
Amounts
$
(23,285 ) $
— $
(23,285 ) $
14,875 $
640 $
(7,770 )
$
(65,905 ) $
— $
(65,905 ) $
44,893 $ 12,272 $
(8,740 )
As of December 31, 2021
Derivatives subject to a master
netting arrangement or similar
agreement
As of December 31, 2020
Derivatives subject to a master
netting arrangement or similar
agreement
Offsetting of Derivative Liabilities
As of December 31, 2021
Derivatives subject to a master
netting arrangement or similar
agreement
As of December 31, 2020
Derivatives subject to a master
netting arrangement or similar
agreement
95
Income Statement Presentation
The following tables summarize the location and amount of gains on derivatives in the Consolidated Statements of Operations for
the years ended December 31, 2021, 2020 and 2019:
Amount of Gain (Loss) Recognized in
Income on Derivative Contracts (a)
(in thousands)
Location of Gain (Loss) Recognized
in Income on Derivative Contracts
Year Ended December 31,
2021
2020
2019
Foreign currency exchange contracts - Ria
Operations
Foreign currency exchange gain
(loss), net
$
1,618 $
(1,499 ) $
62
(a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its xe
operations. These derivative contracts are excluded from this table as they are part of the broader disclosure of foreign currency exchange
revenues for this business discussed above.
See Note 18, Financial Instruments and Fair Value Measurements, for the determination of the fair values of derivatives.
(13) LEASES
The Company enters into operating leases for ATM sites, office spaces, retail stores and equipment. The Company's finance leases are
immaterial. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of the
lease payments over the lease terms.
The present value of lease payments is determined using the incremental borrowing rate based on information available at the lease
commencement date. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.
Most leases include an option to renew, with renewal terms that can extend the lease terms. The exercise of lease renewal options is at
the Company’s sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease terms. The
Company also has a unilateral termination right for most of the ATM site leases. The Company evaluated the likelihood of exercising
the renewal and termination options beginning with the adoption of the new accounting lease standard on January 1, 2019, concluding:
the options were not reasonably certain to be exercised and thus were not considered in determining the lease terms, and associated
payment impacts were excluded from lease payments; and termination options were reasonably certain not to be exercised and therefore
the stated lease payment schedule of the lease was used to determine the lease term.
During the second quarter of 2020, the impact of the COVID-19 pandemic was a significant event that caused a significant change in
circumstances and business plans to manage our portfolio of ATM leases. Specifically, the Company downsized, through the exercise
of termination clauses and the reduction of monthly costs by renegotiating payment terms of its ATM leases. The Company's execution
of the business plan to renegotiate terms and downsize the portfolio of ATM leases constituted a reassessment event during the second
quarter of 2020. The reassessment event required the Company to reevaluate the accounting for the portfolio of ATM leases, including
lease terms. Due to the recent increased frequency of ATM site lease terminations, modifications, and greater unpredictability whether
or not future lease terminations will be exercised, the Company was no longer able to conclude that termination options are reasonably
certain not to be exercised. This reassessment conclusion impacted the lease term evaluation, instead of determining the lease term based
on the stated lease payment schedule of the lease, the lease term was evaluated when the Company has the contractual ability to terminate
the lease (most leases allow for a termination upon advance notice of between 30 and 90 days), which impacted the amounts recorded
as right of use assets and lease liability balances. New, amended, and modified ATM site leases with termination options exercisable
within 12 months will be excluded from the right of use lease asset and lease liability balances under the short-term lease exemption.
Payments for ATM site leases with termination options subject to the short-term lease exemption are expensed in the period incurred.
The short-term lease expense for 2021 reasonably reflects the Company’s short-term lease commitments. Certain of the Company's lease
agreements include variable rental payments based on revenues generated from the use of the leased location and certain leases include
rental payments adjusted periodically for inflation. Variable lease payments are recognized when the event, activity or circumstance in
the lease agreement on which those payments are assessed occurs and are excluded from the right of use assets and lease liabilities
balances. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
96
Future minimum lease payments
Future minimum lease payments under the operating leases (with initial lease terms in excess of one year) as of December 31, 2021 are:
As of December 31,
2021
Operating Leases (1)
$
48,412
37,368
27,827
19,172
12,620
22,819
168,218
(4,727 )
163,491
Maturity of Lease Liabilities (in thousands)
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: imputed interest
Present value of lease liabilities
(1) Operating lease payments reflect the Company's current fixed obligations under the operating lease agreements.
$
Lease expense recognized in the Consolidated Statements of Operations is summarized as follows:
Lease Expense (in thousands)
Income Statement Classification
Operating lease expense
Short-term and variable lease expense
Total lease expense
Selling, general and administrative and
Direct operating costs
Selling, general and administrative and
Direct operating costs
Year ended
December 31, 2021
Year ended
December 31, 2020
$
$
55,613 $
83,102
115,963
171,576 $
69,711
152,813
Other information about lease amounts recognized in the consolidated financial statements is summarized as follows:
Lease Term and Discount Rate of Operating Leases
Weighted- average remaining lease term (years)
Weighted- average discount rate
The following table presents supplemental cash flow and non-cash information related to leases:
Other Information (in thousands)
As of December 31, 2021
4.9
2.24
Year ended
December
31, 2021
Year ended
December
31, 2020
Cash paid for amounts included in the measurement of lease liabilities (a)
$
51,464 $
79,447
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets:
ROU assets obtained in exchange for new operating lease liabilities
$
69,073 $
77,728
(a) Included in Net cash provided by operating activities on the Company's Consolidated Statements of Cash Flows.
97
(14) INCOME TAXES
The sources of income before income taxes for the years ended December 31, 2021, 2020 and 2019 are presented as follows:
(in thousands)
Income before taxes:
United States
Foreign
Total income before income taxes
Year Ended December 31,
2021
2020
2019
$
(4,775 ) $
40,323 $
44,290
140,450
135,675 $
$
(32,152 )
389,517
8,171 $
433,807
The Company's income tax expense for the years ended December 31, 2021, 2020 and 2019 consisted of the following:
(in thousands)
Current tax expense (benefit):
U.S.
Foreign
Total current
Deferred tax expense (benefit):
U.S.
