Euronet Worldwide, Inc. (“Euronet” or the “Company”) (NASDAQ:
EEFT), a leading global financial technology solutions and payments
provider, reports third quarter 2023 financial
results.
Euronet reports the following
consolidated results for the third quarter 2023 compared with the
same period of 2022:
- Revenues of $1,004.0 million, an 8% increase
from $931.3 million (3% increase on a constant
currency1 basis).
- Operating income of $167.0 million, a 1% decrease
from $168.5 million (6% decrease on a constant currency
basis).
- Adjusted EBITDA2 of $212.5 million, consistent with $211.6
million (4% decrease on a constant currency basis).
- Net income attributable to Euronet of $104.2 million, or $2.05
diluted earnings per share, compared with $97.7 million, or
$1.87 diluted earnings per share.
- Adjusted earnings per share3 of $2.72, a 1% decrease from
$2.74.
- Euronet's cash and cash equivalents were $1,074.4 million
and ATM cash was $603.5 million, totaling $1,677.9 million as
of September 30, 2023, and availability under its revolving
credit facilities was approximately $1,080 million.
See the reconciliation of non-GAAP items in the attached
financial schedules.
"I am pleased that we were able to deliver our
first one billion dollar revenue quarter. This third quarter is a
great reminder of how our product and geographical diversity
provides consistency in our earnings despite the geopolitical and
economic challenges across the world. Moreover, with the current
share price dislocation, we took the opportunity to make a
substantial share repurchase, the benefit to adjusted EPS was
largely offset by the weakening of foreign currencies versus the US
dollar," stated Michael J. Brown, Euronet's Chairman and
CEO.
"Money Transfer produced strong third quarter
results compared to prior year across all financial metrics,
as well as margin expansion from continued growth in both physical
and digital transactions and effective cost management. In EFT, our
POS acquiring business continues to deliver strong growth rates,
with earnings doubling in the first 18 months post-acquisition, and
we saw a positive trend reversal in our international ATM
transactions as we ended the quarter. In epay, our core business
delivered strong results from continued digital media and mobile
growth."
Taking into consideration recent trends in the
business and the global economy, and historical seasonal
patterns, the Company anticipates that its fourth
quarter 2023 adjusted EPS will be $1.75. Moreover,
the Company anticipates its 2024 adjusted EPS will grow 10-15%
year-over-year, consistent with its 10 and 20 year compounded
annualized growth rates. This outlook does not include any
changes that may develop in foreign exchange rates, interest rates
or other unforeseen factors.
Segment and Other Results
The EFT Processing Segment
reports the following results for the third quarter 2023 compared
with the same period or date in 2022:
- Revenues of $345.8 million, an 8% increase from
$319.5 million (2% increase on a constant
currency1 basis).
- Operating income of $104.8 million, a
10% decrease from $116.4 million (15% decrease on a
constant currency basis).
- Adjusted EBITDA of $128.7 million,
an 8% decrease from $139.5 million
(12% decrease on a constant currency basis).
- Transactions of 2,231 million, a 29% increase
from 1,733 million.
- Total of 53,272 installed ATMs as of September
30, 2023, a 4% increase from 51,437. Operated
51,496 active ATMs as of September 30, 2023, a
4% increase from 49,617 as of September 30, 2022.
Revenue growth in the third quarter 2023 was
driven by continued growth in our POS acquiring business and growth
in Asia as we expand into new markets. The decreases in
adjusted EBITDA and operating income were the result of
decreases in our most profitable international transactions driven
by a decline in Croatia due to the switch from kuna to the euro at
the beginning of the year and inflationary pressures on travel
budgets in Europe.
Transaction growth outpaced revenue growth due
to continued growth in high-volume low-value transactions in
India.
The EFT Segment's total
installed ATMs grew 4% from the addition of
495 Euronet-owned ATMs, 388 new outsourcing ATMs and the
addition of 952 low-margin ATMs in India. The difference
between installed and active ATMs relates
to ATMs that have been seasonally deactivated.
The epay Segment reports
the following results for the third
quarter 2023 compared with the same period or date
in 2022:
- Revenues of $264.5 million,
a 6% increase from $248.9 million
(1% increase on a constant currency basis).
