UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þ
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2021
OR
o
☐
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)
Delaware
74-2806888
Delaware74-2806888
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
(I.R.S. Employer Identification No.)
3500 College Boulevard
11400 Tomahawk Creek Parkway, Suite 300
 
Leawood,
Kansas
66211
(Address of principal executive offices)(Zip Code)
(913)327-4200
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockEEFT
Nasdaq Global Select Market
1.375% Senior Notes due 2026
EEFT26
Nasdaq Global Market
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þNo o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
þ
Accelerated filer
o
Large acceleratedNon-accelerated filer þ
o
Smaller reporting company
☐


Emerging growth company
Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)☐
Smaller reporting company o
Emerging growth company o
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐Noþ

On October 26, 2017,May 3, 2021, Euronet Worldwide, Inc. had 52,681,03452,797,354 shares of Common Stockcommon stock outstanding.
 


EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Table of Contents
​

Page



Page
PART I—FINANCIAL INFORMATION


Item 1.
Financial Statements (unaudited)
3
1

Consolidated Balance Sheets as of September 30, 2017March 31, 2021 and December 31, 20162020
3
1

Consolidated Statements of IncomeOperations for the Three and Nine Months Ended September 30, 2017March 31, 2021 and 20162020
4
2

Consolidated Statements of Comprehensive IncomeLoss for the Three and Nine Months Ended September 30, 2017March 31, 2021 and 20162020
5
3

Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2021 and 2020
4

Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2021 and 20162020
6

Notes to the Unaudited Consolidated Financial Statements
7
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
19
21
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
37
39
Item 4.
Controls and Procedures
38
40
PART II—OTHER INFORMATION


Item 1.
Legal Proceedings
38
40
Item 1A.
Risk Factors
39
41
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
39
41
Item 6.
Exhibits
39
42

Signatures
4043


Table of Contents
PART I—FINANCIAL INFORMATION


ITEM 1.1. FINANCIAL STATEMENTS (UNAUDITED)

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 As of
 March 31,
2021		 December 31,
2020
 (unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$
1,145,406

 
$1,420,255
ATM cash339,883
 411,054
Restricted cash2,897
 3,334
Settlement assets960,313
 1,140,875
Trade accounts receivable, net of credit losses of $4,717 and $5,926111,384
 117,517
Prepaid expenses and other current assets253,308
 272,900
Total current assets2,813,191
 3,365,935
Operating right of use lease assets171,852
 162,074
Property and equipment, net of accumulated depreciation of $485,467 and $490,429357,272
 378,441
Goodwill653,128
 665,821
Acquired intangible assets, net of accumulated amortization of $178,219 and $175,210114,768
 121,883
Other assets, net of accumulated amortization of $57,118 and $55,710240,623
 232,557
Total assets$4,350,834
 $4,926,711
LIABILITIES AND EQUITY   
Current liabilities:   
Settlement obligations$960,313
 $1,140,875
Trade accounts payable125,007
 147,593
Accrued expenses and other current liabilities361,139
 404,021
Current portion of operating lease liabilities51,461
 52,436
Short-term debt obligations and current maturities of long-term debt obligations743
 797
Income taxes payable29,323
 36,359
Deferred revenue74,737
 73,360
Total current liabilities1,602,723
 1,855,441
Debt obligations, net of current portion1,143,026
 1,437,589
Operating lease obligations, net of current portion120,260
 106,502
Deferred income taxes39,708
 37,875
Other long-term liabilities39,390
 43,401
Total liabilities2,945,107
 3,480,808
Equity:   
Euronet Worldwide, Inc. stockholders’ equity:   
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; NaN issued0—
 0—
Common Stock, $0.02 par value. 90,000,000 shares authorized;  shares issued 63,429,190 and 63,366,0101,268
 1,267
Additional paid-in-capital1,240,273
 1,228,446
Treasury stock, at cost, shares issued 10,632,705 and 10,631,961(703,514) (703,032)
Retained earnings1,004,490
 1,013,155
Accumulated other comprehensive loss(137,059) (94,214)
Total Euronet Worldwide, Inc. stockholders’ equity1,405,458
 1,445,622
Noncontrolling interests269 281
Total equity1,405,727
 1,445,903
Total liabilities and equity$4,350,834
 $4,926,711
 As of
 September 30,
2017		 December 31,
2016
 (unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$1,062,241
 $734,414
Restricted cash113,617
 77,674
Inventory — PINs and other49,108
 78,115
Trade accounts receivable, net of allowances for doubtful accounts of $20,033 at September 30, 2017 and $18,369 at December 31, 2016547,383
 502,989
Prepaid expenses and other current assets152,913
 191,796
Total current assets1,925,262
 1,584,988
Property and equipment, net of accumulated depreciation of $325,521 at September 30, 2017 and $262,470 at December 31, 2016250,436
 202,145
Goodwill743,860
 689,713
Acquired intangible assets, net of accumulated amortization of $176,495 at September 30, 2017 and $150,347 at December 31, 2016155,155
 165,331
Other assets, net of accumulated amortization of $42,549 at September 30, 2017 and $36,984 at December 31, 2016103,208
 70,695
Total assets$3,177,921
 $2,712,872
LIABILITIES AND EQUITY   
Current liabilities:   
Trade accounts payable$365,952
 $456,682
Accrued expenses and other current liabilities704,200
 615,153
Current portion of capital lease obligations4,977
 3,293
Short-term debt obligations and current maturities of long-term debt obligations136,896
 32,161
Income taxes payable41,883
 27,611
Deferred revenue45,218
 44,200
Total current liabilities1,299,126
 1,179,100
Debt obligations, net of current portion592,924
 561,663
Capital lease obligations, net of current portion9,168
 6,969
Deferred income taxes46,361
 44,079
Other long-term liabilities32,828
 20,504
Total liabilities1,980,407
 1,812,315
Equity:   
Euronet Worldwide, Inc. stockholders’ equity:   
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued—
 —
Common Stock, $0.02 par value. 90,000,000 shares authorized; 58,758,343 issued at September 30, 2017 and 58,389,242 issued at December 31, 20161,175
 1,168
Additional paid-in-capital1,065,987
 1,045,663
Treasury stock, at cost, 6,088,055 shares at September 30, 2017 and 6,085,841 shares at December 31, 2016(216,843) (215,462)
Retained earnings459,887
 278,842
Accumulated other comprehensive loss(113,523) (210,662)
Total Euronet Worldwide, Inc. stockholders’ equity1,196,683
 899,549
Noncontrolling interests831
 1,008
Total equity1,197,514
 900,557
Total liabilities and equity$3,177,921
 $2,712,872
See accompanying notes to the unaudited consolidated financial statements.