Foreign
Total deferred
Total tax expense
Year Ended December 31,
2021
2020
2019
$
2,810 $
59,874
2,605 $
39,270
62,684
41,875
12,269
(9,865 )
2,404
(16,100 )
(14,300 )
(30,400 )
$
65,088 $
11,475 $
(4,885 )
83,792
78,907
(8,424 )
16,629
8,205
87,112
The following is a reconciliation of the federal statutory income tax rates of 21% to the effective income tax rate for the years ended
December 31, 2021, 2020 and 2019:
(dollar amounts in thousands)
Year Ended December 31,
2021
2020
2019
U.S. federal income tax expense at applicable statutory rate
$
28,492
$
1,716 $
91,099
Tax effect of:
State income tax expense at statutory rates, net of U.S. federal income tax
Non-deductible expenses
Share-based compensation
Other permanent differences
Difference between U.S. federal and foreign tax rates
Provision in excess of statutory rates
Change in federal and foreign valuation allowance
Impairment of goodwill and acquired intangibles assets
GILTI, net of tax credits
U.S. Tax Reform - transition tax and rate change
Tax credits
Other
Total income tax expense
Effective tax rate
1,516
538
(3,524 )
(2,047 )
7,438
2,879
26,673
—
3,900
—
(1,122 )
345
65,088
$
347
1,887
(6,446 )
3,828
7,002
(6,491)
(4,238)
22,053
—
—
(3,518 )
(4,665 )
5,101
2,896
(2,875 )
(864 )
12,281
3,565
2,144
—
6,471
(25,728 )
(4,500 )
(2,478 )
11,475 $
87,112
48.0 %
140.4 %
20.1 %
98
$
We calculate our provision for federal, state and international income taxes based on current tax law. In the fourth quarter of 2019 after
additional regulatory guidance was issued by applicable taxing authorities relating to the U.S. Tax Reform, the Company elected to
claim U.S. foreign tax credits, which reduced the net tax expense by $25.7 million.
The tax effect of temporary differences and carryforwards that give rise to deferred tax assets and liabilities from continuing operations
are as follows:
(in thousands)
Deferred tax assets:
Tax loss carryforwards
Share-based compensation
Accrued expenses
Property and equipment
Goodwill and intangible amortization
Contract costs
Intercompany notes
Accrued revenue
Tax credits
Lease accounting
Foreign exchange
Other
Gross deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Intangible assets related to purchase accounting
Goodwill and intangible amortization
Accrued expenses
Intercompany notes
Accrued interest
Capitalized research and development
Property and equipment
Accrued revenue
Lease accounting
Foreign exchange
Other
Total deferred tax liabilities
Net deferred tax liabilities
As of December 31,
2021
2020
$
65,862 $
45,609
9,743
19,907
11,949
9,353
9,921
6,077
7,541
6,771
22,243
10,835
7,614
—
7,689
34,663
65,267
65,388
42,381
8,283
14,616
39,962
19,160
14,230
270,900
274,164
(100,489 )
(77,563 )
170,411
196,601
(11,763 )
(30,339 )
(21,495 )
(10,388 )
(34,175 )
(6,376 )
(15,597 )
(2,073 )
(12,854 )
(24,763 )
(43,971 )
(10,396 )
(30,932 )
(6,352 )
(18,295 )
(1,829 )
(42,381 )
(39,962 )
(1,211 )
(3,971 )
(10,880 )
(6,826 )
(179,769 )
(207,060 )
$
(9,358 ) $
(10,459 )
Net deferred tax assets of $37.7 million and $27.4 million as of December 31, 2021 and 2020, respectively, are recorded within "Other
assets" on the Consolidated Balance Sheet.
Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2021, are expected
to be allocated to income taxes in the Consolidated Statements of Operations.
As of December 31, 2021, and 2020, the Company's foreign tax loss carryforwards were $267.3 million and $197.4 million, respectively,
and U.S. state tax loss carryforwards were $73.7 million and $95.8 million, respectively. As of December 31, 2021, the Company had
99
U.S. foreign tax credit carryforwards of $61.6 million which are largely not expected to be utilized in future periods.
In assessing the Company's ability to realize deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible. Management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax
assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible
differences, net of the existing valuation allowances, as of December 31, 2021.
As of December 31, 2021, the Company had foreign tax net operating loss carryforwards of $267.3 million, which will expire as follows:
(in thousands)
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Unlimited
Total
Gross
Tax Effected
$
3,960 $
2,296
3,153
21,012
21,767
25,465
189,670
$
267,323 $
749
533
711
4,664
4,843
6,501
45,792
63,793
In addition, the Company's state tax net operating loss carryforwards of $73.7 million will expire periodically from 2022 through 2041,
U.S. foreign tax credit carryforwards of $61.6 million that will expire periodically from 2022 through 2030 and U.S. federal research
and expenditure credit carryforwards of $3.3 million that will expire periodically from 2034 through 2038.
While U.S. tax expense has been recognized as a result of the transition tax and global intangible low-taxed income, or GILTI, provisions
of U.S. Tax Reform, the Company has not provided additional deferred taxes with respect to items such as certain foreign exchange
gains or losses, foreign withholding taxes or additional state taxes, if any, on undistributed earnings attributable to foreign subsidiaries
and it is not practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely. Gross
undistributed earnings reinvested indefinitely in foreign subsidiaries aggregated approximately $1,808.8 million as of December 31,
2021.
Accounting for uncertainty in income taxes
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2021 and 2020 is
as follows:
(in thousands)
Beginning balance
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Statute of limitations expiration
Ending balance
Year Ended December 31,
2021
2020
$
39,785 $
44,535
3,815
—
(1,998 )
—
(612 )
7,331
—
(1,349 )
(10,127 )
(605 )
$
40,990 $
39,785
100
As of December 31, 2021 and 2020, approximately $29.1 million and $31.8 million, respectively, of the unrecognized tax benefits would
impact the Company's provision for income taxes and effective income tax rate, if recognized. Total estimated accrued interest and
penalties related to the underpayment of income taxes was $7.2 million and $6.2 million as of December 31, 2021 and 2020, respectively.
The following income tax years remain open in the Company's major jurisdictions as of December 31, 2021:
Jurisdictions
U.S. (Federal)
Germany
Greece
Spain
U.K.
Periods
2014 through 2021
2016 through 2021
2013 through 2021
2015 through 2021
2018 through 2021
It is reasonably possible that the balance of gross unrecognized tax benefits could significantly change within the next twelve months
as a result of the resolution of audit examinations and expirations of certain statutes of limitations and, accordingly, materially affect the
Company's operating results. At this time, it is not possible to estimate the range of change due to the uncertainty of potential outcomes.
(15) VALUATION AND QUALIFYING ACCOUNTS
Trade accounts receivable and accounts receivable balances included within the settlement assets are stated net of credit losses.
Historically, the Company has not experienced significant write-offs. The Company records credit losses when it is probable that the
accounts receivable balance will not be collected.
The following table provides a summary of the credit loss balances and activity for the years ended December 31, 2021, 2020 and 2019:
(in thousands)
Beginning balance-credit losses
Additions-charged to expense
Amounts written off
Other (primarily changes in foreign currency exchange rates)
Ending balance-credit losses
(16) STOCK PLANS
Year Ended December 31,
2021
2020
2019
$
41,727 $
27,938 $
24,287
9,721
19,469
(21,662 )
2,024
31,810 $
(7,842 )
2,162
41,727 $
10,095
(6,179 )
(265 )
27,938
$
The Company has share-based compensation plans ("SCP") that allow it to grant restricted shares, or options to purchase shares, of
common stock to certain current and prospective key employees, directors and consultants of the Company. These awards generally
vest over periods ranging from three to five years from the date of grant. Stock options are generally exercisable during the shorter of a
ten-year term or the term of employment with the Company. With the exception of certain awards made to the Company's employees
in Germany, Singapore and Malaysia, awards under the SCP are settled through the issuance of new shares under the provisions of the
SCP. For Company employees in Germany, Singapore and Malaysia, certain awards are settled through the issuance of treasury shares,
which also reduces the number of shares available for future issuance under the SCP. As of December 31, 2021, the Company has
approximately 5.6 million in total shares remaining available for issuance under the SCP.