- Operating income of $28.3 million,
a 3% decrease from $29.1 million
(6% decrease on a constant currency basis).
- Adjusted EBITDA of $30.1 million, a 1% decrease from
$30.5 million (5% decrease on a constant currency
basis).
- Transactions of 925 million, a 1% increase from 915
million.
- POS terminals of approximately 810,000 as
of September 30, 2023, a 4% increase from approximately
777,000.
- Retailer locations of approximately 348,000 as
of September 30, 2023, a 1% decrease from
approximately 352,000.
Revenue and transaction growth was driven by
continued digital media and mobile growth. This growth was
offset by declines in promotional campaigns delivered on behalf of
our retail partners that were recognized in the prior year
that did not repeat in the third quarter this year and continued
declines from challenges in India, and inflationary pressures
impacting operating expenses.
The Money Transfer Segment
reports the following results for the third quarter 2023 compared
with the same period or date in 2022:
- Revenues of $395.9 million, an 8% increase from
$364.9 million (6% increase a constant currency
basis).
- Operating income of $53.7 million,
a 32% increase from $40.7 million (27% increase on a
constant currency basis).
- Adjusted EBITDA of $60.7 million, a 24% increase
from $48.9 million (20% increase on a constant currency
basis).
- Total transactions of 40.6 million, an 8% increase
from 37.7 million
- Network locations of approximately 540,000 as
of September 30, 2023, a 6% increase
from approximately 509,000.
Third quarter constant currency revenue,
operating income and adjusted EBITDA growth was the result of 7%
growth in U.S.-outbound transactions, 10% growth in
international-originated money transfers - which included 12%
growth from Americas outside the US, 8% growth in transfers
initiated largely in Europe and 7% growth in transfers initiated in
the Middle East and Asia - and 18% growth in xe transactions. These
transaction growth rates include 20% growth in direct-to-consumer
digital transactions.
Corporate and Other reports
$19.8 million of expense for the third
quarter 2023 compared with $17.7 million for
the third quarter 2022. The increase is
primarily due to an increase in long-term compensation expense
based on company performance.
Balance Sheet and Financial
PositionUnrestricted cash and cash equivalents on hand was
$1,074.4 million as of September 30, 2023, compared to $1,137.5
million as of June 30, 2023. The decrease in unrestricted cash and
cash equivalents is mainly due to approximately $300 million in
share repurchases and working capital fluctuations, partially
offset by cash generated from operations of $146 million and $173
million of ATM cash returned as the peak tourist season winds
down.
Total indebtedness was
$1,717.3 million as of September 30, 2023, compared
to $1,760.8 million as of June 30, 2023. Availability under the
Company's revolving credit facilities was approximately $1,080
million as of September 30, 2023.
Non-GAAP MeasuresIn addition to
the results presented in accordance with U.S. GAAP, the Company
presents non-GAAP financial measures, such as constant currency
financial measures, adjusted EBITDA, and adjusted earnings per
share. These measures should be used in addition to, and not a
substitute for, revenues, net income and earnings per share
computed in accordance with U.S. GAAP. We believe that these
non-GAAP measures provide useful information to investors regarding
the Company's performance and overall results of operations. These
non-GAAP measures are also an integral part of the Company's
internal reporting and performance assessment for executives and
senior management. The non-GAAP measures used by the Company may
not be comparable to similarly titled non-GAAP measures used by
other companies. The attached schedules provide a full
reconciliation of these non-GAAP financial measures to their most
directly comparable U.S. GAAP financial measure.
The Company does not provide a reconciliation of
its forward-looking non-GAAP measures to GAAP due to the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for GAAP and the related GAAP and non-GAAP
reconciliation, including adjustments that would be necessary for
foreign currency exchange rate fluctuations and other charges
reflected in the Company's reconciliation of historic numbers,
the amount of which, based on historical experience, could be
significant.
(1) Constant currency financial measures are
computed as if foreign currency exchange rates did not change from
the prior period. This information is provided to illustrate the
impact of changes in foreign currency exchange rates on the
Company's results when compared to the prior period.