1
Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS
(Unaudited, in thousands, except share and per share data)

 
Three Months Ended
March 31,

 2021 2020
Revenues $652,670
 $583,907

Operating expenses:   
Direct operating costs434,516
 359,456

Salaries and benefits115,668
 101,240

Selling, general and administrative58,776
 60,793

Depreciation and amortization33,261
 30,816

Total operating expenses642,221
 552,305

Operating income10,449
 31,602

Other income (expense):   
Interest income182
 567

Interest expense(9,189) (9,233)
Foreign currency exchange loss, net(4,032) (18,806)
Other gains, net31
 31
Other expense, net(13,008) (27,441)
(Loss) income before income taxes(2,559) 4,161

Income tax expense(6,062) (2,441)
Net (loss) income(8,621) 1,720

Net (income) loss attributable to noncontrolling interests(44) 201
Net (loss) income attributable to Euronet Worldwide, Inc.$(8,665) $1,921

    
(Loss) earnings per share attributable to Euronet Worldwide, Inc. stockholders:   
Basic$
(0.16
) $0.04

Diluted$(0.16) $0.04

    
Weighted average shares outstanding:   
Basic52,762,845
 53,607,104

Diluted52,762,845
 54,779,321


 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Revenues$637,834
 $524,025
 $1,647,777
 $1,438,786
Operating expenses:       
Direct operating costs364,815
 300,159
 978,768
 853,544
Salaries and benefits82,134
 71,899
 232,617
 212,974
Selling, general and administrative49,279
 41,379
 139,708
 121,678
Acquired intangible assets impairment—
 —
 2,286
 —
Depreciation and amortization24,705
 20,120
 69,520
 58,923
Total operating expenses520,933
 433,557
 1,422,899
 1,247,119
Operating income116,901
 90,468
 224,878
 191,667
Other income (expense):       
Interest income380
 349
 2,009
 1,244
Interest expense(9,534) (7,724) (25,058) (20,968)
Foreign currency exchange gain (loss), net8,179
 (1,527) 21,035
 (1,299)
Other gains—
 —
 35
 19,903
Other expense, net(975) (8,902) (1,979) (1,120)
Income before income taxes115,926
 81,566
 222,899
 190,547
Income tax expense(15,573) (20,784) (43,130) (45,104)
Net income100,353
 60,782
 179,769
 145,443
Net (income) loss attributable to noncontrolling interests(63) (49) 9
 61
Net income attributable to Euronet Worldwide, Inc.$100,290
 $60,733
 $179,778
 $145,504
        
Earnings per share attributable to Euronet Worldwide, Inc. stockholders:       
Basic$1.91
 $1.16
 $3.43
 $2.78
Diluted$1.80
 $1.11
 $3.23
 $2.66
        
Weighted average shares outstanding:       
Basic52,590,837
 52,134,500
 52,463,511
 52,293,808
Diluted55,784,485
 54,523,211
 55,582,583
 54,641,388
See accompanying notes to the unaudited consolidated financial statements.