Share-based compensation expense was $36.5 million, $22.0 million and $21.4 million for the years ended December 31, 2021, 2020 and
2019, respectively, and was recorded in salaries and benefits expense in the accompanying Consolidated Statements of Operations. The
Company recorded a tax benefit of $4.1 million, $2.1 million and $4.9 million during the years ended December 31, 2021, 2020 and
2019, respectively, for the portion of this expense that relates to foreign tax jurisdictions in which an income tax benefit is expected to
be derived.
101
Stock options
Summary stock options activity is presented in the table below:
Weighted
Average
Remaining
Contractual
Term
(years)
Weighted
Average
Exercise Price
Aggregate
Intrinsic
Value
(thousands)
Number of
Shares
Balance at December 31, 2020 (1,497,567 shares exercisable)
4,091,293 $
94.88
Granted
Exercised
Forfeited/Canceled
Expired
532,979 $
116.55
(296,363 ) $
26.41
(17,831 ) $
119.80
(877 ) $
16.39
Balance at December 31, 2021
Exercisable at December 31, 2021
4,309,201 $
102.19
7.2 $
97,425
1,466,983 $
78.19
4.5 $
65,770
Vested and expected to vest at December 31, 2021
1,963,940 $
90.29
5.5 $
68,162
Options outstanding that are expected to vest are net of estimated future forfeitures. The Company received cash of $7.8 million,
$15.8 million and $13.1 million in connection with stock options exercised in the years ended December 31, 2021, 2020 and 2019,
respectively. The intrinsic value of these options exercised was $27.7 million, $41.1 million and $30.6 million in the years ended
December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, unrecognized compensation expense related to nonvested
stock options that are expected to vest totaled $58.5 million and will be recognized over the next 4 years, with an overall weighted-
average period of 2.6 years. The following table provides the fair value of options granted under the SCP during 2021, 2020 and 2019,
together with a description of the assumptions used to calculate the fair value using the Black-Scholes-Merton option-pricing model:
Volatility
Risk-free interest rate - weighted average
Risk-free interest rate - range
Dividend yield
Assumed forfeitures
Expected lives
Weighted-average fair value (per share)
Year ended December 31,
2021
2020
2019
39.3 %
1.2 %
35.6 %
0.6 %
0.5% to 1.21 % 0.31% to 1.17 %
— %
8.0 %
— %
8.0 %
29.3 %
2.1 %
(a)
— %
8.0 %
4.6 years
7.1 years
5.2 years
$
39.99
$
48.21
$
43.96
(a) At the date of grant, the risk fee rate for stock options awarded in 2019 was 1.7%.
During 2021, the Company granted approximately 331,000 options that were valued using a Monte Carlo simulation (not included in
the table above). The Monte Carlo simulation calculated a fair value per option of $40.30 using the following assumptions: volatility of
40.0%, risk-free interest rate of 1.19%, and a term of 4.5 years. During 2020, the Company granted 1,350,000 options that were valued
using a Monte Carlo simulation (not included in the table above). The Monte Carlo simulation calculated a fair value per option of
$26.90 using the following assumptions: volatility of 37.0%, risk-free interest rate of 0.33%, and a term of 5.0 years.
Restricted stock
Restricted stock awards vest based on the achievement of time-based service conditions and/or performance-based conditions. For
certain awards, vesting is based on the achievement of more than one condition of an award with multiple time-based and/or
performance-based conditions.
102
Summary restricted stock activity is presented in the table below:
Nonvested at December 31, 2020
Granted
Vested
Forfeited
Nonvested at December 31, 2021
Number of
Shares
Weighted Average Grant
Date Fair Value Per Share
485,510 $
191,184 $
(107,700 ) $
(33,890 ) $
535,104 $
126.62
117.35
115.85
98.18
127.96
The fair value of shares vested in the years ended December 31, 2021, 2020 and 2019 was $13.8 million, $15.4 million and $16.6
million, respectively. As of December 31, 2021, there was $17.3 million of total unrecognized compensation cost related to unvested
time-based restricted stock, which is expected to be recognized over a weighted-average period of 3.0 years. As of December 31, 2021,
there was $16.8 million of total unrecognized compensation costs related to unvested performance-based restricted stock, which is
expected to be recognized based on Company performance over a weighted-average period of 2.0 years. The weighted average grant
date fair value of restricted stock granted during the years ended December 31, 2021, 2020 and 2019 was $115.85, $117.97 and $145.93
per share, respectively.
(17) BUSINESS SEGMENT INFORMATION
Euronet's reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting ("ASC 280").
The Company currently operates in the following three reportable operating segments:
1) Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across
Europe, the Middle East, Africa, Asia Pacific and the United States. The Company provides comprehensive electronic payment solutions
consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit,
debit and prepaid card outsourcing, dynamic currency conversion, domestic and international surcharges and other value-added services.
Through this segment, the Company also offers a suite of integrated electronic financial transaction software solutions for electronic
payment and transaction delivery systems.
2) Through the epay Segment, the Company provides distribution, processing and collection services for prepaid mobile airtime and
other electronic payment products in Europe, the Middle East, Asia Pacific, the U.S. and South America.
3) Through the Money Transfer Segment, the Company provides global money transfer services under the brand names Ria, AFEX,
IME, and xe. Ria, AFEX, and IME provide global consumer-to-consumer money transfer services through a network of sending agents,
Company-owned stores and Company-owned websites, disbursing money transfers through a worldwide correspondent network. xe
offers account-to-account international payment services to high-income individuals and small-to-medium sized businesses. xe is also
a provider of foreign currency exchange information. The Company also offers customers bill payment services, payment alternatives
such as money orders and prepaid debit cards, comprehensive check cashing services, foreign currency exchange services and mobile
top-up. Furthermore, xe provides cash management solutions and foreign currency risk management services to small-to-medium sized
businesses.
In addition, the Company accounts for non-operating activity, share-based compensation expense, certain intersegment eliminations and
the costs of providing corporate and other administrative services in its administrative division, "Corporate Services, Eliminations and
Other." These services are not directly identifiable with the Company's reportable operating segments.