(2) Adjusted EBITDA is defined as net income
excluding, to the extent incurred in the period, interest expense,
income tax expense, depreciation, amortization, share-based
compensation, non-cash gain and other non-operating or
non-recurring items that are considered expenses or income under
U.S. GAAP. Adjusted EBITDA represents a performance measure and is
not intended to represent a liquidity measure.
(3) Adjusted earnings per share is defined as
diluted U.S. GAAP earnings per share excluding, to the extent
incurred in the period, the tax-effected impacts of: a) foreign
currency exchange gains or losses, b) share-based compensation, c)
acquired intangible asset amortization, d) non-cash income tax
expense, e) other non-operating or non-recurring items and g)
dilutive shares relate to the Company's convertible bonds. Adjusted
earnings per share represents a performance measure and is not
intended to represent a liquidity measure.
Conference Call and Slide
PresentationEuronet Worldwide will host an analyst
conference call on October 20, 2023, at 9:00 a.m. Eastern Time
to discuss these results. The call may also include discussion of
Company developments on the Company's operations, forward-looking
information, and other material information about business and
financial matters. To listen to the call via telephone please
register at Euronet Worldwide Third Quarter 2023 Earnings Call. The
conference call will also be available via webcast at
http://ir.euronetworldwide.com. Participants should register at
least five minutes prior to the scheduled start time of the event.
A slideshow will be included in the webcast.
A webcast replay will be available beginning
approximately one hour after the event
at http://ir.euronetworldwide.com and will remain available
for one year.
About Euronet Worldwide,
Inc.Starting in Central Europe in 1994 and growing to a
global real-time digital and cash payments network with millions of
touchpoints today, Euronet now moves money in all the ways
consumers and businesses depend upon. This includes money
transfers, credit/debit card processing, ATMs, POS services,
branded payments, foreign currency exchange and more. With products
and services in more than 200 countries and territories provided
through its own brand and branded business segments,
Euronet and its financial technologies and networks make
participation in the global economy easier, faster and more secure
for everyone.
A leading global financial technology solutions
and payments provider, Euronet has developed an extensive global
payments network that includes 53,272 installed ATMs, approximately
637,000 EFT POS terminals and a growing portfolio of outsourced
debit and credit card services which are under management in 66
countries; card software solutions; a prepaid processing network of
approximately 810,000 POS terminals at approximately 348,000
retailer locations in 61 countries; and a global money transfer
network of approximately 540,000 locations serving 194 countries
and territories. Euronet serves clients from its corporate
headquarters in Leawood, Kansas, USA, and 67 worldwide offices. For
more information, please visit the Company's website at
www.euronetworldwide.com.
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-19 or other pandemics; inflation; the war in the
Ukraine; military conflicts in the Middle East, and the related
economic sanctions; our ability to successfully integrate any
acquired operations; 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, consumer and data protection and privacy; 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 (including fluctuations in
interest rates), availability of credit and terms of and compliance
with debt covenants; and renewal of sources of funding as they