2
Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMELOSS
(Unaudited, in thousands)
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income$100,353
 $60,782
 $179,769
 $145,443
Translation adjustment26,703
 6,849
 97,311
 13,522
Comprehensive income127,056
 67,631
 277,080
 158,965
Comprehensive (income) loss attributable to noncontrolling interests(113) (64) (163) 14
Comprehensive income attributable to Euronet Worldwide, Inc.$126,943
 $67,567
 $276,917
 $158,979

 
Three Months Ended
March 31,

 
2021
 
2020

Net (loss) income$(8,621) $1,720

Translation adjustment(42,901) (59,818)
Comprehensive loss(51,522) (58,098)
Comprehensive loss attributable to noncontrolling interests12 242

Comprehensive loss attributable to Euronet Worldwide, Inc.$(51,510) $(57,856)
See accompanying notes to the unaudited consolidated financial statements.


3
Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited, in thousands, except share data)

  
Number of
Shares Outstanding
 
Common
Stock
 
Additional
Paid-in Capital
 
Treasury
Stock
Balance as of December 31, 2019
 54,220,854
 $1,256
 $1,190,058
 $(463,704)
Net income (loss)  
 
 
  

  

Other comprehensive loss  
 
 
  

  

Stock issued under employee stock plans 80,519
 
1
 1,701
 
(249
)
Share-based compensation  
 
 
 
6,338
  

Repurchase of shares (2,095,683) 
 
 


  (239,763)
Balance as of March 31, 2020
 52,205,690
 
1,257
 
1,198,097
 
(703,716)

  
Number of
Shares Outstanding
 
Common
Stock
 
Additional
Paid-in Capital
 
Treasury
Stock
Balance as of December 31, 2020
 52,734,049
 $1,267
 $1,228,446
 $(703,032)
Net (loss) income  
  

  

  

Other comprehensive loss  
  

  

  

Stock issued under employee stock plans 62,436
 
1
 
3,335
 
(482)
Share-based compensation  
  

 
8,492
  

Balance as of March 31, 2021
 52,796,485
 
1,268
 
1,240,273
 
(703,514)

See accompanying notes to the unaudited consolidated financial statements.

4
Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN EQUITY (CONTINUED)
(Unaudited, in thousands)

 Nine Months Ended
September 30,
 2017 2016
Net income$179,769
 $145,443
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization69,520
 58,923
Share-based compensation11,817
 11,352
Unrealized foreign exchange (gain) loss, net(21,035) 1,299
Deferred income taxes(14,856) 993
Accretion of convertible debt discount and amortization of debt issuance costs10,068
 9,056
Gain on sale of investment—
 (19,449)
Non-cash impairment of acquired intangible assets2,286
 —
Changes in working capital, net of amounts acquired:   
Income taxes payable, net10,924
 16,006
Restricted cash(3,633) (10,227)
Inventory — PINs and other33,712
 25,948
Trade accounts receivable(7,861) 54,356
Prepaid expenses and other current assets43,826
 (76,594)
Trade accounts payable(118,677) (133,207)
Deferred revenue(2,497) 3,181
Accrued expenses and other current liabilities30,678
 135,431
Changes in noncurrent assets and liabilities6,455
 (5,020)
Net cash provided by operating activities230,496
 217,491
Cash flows from investing activities:   
Acquisitions, net of cash acquired—
 (2,183)
Purchases of property and equipment(70,871) (61,597)
Purchases of other long-term assets(4,651) (4,501)
Proceeds from sale of investment—
 11,900
Other, net1,499
 800
Net cash used in investing activities(74,023) (55,581)
Cash flows from financing activities:   
Proceeds from issuance of shares8,328
 5,098
Repurchase of shares(2,310) (76,510)
Borrowings from revolving credit agreements1,839,963
 1,961,814
Repayments of revolving credit agreements(1,808,695) (1,855,053)
Repayments of long-term debt obligations(6,563) (5,156)
Repayments of capital lease obligations(3,473) (1,997)
Borrowings from short-term debt obligations, net99,081
 2,290
Other, net284
 748
Net cash provided by financing activities126,615
 31,234
Effect of exchange rate changes on cash and cash equivalents44,739
 10,634
Increase in cash and cash equivalents327,827
 203,778
Cash and cash equivalents at beginning of period734,414
 457,518
    