103
The following tables present the Company's reportable segment results for the years ended December 31, 2021, 2020 and 2019:
(in thousands)
Total revenues
Operating expenses:
Direct operating costs
Acquired contract cost impairment
Salaries and benefits
Selling, general and administrative
Depreciation and amortization
Total operating expenses
For the Year Ended December 31, 2021
EFT
Processing
epay
Money
Transfer
Corporate
Services,
Eliminations
and Other
Consolidated
$
591,138 $ 1,011,482 $ 1,400,957 $
(8,134)
$ 2,995,443
354,254
760,891
793,218
—
98,584
47,832
90,969
(8,096)
—
—
38,634
79,451
255,816
50,988
39,602
157,955
6,544
1,900,267
38,634
484,839
251,933
8,501
35,739
545
135,754
591,639
888,445
1,281,362
49,981
2,811,427
Operating income (expense)
$
(501) $
123,037 $
119,595 $
(58,115)
$
184,016
Other income (expense)
Interest income
Interest expense
Foreign currency exchange loss, net
Other gains, net
Total other expense, net
Income before income taxes
664
(38,198)
(10,866)
59
(48,341)
135,675
$
Segment assets as of December 31, 2021
$ 1,682,680 $ 1,234,074 $ 1,621,726 $
205,796 $ 4,744,276
104
(in thousands)
Total revenues
Operating expenses:
Direct operating costs
Salaries and benefits
Selling, general and administrative
Goodwill and acquired intangible assets
impairment
Depreciation and amortization
Total operating expenses
For the Year Ended December 31, 2020
EFT
Processing
epay
Money
Transfer
Corporate
Services,
Eliminations
and Other
Consolidated
$
468,726 $
835,517 $ 1,183,849 $
(5,392 ) $ 2,482,700
302,637
630,391
649,033
(5,362 )
1,576,699
91,526
35,388
64,769
35,789
213,511
142,161
34,336
8,276
404,142
221,614
21,861
84,025
—
84,741
—
106,602
7,890
34,694
412
127,021
535,437
738,839
1,124,140
37,662
2,436,078
Operating income (expense)
$
(66,711) $
96,678 $
59,709 $
(43,054 ) $
46,622
Other income (expense)
Interest income
Interest expense
Foreign currency exchange gain, net
Other gains, net
Total other expense, net
Income before income taxes
1,040
(36,604 )
(3,756)
869
(38,451 )
$
8,171
Segment assets as of December 31, 2020
$ 1,541,610 $ 1,135,204 $ 1,755,651 $
494,246 $ 4,926,711
(in thousands)
Total revenues
Operating expenses:
Direct operating costs
Salaries and benefits
Selling, general and administrative
Depreciation and amortization
Total operating expenses
For the Year Ended December 31, 2019
EFT
Processing
epay
Money
Transfer
Corporate
Services,
Eliminations
and Other Consolidated
$
888,712 $ 769,329 $ 1,096,226 $
(4,158 ) $ 2,750,109
397,132
576,757
586,730
(4,136 )
1,556,483
87,603
61,540
208,792
36,809
35,518
35,054
133,068
71,819
6,774
32,846
8,304
305
394,744
211,944
111,744
592,072
680,125
961,436
41,282
2,274,915
Operating income (expense)
$
296,640 $
89,204 $ 134,790 $
(45,440 ) $
475,194
Other income (expense)
Interest income
Interest expense
Foreign currency exchange loss, net
Other gains, net
Total other expense, net
Income before income taxes
1,969
(36,237 )
2,701
(9,820)
(41,387 )
$
433,807
Segment assets as of December 31, 2019
$ 1,914,144 $ 962,671 $ 1,560,136 $
220,715 $ 4,657,666
105
Total revenues for the years ended December 31, 2021, 2020 and 2019, and property and equipment and total assets as of December 31,
2021 and 2020, summarized by geographic location, were as follows:
(in thousands)
United States
Germany
Spain
Revenues
Property and Equipment,
net
Total Assets
For the year ended December 31,
as of December 31,
as of December 31,
2021
2020
2019
2021
2020
2021
2020
$ 805,028 $ 725,135 $ 716,576 $ 59,469 $ 55,573 $ 1,040,190 $ 1,255,983
631,550
533,999
518,146
32,126
38,808
901,724
797,627
157,766
118,934
189,104
50,321
61,563
317,199
291,254
United Kingdom
143,914
118,024
135,006
13,783
20,150
371,090
402,587
Italy
Poland
India
France
Greece
Malaysia
Australia
New Zealand
Other
Total foreign
Total
130,095
92,006
130,929
18,279
21,225
207,347
231,548
93,654
89,688
130,104
24,091
33,087
201,506
206,016
173,154
123,343
113,146
32,705
26,126
206,378
182,073
166,655
119,265
94,352
7,038
2,731
134,981
112,335
61,627
39,705
79,716
10,815
13,252
80,778
78,439
50,039
73,541
74,948
46,851
46,062
51,686
56,480
47,368
47,611
1,998
2,791
3,949
2,319
91,813
115,448
1,575
56,275
68,577
3,772
231,468
254,580
478,630
355,630
468,785
88,016
98,260
903,527
930,244
2,190,415 1,757,565 2,033,533
285,912
322,868 3,704,086 3,670,728
$ 2,995,443 $ 2,482,700 $ 2,750,109 $ 345,381 $ 378,441 $ 4,744,276 $ 4,926,711
Revenues are attributed to countries based on location of the customer, with the exception of software sales made by the Company's
software subsidiary, which are attributed to the U.S.
(18) FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Concentrations of credit risk
The Company's credit risk primarily relates to trade accounts receivable and cash and cash equivalents. The EFT Processing Segment's
customer base includes the most significant international card organizations and certain banks in its markets. The epay Segment's
customer base is diverse and includes several major retailers and/or distributors in markets that they operate. The Money Transfer
Segment trade accounts receivable are primarily due from independent agents that collect cash from customers on the Company's behalf
and generally remit the cash within one week. The Company performs ongoing evaluations of its customers' financial condition and
limits the amount of credit extended, or purchases credit enhancement protection, when deemed necessary, but generally requires no
collateral. See Note 15, Valuation and Qualifying Accounts, for further disclosure.
The Company invests excess cash not required for use in operations primarily in high credit quality, short-term duration securities that
the Company believes bear minimal risk.
Fair value measurements
Fair value measurements used in the consolidated financial statements are based upon the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy
distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources
(observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information
available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable
inputs (Level 3). The three levels of the fair value hierarchy are described below:
• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
106
• Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other
inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
• Level 3 – Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own
assumptions about the inputs that market participants would use in pricing.
The following table details financial assets measured and recorded at fair value on a recurring basis:
(in thousands)
Assets
Balance Sheet
Classification
Level 1
Level 2
Level 3
Total
As of December 31, 2021
Foreign currency exchange contracts
Other current assets
$
— $
27,582 $
— $ 27,582
Liabilities
Foreign currency exchange contracts
Other current liabilities $
— $
(23,285 ) $
— $ (23,285 )
(in thousands)
Assets
Balance Sheet
Classification
Level 1
Level 2
Level 3
Total
As of December 31, 2020
Foreign currency exchange contracts
Other current assets
$
— $
80,879 $
— $ 80,879
Liabilities
Foreign currency exchange contracts
Other current liabilities $
— $
(65,905 ) $
— $ (65,905 )
The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term debt obligations
approximate fair values due to their short maturities. The carrying values of the Company's revolving credit agreements approximate
fair values because interest is based on LIBOR that resets at various intervals of less than one year. The Company estimates the fair
value of the Convertible Notes and Senior Notes using quoted prices in inactive markets for identical liabilities (Level 2). As of
December 31, 2021, the fair values of the Convertible Notes and Senior Notes were $589.3 million and $696.1 million, respectively,
with carrying values of $468.2 million and $682.1 million, respectively.