expire and the availability of replacement funding. 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.
EURONET WORLDWIDE, INC. |
Condensed Consolidated Balance Sheets |
(in millions) |
|
As of |
|
|
|
September 30, |
|
As of |
|
2023 |
|
December 31, |
|
(unaudited) |
|
2022 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
1,074.4 |
|
|
$ |
1,131.2 |
|
ATM cash |
|
603.5 |
|
|
|
515.6 |
|
Restricted cash |
|
14.1 |
|
|
|
7.4 |
|
Settlement assets |
|
1,242.3 |
|
|
|
1,442.7 |
|
Trade accounts receivable, net |
|
300.6 |
|
|
|
270.8 |
|
Prepaid expenses and other current assets |
|
301.5 |
|
|
|
359.0 |
|
Total current assets |
|
3,536.4 |
|
|
|
3,726.7 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
327.9 |
|
|
|
336.6 |
|
Right of use lease asset, net |
|
140.0 |
|
|
|
149.7 |
|
Goodwill and acquired intangible assets, net |
|
985.2 |
|
|
|
1,016.6 |
|
Other assets, net |
|
173.4 |
|
|
|
174.0 |
|
Total assets |
$ |
5,162.9 |
|
|
$ |
5,403.6 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Settlement obligations |
$ |
1,242.3 |
|
|
$ |
1,442.7 |
|
Accounts payable and other current liabilities |
|
825.5 |
|
|
|
858.1 |
|
Current portion of operating lease liabilities |
|
49.1 |
|
|
|
50.2 |
|
Short-term debt obligations |
|
451.9 |
|
|
|
3.1 |
|
Total current liabilities |
|
2,568.8 |
|
|
|
2,354.1 |
|
|
|
|
|
|
|
|
|
Debt obligations, net of current portion |
|
1,263.0 |
|
|
|
1,609.1 |
|
Operating lease liabilities, net of current portion |
|
95.1 |
|
|
|
102.6 |
|
Capital lease obligations, net of current portion |
|
2.4 |
|
|
|
1.3 |
|
Deferred income taxes |
|
28.5 |
|
|
|
28.4 |
|
Other long-term liabilities |
|
62.9 |
|
|
|
63.7 |
|
Total liabilities |
|
4,020.7 |
|
|
|
4,159.2 |
|
Equity |
|
1,142.2 |
|
|
|
1,244.4 |
|
Total liabilities and equity |
$ |
5,162.9 |
|
|
$ |
5,403.6 |
|
EURONET WORLDWIDE, INC. |
Consolidated Statements of Operations |
(unaudited - in millions, except share and per share
data) |
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
2023 |
|
2022 |
|
|
|
|
Revenues |
$ |
1,004.0 |
|
|
$ |
931.3 |
|
|
|
|
|
Operating expenses: |
|
|
|
Direct operating costs |
576.7 |
|
|
526.0 |
|
Salaries and benefits |
153.6 |
|
|
134.4 |
|
Selling, general and administrative |
73.9 |
|
|
69.6 |
|
Depreciation and amortization |
32.8 |
|
|
32.8 |
|
Total operating expenses |
837.0 |
|
|
762.8 |
|
Operating income |
167.0 |
|
|
168.5 |
|
|
|
|
|
Other income (expense): |
|
|
|
Interest income |
4.0 |
|
|
0.6 |
|
Interest expense |
(15.0 |
) |
|
(11.7 |
) |
Foreign currency exchange loss |
(8.8 |
) |
|
(15.8 |
) |
Total other expense, net |
(19.8 |
) |
|
(26.9 |
) |
Income before income taxes |
147.2 |
|
|
141.6 |
|
|
|
|
|
Income tax expense |
(43.0 |
) |
|
(44.0 |
) |
|
|
|
|
Net income |
104.2 |
|
|
97.6 |
|
Net loss attributable to
noncontrolling interests |
— |
|
|
0.1 |
|
Net income attributable to Euronet Worldwide, Inc. |
$ |
104.2 |
|
|
$ |
97.7 |
|
Add: Interest expense from assumed conversion of convertible notes,
net of tax |
|
1.1 |
|
|
|
1.1 |
|
Net income for diluted earnings per share calculation |
$ |
105.3 |
|
|
$ |
98.8 |
|
Earnings per share
attributable to Euronet |
|
|
|
Worldwide, Inc. stockholders - diluted |
$ |
2.05 |
|
|
$ |
1.87 |
|
|
|
|
|
Diluted weighted average shares outstanding |
51,470,603 |
|
|
52,751,304 |
|
|
|
|
|
EURONET WORLDWIDE, INC. |
Reconciliation of Net Income to Operating Income (Expense)
and Adjusted EBITDA |
(unaudited - in millions) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
EFT Processing |
|
epay |
|
Money Transfer |
|
Corporate Services |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
$ |
104.2 |
|
|
|
|
|
|
|
|
|
|
|
Add: Income tax expense |
|
|
|
|
|
|
|
|
43.0 |
|