Cash and cash equivalents at end of period$1,062,241
 $661,296
    
Supplemental disclosure of cash flow information:   
Interest paid during the period$17,359
 $12,598
Income taxes paid during the period$34,769
 $31,751
Supplemental disclosure of non-cash investing and financing activities   
Non-cash consideration received from sale of investment$—
 $7,549
   Retained Earnings 
Accumulated Other
Comprehensive Loss
 
Noncontrolling
Interests
 Total
Balance as of December 31, 2019 $1,016,554
 $(164,890) $68
 $1,579,342
Net income (loss) 
1,921
  

 
(201) 
1,720
Other comprehensive loss  

 
(59,777
) 
(41
) 
(59,818
)
Stock issued under employee stock plans  

  

  

 
1,453
Share-based compensation  

  

  

 
6,338
Repurchase of shares  

  

  

 
(239,763)
 Balance as of March 31, 2020
 
1,018,475
 
(224,667) 
(174) 
1,289,272

   Retained Earnings 
Accumulated Other
Comprehensive Loss
 
Noncontrolling
Interests
 Total
Balance as of December 31, 2020 $1,013,155
 $(94,214) $281
 $1,445,903
Net (loss) income 
(8,665)  

 
44 (8,621)
Other comprehensive loss  

 
(42,845) 
(56) (42,901)
Stock issued under employee stock plans  

  

  

 2,854
Share-based compensation  

  

  

 8,492
 Balance as of March 31, 2021
 
1,004,490
 
(137,059) 
269 
1,405,727

See accompanying notes to the unaudited consolidated financial statements.



EURONET WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 Three Months Ended
March 31,
 2021 2020
Net (loss) income
$(8,621) $1,720
Adjustments to reconcile net (loss) income to net cash provided by operating activities:   
Depreciation and amortization33,261
 30,816
Share-based compensation8,492
 6,338
Unrealized foreign exchange loss, net4,032
 18,806
Deferred income taxes2,374 (2,043)
Accretion of convertible debt discount and amortization of debt issuance costs4,979
 4,616
Changes in working capital, net of amounts acquired:
 
Income taxes payable, net(5,534) (10,454)
Trade accounts receivable148,697
 300,063
Prepaid expenses and other current assets29,551 (119,648)
Trade accounts payable(220,439) (126,242)
Deferred revenue3,738 4,119
Accrued expenses and other current liabilities11,234
 14,811
Changes in noncurrent assets and liabilities(14,409) (17,018)
Net cash (used in) provided by operating activities(2,645) 105,884
Cash flows from investing activities:  
Acquisitions, net of cash acquired0— 475
Purchases of property and equipment(16,393) (30,392)
Purchases of other long-term assets(2,212) (2,046)
Other, net380
 357
Net cash used in investing activities(18,225) (31,606)
Cash flows from financing activities:   
Proceeds from issuance of shares3,670
 1,700
Repurchase of shares(808) (240,530)
Borrowings from revolving credit agreements707,100
 805,500
Repayments of revolving credit agreements(977,500) (805,500)
Net repayments from short-term debt obligations(32) (2,163)
Other, net(1,641) (1,651)
Net cash used in financing activities(269,211) (242,644)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(53,188) (59,260)
Decrease in cash and cash equivalents and restricted cash(343,269) (227,626)
Cash and cash equivalents and restricted cash at beginning of period2,099,508
 1,817,379
    
Cash and cash equivalents and restricted cash at end of period$1,756,239
 $1,589,753
    
Supplemental disclosure of cash flow information:   
Interest paid during the period$2,703
 $3,678
Income taxes paid during the period$11,160
 $16,064
See accompanying notes to the unaudited consolidated financial statements.
6
Table of Contents

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1)
(1) GENERAL


Organization


Euronet Worldwide, Inc. (together with its subsidiaries, the(the “Company” or “Euronet”) was established as a Delaware corporation on December 13, 1997 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 automated teller machine (“ATM”), point-of-sale (“POS”), card outsourcing, card issuing and merchant acquiring services, software solutions, electronic distribution of prepaid mobile airtime and other electronic payment products, foreign currency exchange services and global money transfer services.


Basis of Presentation


The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the consolidated financial position and the results of operations, comprehensive income, changes in equity and cash flows for the interim periods. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 20162020, including the notes thereto, set forth in the Company’s 20162020 Annual Report on Form 10-K.


Use of Estimates


The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reportedreporting period. Significant items subject to such estimates and assumptions include computing income taxes, 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. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2017.
2021.

Seasonality


Euronet’s EFTElectronic Funds Transfer ("EFT") Processing Segment normally experiences its heaviest demand for dynamic currency conversion ("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 the 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 regionsregion 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 experiences its lowest transaction levels during the first quarter of eachthe year.