(19) LITIGATION AND CONTINGENCIES
From time to time, the Company is a party to legal and regulatory proceedings arising in the ordinary course of its business. Currently,
there are no legal proceedings or regulatory findings that management believes, either individually or in the aggregate, would have a
material adverse effect upon the Consolidated Financial Statements of the Company. In accordance with U.S. GAAP, the Company
records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal
counsel, and other information and events pertaining to a particular case.
(20) COMMITMENTS
As of December 31, 2021, the Company had $84.2 million of stand-by letters of credit/bank guarantees issued on its behalf, of which
$3.7 million are collateralized by cash deposits held by the respective issuing banks.
Under certain circumstances, the Company grants guarantees in support of obligations of subsidiaries. As of December 31, 2021, the
Company granted off balance sheet guarantees for cash in various ATM networks amounting to $11.4 million over the terms of the cash
supply agreements and performance guarantees amounting to approximately $51.7 million over the terms of the agreements with the
customers.
From time to time, the Company enters into agreements with commercial counterparties that contain indemnification provisions, the
terms of which may vary depending on the negotiated terms of each respective agreement. The amount of such potential obligations is
generally not stated in the agreements. Euronet's liability under such indemnification provisions may be mitigated by relevant insurance
coverage and may be subject to time and materiality limitations, monetary caps and other conditions and defenses. Such indemnification
obligations include the following:
107
•
•
•
•
In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for
damage to ATMs and theft of ATM network cash that, generally, is not recorded on the Company's Consolidated Balance
Sheets. As of December 31, 2021, the balance of such cash used in the Company's ATM networks for which the Company
was responsible was approximately $558.1 million. The Company maintains insurance policies to mitigate this exposure;
In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for
losses suffered by its customers and other parties as a result of the breach of its computer systems, including in particular,
losses arising from fraudulent transactions made using information stolen through its processing systems. The Company
maintains insurance policies to mitigate this exposure;
•
•
In connection with the license of proprietary systems to customers, the Company provides certain warranties and
infringement indemnities to the licensee, which generally warrant that such systems do not infringe on intellectual property
owned by third parties and that the systems will perform in accordance with their specifications;
•
• Euronet has entered into purchase and service agreements with vendors and consulting agreements with providers of
consulting services, pursuant to which the Company has agreed to indemnify certain of such vendors and consultants,
respectively, against third-party claims arising from the Company's use of the vendor's product or the services of the vendor
or consultant;
•
•
In connection with acquisitions and dispositions of subsidiaries, operating units and business assets, the Company has
entered into agreements containing indemnification provisions, which can be generally described as follows: (i) in
connection with acquisitions of operating units or assets made by Euronet, the Company has agreed to indemnify the seller
against third party claims made against the seller relating to the operating unit or asset and arising after the closing of the
transaction, and (ii) in connection with dispositions made by Euronet, Euronet has agreed to indemnify the buyer against
damages incurred by the buyer due to the buyer's reliance on representations and warranties relating to the subject subsidiary,
operating unit or business assets in the disposition agreement if such representations or warranties were untrue when made;
and
•
• Euronet has entered into agreements with certain third parties, including banks that provide fiduciary and other services to
Euronet or to the Company's benefit plans. Under such agreements, the Company has agreed to indemnify such service
providers for third-party claims relating to carrying out their respective duties under such agreements.
The Company is also required to meet minimum capitalization and cash requirements of various regulatory authorities in the jurisdictions
in which the Company has money transfer operations. The Company has obtained surety bonds in compliance with money transfer
licensing requirements of the applicable governmental authorities.
To date, the Company is not aware of any significant claims made by the indemnified parties or third parties to guarantee agreements
with the Company and, accordingly, no liabilities were recorded as of December 31, 2021 or 2020.
(21) RELATED PARTY TRANSACTIONS
The Company leases an airplane from a company owned by Mr. Michael J. Brown, Euronet's Chief Executive Officer, President and
Chairman of the Board of Directors. The airplane is leased for business use on a per flight hour basis at competitive commercial rates
with no minimum usage requirement. Euronet incurred expenses of $0.1 million, $0.1 million and $0.3 million during the years ended
December 31, 2021, 2020 and 2019, respectively, for the use of this airplane.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our executive management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design
and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of December 31, 2021.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of these
disclosure controls and procedures were effective as of such date to provide reasonable assurance that information required to be
108
disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There has been no change in our internal control over financial reporting during the fourth quarter of 2021 that has materially affected,
or is reasonably likely to materially affect, our internal control over financial reporting.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Stockholders of Euronet Worldwide, Inc.:
Management is responsible for establishing and maintaining an effective internal control over financial reporting as this term is defined
under Rule 13a-15(f) of the Securities Exchange Act of 1934 and has made organizational arrangements providing appropriate divisions
of responsibility and has established communication programs aimed at assuring that its policies, procedures and principles of business
conduct are understood and practiced by its employees. All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.
Management of Euronet Worldwide, Inc. assessed the effectiveness of the Company's internal control over financial reporting as
of December 31, 2021. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework (2013). Based on these criteria and our assessment, we have
determined that, as of December 31, 2021, the Company's internal control over financial reporting was effective.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2021, has been audited by KPMG LLP,
an independent registered public accounting firm, as stated in their audit report, included herein.
/s/ Michael J. Brown
Michael J. Brown
Chief Executive Officer
/s/ Rick L. Weller
Rick L. Weller
Chief Financial Officer and Chief Accounting Officer
February 22, 2022
109
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information under “Election of Directors,” “Delinquent Section 16(a) Reports” (if applicable) and “Meetings and Committees of
the Board of Directors” in the Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the SEC no later
than 120 days after December 31, 2021, is incorporated herein by reference. Information concerning our Code of Business Conduct and
Ethics for our employees, including our Chief Executive Officer and Chief Financial Officer, is set forth under “Availability of Reports,
Certain Committee Charters, and Other Information” in Part I of this Annual Report on Form 10-K and incorporated herein by reference.
Information concerning executive officers is set forth under “Information about our Executive Officers” in Part I of this Annual Report
on Form 10-K and incorporated herein by reference.
We intend to satisfy the requirement under Item 5.05 of Form 8-K to disclose any amendments to our Code of Business Conduct and
Ethics and any waiver from a provision of our Code of Ethics by disclosing such information on a Form 8-K or on our website at
www.euronetworldwide.com under For Investors/Corporate Governance.