Add: Total other expense,
net |
|
|
|
|
|
|
|
|
19.8 |
|
|
|
|
|
|
|
|
|
|
|
Operating income (expense) |
$ |
104.8 |
|
|
$ |
28.3 |
|
|
$ |
53.7 |
|
|
$ |
(19.8 |
) |
|
$ |
167.0 |
|
|
|
|
|
|
|
|
|
|
|
Add: Depreciation and
amortization |
23.9 |
|
|
1.8 |
|
|
7.0 |
|
|
0.1 |
|
|
32.8 |
|
Add: Share-based
compensation |
— |
|
|
— |
|
|
— |
|
|
12.7 |
|
|
12.7 |
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest,
taxes, depreciation, amortization, share-based compensation
(Adjusted EBITDA) (1) |
$ |
128.7 |
|
|
$ |
30.1 |
|
|
$ |
60.7 |
|
|
$ |
(7.0 |
) |
|
$ |
212.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
EFT Processing |
|
epay |
|
Money Transfer |
|
Corporate Services |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
$ |
97.6 |
|
|
|
|
|
|
|
|
|
|
|
Add: Income tax expense |
|
|
|
|
|
|
|
|
44.0 |
|
Add: Total other expense,
net |
|
|
|
|
|
|
|
|
26.9 |
|
|
|
|
|
|
|
|
|
|
|
Operating income
(expense) |
$ |
116.4 |
|
|
$ |
29.1 |
|
|
$ |
40.7 |
|
|
$ |
(17.7 |
) |
|
$ |
168.5 |
|
|
|
|
|
|
|
|
|
|
|
Add: Depreciation and
amortization |
23.1 |
|
|
1.4 |
|
|
8.2 |
|
|
0.1 |
|
|
32.8 |
|
Add: Share-based
compensation |
— |
|
|
— |
|
|
— |
|
|
10.3 |
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest,
taxes, depreciation, amortization and share-based compensation
(Adjusted EBITDA) (1) |
$ |
139.5 |
|
|
$ |
30.5 |
|
|
$ |
48.9 |
|
|
$ |
(7.3 |
) |
|
$ |
211.6 |
|
(1) Adjusted EBITDA is a non-GAAP measure that
should be considered in addition to, and not a substitute for, net
income computed in accordance with U.S. GAAP.
EURONET WORLDWIDE, INC. |
Reconciliation of Adjusted Earnings per
Share |
(unaudited - in millions, except share and per share
data) |
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
2023 |
|
2022 |
|
|
|
|
Net income attributable to Euronet Worldwide, Inc. |
$ |
104.2 |
|
|
$ |
97.7 |
|
|
|
|
|
Foreign currency exchange
loss |
8.8 |
|
|
15.8 |
|
Intangible asset
amortization(1) |
5.5 |
|
|
6.8 |
|
Share-based
compensation(2) |
12.7 |
|
|
10.3 |
|
Income tax effect of above
adjustments(3) |
(4.7 |
) |
|
5.6 |
|
Non-cash GAAP tax
expense(4) |
6.2 |
|
|
1.1 |
|
|
|
|
|
Adjusted earnings(5) |
$ |
132.7 |
|
|
$ |
137.3 |
|
|
|
|
|
Adjusted earnings per share -
diluted(5) |
$ |
2.72 |
|
|
$ |
2.74 |
|
|
|
|
|
Diluted weighted average
shares outstanding (GAAP) |
|
51,470,603 |
|
|
52,751,304 |
|
Effect of adjusted EPS
dilution of convertible notes |
|
(2,781,818 |
) |
|
|
(2,781,818 |
) |
Effect of unrecognized
share-based compensation on diluted shares outstanding |
|
185,073 |
|
|
160,357 |
|
Adjusted diluted weighted
average shares outstanding |
|
48,873,858 |
|
|
50,129,843 |
|
|
|
|
|
|
|
(1) Intangible asset amortization of $5.5
million and $6.8 million are included in
depreciation and amortization expense of $32.8
million for both the three months ended September 30,
2023and September 30, 2022, in the consolidated statements of
operations.
(2) Share-based compensation of $12.7 million
and $10.3 million are included in salaries and benefits expense of
$153.6 million and $134.4 million for the three months ended
September 30, 2023 and September 30, 2022, respectively, in the
consolidated statements of operations.
(3) Adjustment is the aggregate U.S. GAAP
income tax effect on the preceding adjustments determined by
applying the applicable statutory U.S. federal, state and/or
foreign income tax rates.
(4) Adjustment is the non-cash GAAP tax impact
recognized on certain items such as the utilization of certain
material net deferred tax assets and amortization of
indefinite-lived intangible assets.
(5) 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.
Contact:
Euronet Worldwide, Inc.
Genese Hill
+1-913-327-4200
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