7


(2) RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS


In May 2014,August 2020, the FASB issuedFinancial Accounting Standards Update (“ASU”Board ("FASB") 2014-09, Revenue fromissued ASU 2020-06, "Accounting for Convertible Instruments and Contracts with Customers (Topic 606), in an Entity's Own Equity" which requires an entity to recognizesimplifies the amount of revenue to which it expectsaccounting for convertible instruments by eliminating certain accounting models when the conversion features are not required to be entitledaccounted for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of the effective date of the new revenue recognition standard. The new standard will become effective for the Company on January 1, 2018. The standard permits the use of either the full retrospective or modified retrospective transition method.
In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) andas derivatives under Topic 815, Derivatives and Hedging, (Topic 815) - Rescission of SEC Guidance Because ofor that do not result in substantial premiums accounted for as paid-in-capital. Under this ASU, 2014-09 and 2014-16, and certain debt instruments with embedded conversion features will be accounted for as a single liability measured at its amortized cost. Additionally, this ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow Scope Improvements and Practical Expedients. In December 2016,eliminates the FASB issued ASU 2016-20, Technical Corrections and Improvementstreasury stock method to Topic 606, Revenue from Contracts with Customers (Topic 606). These ASUs clarify the implementationguidance on a few narrow areas, make minor corrections and adds some practical expedients to the guidance in Topic 606.

Lastly, in February 2017, the FASB issued ASU 2017-05, Other Income -Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accountingcalculate diluted earnings per share for Partial Sales of Nonfinancial Assets, which clarifies the scope of asset derecognition guidance and provide guidance on partial sales of nonfinancial assets. This ASU clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and defines the term, “in-substance nonfinancial asset.” This ASU must be adopted at the same time as ASC 606.
The Company has performed a review of the requirements of the new revenue standards and is in the process of reviewing customer contracts under the new revenue standards but does not expect the new revenue standards will have a material impact on the timing of revenue recognition on its consolidated financial statements. The Company continues to assess all potential effects of the standards and it believes the principal versus agent guidance will affect the presentation and classification of revenue for certain epay and EFT segment arrangements. The Company estimates revenue would have been approximately $125 million to $200 million greater in 2016 under the new standard due to the change in presentation and classification of certain revenue for the epay segment. The Company will continue to update its assessment of the effect the new revenue standards will have on its consolidated financial statements and will disclose the final determination of the transition method and material effects, if any, when known.
In February 2016, the FASB issued ASU 2016-02, Leases(Topic 842), which will update the existing guidance on accounting for leases and require new qualitative and quantitative disclosures about the Company’s leasing activities.convertible instruments. The new standard requires lessees to account for all leases on the balance sheet, except for certain short-term leases that have a maximum possible lease term of 12 months. The accounting for lessors is largely unchanged from the previous accounting guidance except for leverage lease accounting which is not permitted for leases entered into or modified after the effective date of the new standard. The new standard is effective for annual periods beginning after December 15, 2018 and2021, including interim periods within those annual periods, with earlyfiscal years. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that the Company may elect to apply. The Company is currently evaluating the expected impact of the adoption of this standardASU 2020-06 will have on itsthe consolidated financial statements and related disclosures.statements.
In March 2016, FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which addresses how companies account for certain aspects of share-based payments to employees. This ASU requires all excess tax benefits and tax deficiencies be recognized in the statement of income as a component of income tax expense or benefit. The tax effects of exercised, expired or vested awards are treated as discrete items in the reporting period in which they occur and may result in increased volatility in the Company's effective tax rate. As part of the adoption of this standard during the first quarter, the Company was required to recognize previously unrecognized excess tax benefits on a modified retrospective basis and record an adjustment to deferred tax assets and retained earnings. Additionally, the Company applied the prospective transition method for the presentation of excess tax benefits from a financing activity to an operating activity in the Company’s consolidated statements of cash flows. Cash paid by the Company when directly withholding shares for tax withholding purposes is classified as a financing activity in the Consolidated Statements of Cash Flows. The Company made an accounting election to continue to estimate forfeitures when determining amortization expense of stock-based compensation.
The adoption of the provisions of this ASU did not have a material impact on the Company’s consolidated statement of income. A cumulative effect adjustment of $40.2 million for previously unrecognized excess tax benefits from prior fiscal years was recognized in beginning Retained earnings as of January 1, 2017. As a result of recognizing this excess tax benefit, the Company recorded a deferred tax asset of $40.2 million and an associated valuation allowance of $38.9 million to beginning Retained earnings. The offsetting deferred tax asset and valuation allowance resulted in a net increase of $1.3 million to beginning Retained earnings at adoption. 
Prior to 2017, excess tax benefits were recognized in additional paid-in capital and tax deficiencies were recognized either as an offset to accumulated excess tax benefits, if any, or in the consolidated statements of income. Excess tax benefits were not recognized until the deduction reduced taxes payable. Additionally, excess tax benefits from stock-based compensation were included in financing activities within the Company’s consolidated statements of cash flows.
In May 2017,2020, the FASB issued ASU 2017-09, Compensation-Stock Compensation2020-04, Reference Rate Reform (Topic 718): Scope of Modification Accounting848), which clarifiesprovides optional expedients and exceptions for contracts, hedging relationships, and other transactions affected by reference rate reform due to the changes to termsanticipated cessation of LIBOR on or conditions of a share-based payment award that require an entity to apply modification accounting. The amendments of this ASU arebefore December 31, 2021. This guidance is effective from March 12, 2020 through December 31, 2022 and could impact the accounting for annual reporting periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted and prospective application is required.LIBOR provisions in the Company’s unsecured credit agreement. The Company does not expect that the adoption of this guidance towill have a significant impact on its consolidated financial statements.