ITEM 11. EXECUTIVE COMPENSATION
The information under “Compensation Tables,” “Compensation Discussion and Analysis,” “Director Compensation,” “Compensation
Committee Report” and “Compensation Committee Interlocks and Insider Participation” in the Proxy Statement for the 2022 Annual
Meeting of Stockholders, which will be filed with the SEC no later than 120 days after December 31, 2021, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information under “Beneficial Ownership of Common Stock”, “Election of Directors” and "Compensation Tables - Shares Issuable
under Stockholder Approved Plans" in the Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the
SEC no later than 120 days after December 31, 2021, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information under “Certain Relationships and Related Transactions and Director Independence” in the Proxy Statement for
the 2022 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after December 31, 2021, is
incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information under “Audit Matters - Fees of the Company's Independent Auditors” and - "Audit Matters - Audit Committee Pre-
Approval Policy" in the Proxy Statement for the 2022 Annual Meeting of Stockholders, which will be filed with the SEC no later than
120 days after December 31, 2021, is incorporated herein by reference.
110
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a) List of Documents Filed as Part of this Report.
1. Financial Statements
The Consolidated Financial Statements and accompanying notes, together with the report of KPMG LLP, appear in Part II, Item 8 -
Financial Statements and Supplementary Data, of this Form 10-K.
2. Schedules
None.
3. Exhibits
The exhibits that are required to be filed or incorporated by reference herein are listed in the Exhibit Index below.
Exhibit Index
Exhibit
EXHIBITS
Description
3.1
Certificate of Incorporation of Euronet Worldwide, Inc., as amended (filed as Exhibit 3.2 to the Company's Current
Report on Form 8-K filed on May 22, 2009, and incorporated by reference herein)
3.2
Certificate of Amendment to Certificate of Incorporation of Euronet Worldwide, Inc. (filed as Exhibit 3.1 to the
Company's Current Report on Form 8-K filed on May 22, 2009, and incorporated by reference herein)
3.3
Amended and Restated Certificate of Designations, Preferences and Rights of Series A Junior Participating Preferred
Stock (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on March 29, 2013, and incorporated
herein by reference)
3.4
Amended and Restated Bylaws of Euronet Worldwide, Inc. (filed as Exhibit 3.2 to the Company's Current Report on
Form 8-K filed on February 28, 2017, and incorporated herein by reference)
4.1
Indenture, dated May 22, 2019, between Euronet Worldwide, Inc. and U.S. Bank National Association, as trustee
(filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on May 22, 2019, and incorporated by
reference herein)
4.2
Supplemental Indenture, dated May 22, 2019, between Euronet Worldwide, Inc. and U.S. Bank National Association,
as trustee (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on May 22, 2019, and
incorporated by reference herein)
4.3
4.4
Form of 1.375% Senior Note due 2026 (included as Exhibit A to Exhibit 4.1 above).
Indenture, dated March 18, 2019, between the Company and U.S. Bank National Association, as trustee (filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K filed on March 18, 2019, and incorporated by reference
herein)
111
4.5
4.6
10.1
Form of 0.75% Convertible Senior Note due 2049 (included as Exhibit A to Exhibit 4.4 above)
Description of Securities (filed as Exhibit 4.6 to the Company's Annual Report on Form 10-K filed on March 3, 2020,
and incorporated herein by reference.
Form of Employee Restricted Stock Grant Agreement pursuant to Euronet Worldwide, Inc. 2006 Stock Incentive Plan
(filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2006, and incorporated by
reference herein) (2)
10.2
Form of Employee Restricted Stock Unit Agreement for Executives and Directors pursuant to Euronet Worldwide,
Inc. 2006 Stock Incentive Plan (filed as Exhibit 10.39 to the Company's Annual Report on Form 10- K filed February
28, 2007, and incorporated by reference herein) (2)
10.3
10.4
Employment Agreement dated June 19, 2007, between Euronet Worldwide, Inc. and Kevin J. Caponecchi (filed as
Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 25, 2007, and incorporated by reference
herein) (2)
Amended and Restated Employment Agreement dated April 10, 2008, between Euronet Worldwide, Inc. and Michael
J. Brown, Chairman and Chief Executive Officer (filed as Exhibit 10.3 to the Company's Quarterly Report on Form
10-Q filed on May 9, 2008, and incorporated by reference herein) (2)
10.5
Amended and Restated Employment Agreement dated April 10, 2008, between Euronet Worldwide, Inc. and Rick L.
Weller, Executive Vice President and Chief Financial Officer (filed as Exhibit 10.4 to the Company's Quarterly
Report on Form 10-Q filed on May 9, 2008, and incorporated by reference herein) (2)
10.6
Amended and Restated Employment Agreement dated April 10, 2008, between Euronet Worldwide, Inc. and Juan C.
Bianchi, Executive Vice President and Managing Director, Money Transfer Segment (filed as Exhibit 10.6 to the
Company's Quarterly Report on Form 10-Q filed on May 9, 2008, and incorporated by reference herein) (2)
10.7
Form of Indemnification Agreement, (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
December 22, 2008, and incorporated by reference herein)
10.8
Euronet Worldwide, Inc. 2006 Stock Incentive Plan, as amended and restated (filed as Appendix B to the Company's
Definitive Proxy Statement filed on April 4, 2021, and incorporated by reference herein) (2)
10.9
Form of Employee Restricted Stock Unit Agreement, as amended, pursuant to Euronet Worldwide, Inc. 2006 Stock
Incentive Plan (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 7, 2010, and
incorporated by reference herein) (2)
10.10
Form of Nonqualified Stock Option Agreement, as amended, pursuant to Euronet Worldwide, Inc. 2006 Stock
Incentive Plan (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on May 7, 2010, and
incorporated by reference herein) (2)
10.11.1
Employment Agreement dated May 21, 2018, between Euronet Worldwide, Inc. and Nikos Fountas (filed as Exhibit
10.1 to the Company's Current Report on Form 8-K filed on May 23, 2018, and incorporated by reference herein) (2)
10.11.2
Deed of Amendment to the Service Agreement dated May 21, 2018, between Euronet Worldwide, Inc. and Nikos
Fountas (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on August 3, 2018, and
incorporated by reference herein) (2)
10.12
Bonus Compensation Agreement between Euronet Worldwide, Inc. and Nikos Fountas, Senior Vice President -
Managing Director, Europe EFT Processing Segment (filed as Exhibit 10.26 to the Company's Annual Report on
Form 10-K filed on February 25, 2011, and incorporated by reference herein) (2)
112
10.13
Euronet Worldwide, Inc. Employee Stock Purchase Plan, as amended (filed as Exhibit 10.18 to the Company's Annual
Report on Form 10-K filed on February 26, 2016, and incorporated by reference herein) (2)
10.14
Euronet Worldwide, Inc. Executive Annual Incentive Plan, as amended and restated (filed as Appendix B to the
Company's Definitive Proxy Statement on Form DEF 14A filed on April 8, 2016, and incorporated by reference
herein) (2)
10.15
Credit agreement dated as of October 17, 2018, among Euronet Worldwide, Inc. and certain subsidiaries, as
borrowers, certain subsidiaries, as guarantors, the lenders party thereto, Bank of America, N.A., as administrative
agent, Wells Fargo Bank, National Association and U.S. Bank National Association, as co-syndication agents, et al.
(filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on November 2, 2018, and incorporated
by reference herein)
10.16
Form of Nonqualified Stock Option Agreement, as amended, pursuant to Euronet Worldwide, Inc. 2006 Stock
Incentive Plan (filed as Exhibit 10.19 to the Company's Annual Report on Form 10-K filed on March 1, 2018, and
incorporated by reference herein) (2)
10.17
Form of Restricted Stock Unit Agreement, as amended, pursuant to Euronet Worldwide, Inc. 2006 Stock Incentive
Plan (filed as Exhibit 10.20 to the Company's Annual Report on Form 10-K filed on March 1, 2018, and incorporated
by reference herein) (2)
10.18
Letter Amendment No. 1 dated August 26, 2019, to the Credit Agreement dated as of October 17, 2018 (filed as
Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed August 3, 2021, and incorporated by reference
herein)
10.19
Letter Amendment No. 2 dated as of September 17, 2020, to the Credit Agreement dated as of October 17, 2018 (filed
as Exhibit 10.1 to the Company's Current Report on Form 8-K filed September 18, 2020, and incorporated by
reference herein)
21.1
23.1
31.1
31.2
32.1
32.2
101
Subsidiaries of the Registrant (1)
Consent of Independent Registered Public Accounting Firm (1)
Section 302 — Certification of Chief Executive Officer (1)
Section 302 — Certification of Chief Financial Officer (1)
Section 906 Certification of Chief Executive Officer (3)
Section 906 Certification of Chief Financial Officer (3)
The following materials from Euronet Worldwide, Inc.’s Annual Report on Form 10-K for the year ended December
31, 2021, formatted inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at
December 31, 2021 and 2020, (ii) Consolidated Statements of Income for the years ended December 31, 2021, 2020
and 2019, (iii) Consolidated Statements of Comprehensive Operations for the years ended December 31, 2021, 2020
and 2019, (iv) Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019,
(v) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019, and (vi) Notes to
the Consolidated Financial Statements.
Cover Page Interactive Data File (contained in Exhibit 101)
104
___________________________
(1) Filed herewith.
(2) Management contracts and compensatory plans and arrangements required to be filed as Exhibits pursuant to Item 15(a) of this
report.
(3) Pursuant to Item 601(b)(32) of Regulation S-K, this Exhibit is furnished rather than filed with this Form 10-K.
113
PLEASE NOTE: Pursuant to the rules and regulations of the SEC, we have filed or incorporated by reference the agreements referenced
above as exhibits to this Annual Report on Form 10-K. The agreements have been filed to provide investors with information regarding
their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or
operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be
subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by
information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that
modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain
representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties,
rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and
covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected
in the Company's public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the
agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof.
114
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Euronet Worldwide, Inc.
Date: February 22, 2022
/s/ Michael J. Brown
Michael J. Brown
Chairman of the Board of Directors, Chief Executive
Officer, President and Director (principal executive
officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
/s/ Michael J. Brown
Michael J. Brown
February 22, 2022
/s/ Rick L. Weller
Rick L. Weller
February 22, 2022
/s/ Paul S. Althasen
Paul S. Althasen
February 22, 2022
/s/ Andrzej Olechowski
Andrzej Olechowski
February 22, 2022
/s/ Michael N. Frumkin
Michael N. Frumkin
February 22, 2022
/s/ Thomas A. McDonnell
Thomas A. McDonnell
February 22, 2022
/s/ Andrew B. Schmitt
Andrew B. Schmitt
February 22, 2022
/s/ M. Jeannine Strandjord
M. Jeannine Strandjord
February 22, 2022
/s/ Mark R. Callegari
Mark R. Callegari
February 22, 2022
Chairman of the Board of Directors, Chief Executive Officer,
President and Director (principal executive officer)
Chief Financial Officer and Chief Accounting Officer (principal
financial officer and principal accounting officer)
Director
Director
Director
Director
Director
Director
Director
115
116
RECONCILIATION TABLE
Reconciliation of Adjusted Earnings Per Share
(unaudited — in millions, except per share data)
2017
2018
2019
2020
2021
Net income (loss) attributable to Euronet Worldwide, Inc.
$ 156.9
$ 232.8
$ 346.8
$
(3.4)
$ 70.7
Foreign exchange (gain) loss
Intangible asset amortization
Share-based compensation
Expenses incurred for proposed acquisition of MoneyGram
Post-acquisition adjustment
Goodwill and intangible asset impairment, net of minority interest
Contract asset impairment
Non-cash convertible debt accretion interest
Income tax effect of above adjustments
Loss on early retirement of debt
U.S. tax reform impact
Non-cash GAAP tax (benefit) expense
Adjusted earnings1
Adjusted earnings per share — diluted1
Diluted weighted average shares outstanding
Effect of conversion of convertible debentures
Effect of unrecognized share-based compensation on diluted shares outstanding
Adjusted diluted weighted average shares outstanding
(20.3)
24.5
15.6
4.5
–
34.1
–
11.0
(6.6)
–
41.6
(7.5)
26.7
22.6
16.7
–
6.6
7.0
–
11.5
(11.7)
–
(12.3)
3.4
(2.7)
20.4
21.5
–
(1.3)
–
–
16.2
(4.9)
9.8
(25.7)
12.9
3.8
22.9
22.0
–
–
106.6
–
15.3
(7.2)
–
–
10.8
23.1
36.6
–
–
–
38.6
16.0
(13.8)
–
–
(8.3)
16.4
$ 253.8
$ 303.3
$ 393.0
$ 151.7
$ 198.4
$ 4.58
$ 5.53
$ 7.01
$ 2.82
$ 3.69
55.1
–
0.3
55.4
54.6
–
0.3
54.9
54.9
0.9
0.3
56.1
52.7
0.9
0.2
53.8
53.5
–
0.2
53.7
Operating Income to Adjusted EBITDA
(unaudited — in millions)
Net income (loss)
Add: Income tax expense
Add: Total other expense, net
Operating income
Add: Contract asset impairment
Add: Goodwill and acquired asset impairment
Post-acquisition adjustment
Add: Expense incurred for proposed acquisition of MoneyGram
Adjusted operating income
Add: Depreciation and amortization
Add: Share-based compensation
2017
2018
2019
2020
2021
$ 157.0
$ 232.0
$ 346.7
$
(3.3)
$ 70.5
99.5
9.5
62.8
63.2
87.2
41.3
11.5
38.4
65.1
48.4
$ 266.0
$ 358.0
$ 475.2
$ 46.6
$ 184.0
–
34.1
–
4.5
–
7.0
6.6
–
–
–
(1.3)
–
–
38.6
106.6
–
–
–
–
–
$ 304.6
$ 371.6
$ 473.9
$ 153.2
$ 222.6
95.0
15.6
106.1
16.7
111.7
21.5
127.0
22.0
135.8
36.6
Earnings before interest, taxes, depreciation, amortization, share-based
compensation, post acquisition adjustments, goodwill and acquired intangible asset
impairment, contract asset impairment and other non-operating and non-recurring
items (Adjusted EBITDA).