(3) PENDING ACQUISITION


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 late 2021 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.


(3)
(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 amounts payable. Settlement assets consist of cash and cash equivalents, restricted cash, accounts receivable and prepaid expenses and other current assets. Cash received by Euronet 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 money transfers and accounts payable to agents and content providers. Money transfer accounts payable 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 accounts payable represent amounts not yet presented for payment. Due to the agent funding and settlement process, accounts payable to agents represent amounts due to agents for money transfers that have not been settled with transferees.

 
As of
(in thousands)
March 31,
2021

December 31,
2020
Settlement assets:
 
 
Settlement cash and cash equivalents
$209,853

$188,191
Settlement restricted cash
58,200

76,674
Accounts receivable, net of credit allowance of $33,980 and $35,800
478,209

641,955
Prepaid expenses and other current assets
214,051

234,055
Total settlement assets
$960,313

$1,140,875
Settlement obligations:
 
 
Trade account payables
$356,612

$571,175
Accrued expenses and other current liabilities
603,701

569,700
Total settlement obligations
$960,313

$1,140,875

8
Table of Contents


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.

  As of
(in thousands) 
March 31,
2021
 
December 31,
2020
 
March 31,
2020
 
December 31,
2019
Cash and cash equivalents $1,145,406
 $1,420,255
 $709,521
 $786,081
Restricted cash 2,897
 3,334
 28,953
 34,301
ATM cash 339,883
 411,054
 558,580
 665,641
Settlement cash and cash equivalents 209,853
 188,191
 256,456
 282,188
Settlement restricted cash 58,200
 76,674
 36,243
 49,168
Cash and cash equivalents and restricted cash at end of period $1,756,239
 $2,099,508
 $1,589,753
 $1,817,379

(5) STOCKHOLDERS' EQUITY


(Loss) Earnings Per Share


Basic (loss) earnings per share has been computed by dividing (loss) earnings available to common stockholders by the weighted average number of common shares outstanding during the respective periods.period. Diluted (loss) earnings per share has been computed by dividing (loss) earnings available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for anythe potential dilution fromof options to purchase the Company's common stock, assumed vesting of restricted stock and the assumed conversion of the Company’sCompany's convertible debentures. debt, if such conversion would be dilutive.

The following table provides the computation of diluted weighted average number of common shares outstanding:


Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
March 31,

2017 2016 2017 20162021
2020
Computation of diluted weighted average shares outstanding:       



Basic weighted average shares outstanding52,590,837
 52,134,500
 52,463,511
 52,293,808
52,762,845
53,607,104
Incremental shares from assumed exercise of stock options and vesting of restricted stock1,863,883
 1,731,451
 1,789,307
 1,690,320
0—
1,172,217
Incremental shares from assumed conversion of convertible notes1,329,765
 657,260
 1,329,765
 657,260
Diluted weighted average shares outstanding55,784,485
 54,523,211
 55,582,583
 54,641,388
52,762,845
54,779,321

The table includes the impact of all stock options and restricted stock that are dilutive to the Company’sCompany's weighted average common shares outstanding during the three and nine months ended September 30, 2017 and 2016.period. The calculation of diluted (loss) earnings per share excludes stock options or shares of restricted stock that are anti-dilutive to the Company’s weighted average common shares outstanding of approximately 458,0002,437,000 and 884,000886,000 for the three and nine months ended September 30, 2017, respectively,March 31, 2021 and approximately 552,000 and 555,000 for the three and nine months ended September 30, 2016,2020, respectively.