$ 415.2
$ 494.4
$ 607.1
$ 302.2
$ 395.0
117
(1) Adjusted earnings and adjusted earnings per share are non-GAAP measures that should be considered in addition to, and not as a substitute for, net income and earnings per share computed in accordance with U.S. GAAP.Note: Adjusted earnings per share is defined as diluted U.S. GAAP earnings per share excluding, to the extent incurred during the period, the tax-effected impacts of: a) foreign exchange gains or losses, b) goodwill and acquired intangible asset impairment charges, c) gains or losses from the early retirement of debt, d) share-based compensation, e) acquired intangible asset amortization, f) contract asset impairments g) non-cash interest expense, h) non-cash income tax expense, and i) other non-operating or non-recurring items. Adjusted earnings per share includes shares potentially issuable in settlement of convertible bonds or other obligations, if the assumed issuances are dilutive to adjusted earnings per share. Adjusted earnings per share represents a performance measure and is notintended to represent a liquidity measure.Adjusted operating income is defined as operating income excluding goodwill and acquired intangible asset impairments, contract asset impairments and non-recurring items that are considered expenses or income under U.S. GAAP.Adjusted EBITDA is defined as operating income excluding depreciation, amortization, share-based compensation expenses, goodwill and intangible asset impairments, contract asset impairments and other non-operating or non-recurring items. Although these items are considered operating costs under U.S. GAAP, these expenses primarily represent non-cash current period allocation of costs associated with long-lived assets acquired in prior periods. Similarly, expense recorded for share-based compensation does not represent a current or future period cash cost. Adjusted EBITDA is a non-GAAP measure that should be considered in addition to, and not as a substitute for, EBITDA computed in accordance with GAAP. LOOKING FORWARD
Annual Meeting
Euronet’s 2022 Annual Meeting of Stockholders will be held on
Wednesday, May 18, 2022, at Euronet’s Corporate Headquarters in
Leawood, Kansas.
Around the Globe
In 2021 we did business in more than
175 countries worldwide.
Website
www.euronetworldwide.com
Forward-Looking Statements
Statements contained in this news release that concern Euronet’s or
its management’s intentions, expectations, or predictions of future
performance, are forward-looking statements. Euronet’s actual results
may vary materially from those anticipated in such forward-looking
statements as a result of a number of factors, including: conditions in
world financial markets and general economic conditions, including
impacts from the COVID pandemic; effectiveness of vaccines and
treatments against variants of COVID; economic conditions in specific
countries and regions; technological developments affecting the market
for our products and services; the potential risk that a military conflict
in Eastern Europe may negatively impact our operations in the region;
our ability to successfully introduce new products and services; foreign
currency exchange rate fluctuations; the effects of any breach of our
computer systems or those of our customers or vendors, including our
financial processing networks or those of other third parties; interruptions
in any of our systems or those of our vendors or other third parties; our
ability to renew existing contracts at profitable rates; 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, consumer and data
protection and the European Union’s General Data Privacy Regulation
and Second Payment Service Directive requirements; changes in laws
and regulations affecting our business, including tax and immigration laws
and any laws regulating payments, including dynamic currency conversion
transactions; changes in our relationships with, or in fees charged by,
our business partners; competition; 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.
These risks and other risks are described in the Company’s filings with
the Securities and Exchange Commission, including our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K. Copies of these filings may be obtained via the SEC’s Edgar website
or by contacting the Company. Any forward-looking statements made in
this release speak only as of the date of this release. Except as may be
required by law, Euronet does not intend to update these forward-looking
statements and undertakes no duty to any person to provide any such
update under any circumstances. The Company regularly posts important
information to the investor relations section of its website.
118
Office Locations
Amsterdam, the Netherlands
Athens, Greece
Auckland, New Zealand
Beijing, China
Belgrade, Serbia
Berlin, Germany
Billericay, United Kingdom
Bracknell, United Kingdom
Bratislava, Slovakia
Brussels, Belgium
Bucharest, Romania
Budapest, Hungary
Buena Park, California
Cairo, Egypt
Copenhagen, Denmark
Dakar, Senegal
Denver, Colorado
Dubai, United Arab Emirates
Dublin, Ireland
Geneva, Swtizerland
Hamburg, Germany
Houston, Texas
Istanbul, Turkey
Jakrata, Indonesia
Karachi, Pakistan
Kiev, Ukraine
Kracow, Poland
Kuala Lumpur, Malaysia
Leawood, Kansas
Lisbon, Portugal
Little Rock, Arkansas
London, United Kingdom
Madrid, Spain
Makati City, Philippines
Manama, Bahrain
Martinsreid, Germany
Mexico City, Mexico
Milan, Italy
Milton Keynes, United Kingdom
Montreal, Canada
Moscow, Russian Federation
Mumbai, India
Munich, Germany
Newmarket, Canada
Paris, France
Prague, Czech Republic
Pune, India
Rome, Italy
San Salvador, El Salvador
Santiago, Chile
Sao Paulo, Brazil
Shanghai, China
Singapore
Sofia, Bulgaria
Stockholm, Sweden
Sydney, Australia
Toronto, Canada
Vienna, Austria
Warsaw, Poland
Zagreb, Croatia
Local Currency
euro
euro
New Zealand dollar
yuan
dinar
euro
British pound
British pound
euro
euro
new leu
forint
U.S. dollar
Egyptian pound
krone
West African CFA franc
U.S. dollar
dirham
euro
Swiss franc
euro
U.S. dollar
lira
rupiah
Pakistan rupee
hryvnia
zloty
ringgit
U.S. dollar
euro
U.S. dollar
British pound
euro
Philippine peso
dinar
euro
Mexican peso
euro
British pound
Canadian dollar
ruble
Indian rupee
euro
Canadian dollar
euro
koruna
Indian rupee
euro
U.S. dollar
Chilean peso
real
yuan
Singapore dollar
lev
krona
Australian dollar
Canadian dollar
euro
zloty
kuna
CONTENTS
Shareholder Letter
Technology In Use
Financial Highlights
Financial Overview
Payments Platforms
• REN
• Dandelion
Business Segments
• Electronic Funds Transfer
• epay
• Money Transfer (Ria, Xe)
Conclusion
Executive Summary
10K Report
Reconciliation Table
Looking Forward
Office Locations/Currencies
2
4
6
7
8
9
10
12
14
16
17
18
117
118
118
> WORLDWIDE OFFICE LOCATIONS
>
At Euronet, we believe that every payment tells a story, and we have
developed technology with these stories in mind. Throughout the pages
of our 2021 Annual Report, you will discover payment stories from
inside each of our business segments and how we make participation
in the global economy easier, faster and more secure for everyone.
> WORLDWIDE OFFICES
> WORLDWIDE EMPLOYEES
66
8,800
119
> EVERY PAYMENT TELLS A STORY
Connecting technology to the way we live
generates opportunities for expansion.
Euronet Worldwide, Inc.
Leawood, Kansas, USA
euronetworldwide.com
> 2021 ANNUAL REPORT
EVERY PAYMENT
TELLS A STORY
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