The Company issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. The Company's convertible notesConvertible Notes currently have a settlement featuresfeature requiring the Company upon conversion to settle the principal amount of the debt and theany 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. At issuance, theThe 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 areConvertible Notes were included in the calculation of diluted (loss) earnings per share if their inclusion iswas dilutive. The convertible notesdilutive 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 $72.18$188.73 per share. The market price per share of common stock was $138.30 on March 31, 2021 and the$85.72 on March 31, 2020, therefore, according to ASC Topic 260, Earnings per Share (“ASC 260”), there was no dilutive effect increases the more the market price exceeds the conversion price. As of September 30, 2017 and 2016, the stock price exceeded the conversion price and these notes were dilutive to earnings per share. Further, as a result of the share price increasing from $81.83 at September 30, 2016 to $94.79 at September 30, 2017, there was an increase in shares from the assumed conversion of convertible notes.the debentures for the three months ended March 31, 2021 and 2020. See Note 9, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes. 


9

Share repurchases

On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized a 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. For the three months ended March 31, 2021, there were 0 repurchases of stock under the repurchase programs. Repurchases under the current program 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.

Accumulated Other Comprehensive Loss


Accumulated other comprehensive incomeloss consists entirely of foreign currency translation adjustments. The Company recorded foreign currency translation gainslosses of $26.7$42.9 million and $97.3 $59.8 million for the three and nine months ended September 30, 2017, respectively,March 31, 2021 and gains of $6.8 million and $13.5 million for the three and nine months ended September 30, 2016,2020, respectively. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three and nine months ended September 30, 2017March 31, 2021 and 2016.2020.


(4)
(6) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

A summary of acquired intangible assets and goodwill activity for the ninethree months ended September 30, 2017March 31, 2021 is presented below:
(in thousands) 
Acquired
Intangible
Assets
 Goodwill 
Total
Intangible
Assets
Balance as of December 31, 2020 $121,883
 $665,821
 $787,704
Decreases:      
Acquisition 0—
 0— 0—
Amortization (5,789) 0—
 (5,789)
Foreign currency exchange rate changes (1,326) (12,693) (14,019)
Balance as of March 31, 2021 $114,768
 $653,128
 $767,896
(in thousands) 
Acquired
Intangible
Assets
 Goodwill 
Total
Intangible
Assets
Balance as of December 31, 2016 $165,331
 $689,713
 $855,044
Increases (Decreases):      
Amortization (18,840) —
 (18,840)
Other (primarily changes in foreign currency exchange rates and impairment) 8,664
 54,147
 62,811
Balance as of September 30, 2017 $155,155
 $743,860
 $899,015

Of the total goodwill balance of $653.1 million as of March 31, 2021, $398.0 million relates to the Money Transfer Segment, $132.3 million relates to the epay Segment and the remaining $122.8 million relates to the EFT Processing Segment. Estimated amortization expense on acquired intangible assets with finite lives before income taxes, as of September 30, 2017,March 31, 2021, is expected to total $5.7$17.0 million for the remainder of 2017, $22.82021, $21.5 million for 2018, $21.82022, $16.6 million for 2019, $21.02023, $9.8 million for 2020, $20.12024, $6.4 million for 20212025 and $19.0$6.2 million for 2022.2026.

The Company’s annual goodwill impairment test is performed during the fourth quarter of its fiscal year. The annual impairment test for the year ended December 31, 2016 resulted in no impairment charge. The Company recorded a non-cash impairment charge to customer relationships of $2.3 million in the first nine months of 2017 as a result of the closure of the Pure Commerce office in South Korea within the EFT Processing Segment.
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 the Company’s operations will not perform as expected, or that the estimates or assumptions included in the 2016 annual impairment test could change, which may result in the Company recording material non-cash impairment charges during the year in which these changes take place.
(5)(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:
  As of
(in thousands) March 31, 2021 December 31, 2020
Accrued expenses  $314,103
 $331,713
Derivative liabilities 41,219
 65,905
Current portion of finance lease obligations 5,817
 6,403
Total $361,139
 $404,021
 As of
(in thousands)September 30, 2017 December 31, 2016
Accrued expenses$278,078
 $210,275
Money transfer settlement obligations289,640
 219,601
Accrued amounts due to mobile operators and other content providers104,535
 121,505
Derivative liabilities31,947
 63,772
Total$704,200
 $615,153


(8) UNEARNED REVENUES


(6)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 three months ended March 31, 2021 is primarily driven by $22.9 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, offset by $21.6 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2020.

10


(9) DEBT OBLIGATIONS


Debt obligations consist of the following:

As of As of
(in thousands)September 30, 2017 December 31, 2016 March 31, 2021 December 31, 2020
Credit Facility:       
Term loan, due 2019$53,438
 $60,000
Revolving credit agreements, due 2019191,590
 159,963
Revolving credit agreement $0—
 $270,400
Convertible Debt:    
0.75% convertible notes, unsecured, due 2049 456,159
 452,228
245,028
 219,963
    
Convertible Debt:   
1.50% convertible notes, unsecured, due 2044366,464
 358,293
   
ATM credit facility100,000
 —
1.375% Senior Notes, due 2026 703,680
 732,840
       
Other obligations24,782
 23,892
 813
 850
       
Total debt obligations736,274
 602,148
 1,160,652
 1,456,318
Unamortized debt issuance costs(6,454) (8,324) (16,883) (17,932)
Carrying value of debt729,820
 593,824
 1,143,769
 1,438,386
Short-term debt obligations and current maturities of long-term debt obligations(136,896) (32,161) (743) (797)
Long-term debt obligations$592,924
 $561,663
 $1,143,026
 $1,437,589


Credit Facility
As of September 30, 2017,
On October 17, 2018, the Company had a $675 million senior securedentered into an unsecured revolving credit facilityagreement (the "Credit Facility") consisting of a $600 million revolving credit facilityfor $1.0 billion that expires on October 17, 2023. Fees and a $75 million term loan ("Term Loan A"), which had been reduced to $53.4 million through principal amortization payments. The Credit Facility expires April 9, 2019.
Interestinterest on borrowings under the revolving credit facility and Term Loan A variesare based upon the Company's consolidated total leverage ratio, as definedcorporate credit rating and are based, in the Company'scase of letter of credit agreement, and is basedfees, on a margin, and in the case of interest, on a margin over the London Inter-Bank Offered Rate (“LIBOR”) or a margin over athe base rate, as selected by the Company, with the applicable margin ranging from 1.375%1.125% to 2.375% for LIBOR loans or 0.375%2.0% (or 0.175% to 1.375%1.0% for base rate loans. Accordingly, the weighted average interest rateloans). The Credit Facility allows for borrowings outstanding underin 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 Company's revolvingissuance of letters of credit, facilitya $50 million sublimit for U.S. dollar swingline loans, and Term Loan Aa $90 million sublimit for certain foreign currencies swingline loans. The Credit Facility contains customary affirmative and negative covenants, events of default and financial covenants. The Company was 3.04% and 2.86%, respectively,in compliance with all debt covenants as of September 30, 2017.
March 31, 2021.

Convertible Debt
The

On March 18, 2019, the Company completed the sale of $525.0 million of Convertible Senior Notes (“("Convertible Notes”Notes") had a principal amount outstanding of $402.5 million as of September 30, 2017.. The Convertible Notes mature in October 2044March 2049 unless repurchasedredeemed or converted prior to such date, and are convertible into shares of Euronet Common Stockcommon stock at a conversion price of approximately $72.18$188.73 per share.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 par on October 1, 2020, and have additional optionsa repurchase price equal to require the Company to purchase their notes at par on October 1, 2024, 2029, 2034, and 2039, or upon a change in control100% of the Company.
Holders may convert all or any portionprincipal amount of theirthe Convertible Notes at their option at any time prior to October 1, 2044 only underbe repurchased, plus accrued and unpaid interest to, but excluding, the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), ifrelevant repurchase date.

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Table of Contents

In accordance with ASC 470-20-30-27, proceeds from the closing sale priceissuance of convertible debt is allocated between debt and equity components so that debt is discounted to reflect the common stock for at least 20 trading days (whether or not consecutive) during aCompany'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 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (2) during the five consecutive business day period after any ten consecutive trading day period (the measurement period) in which the trading price$99.7 million for the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the closing sale price of the Company's common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. If the holders exercise their option to convert, the Company is required to deliver cash or shares of the Company's common stock, at the Company's option, to satisfy the principal amount and the conversion premium.

The Company's common stock was greater than 130% of the conversion price for at least 20 trading days during the 30 consecutive trading days ending on the last trading day of the calendar quarter ended September 30, 2017. Therefore, as of September 30, 2017, the conversion threshold had been met and the Convertible Notes became convertible at the holders’ option beginning on October 1, 2017 and ending on December 31, 2017.
Notes.

Contractual interest expense for the Convertible Notes was $1.5$1.0 million for the three months ended March 31, 2021 and $4.52020. Accretion expense for the Convertible Notes was $3.9 million and $3.7 million for the three and nine months ended September 30, 2017March 31, 2021 and 2016, respectively. Accretion expense was $2.8 million and $8.2 million for the three and nine months ended September 30, 2017,2020, respectively and $2.6 million and $7.8 million for the three and nine months ended September 30, 2016, respectively.. The effective interest rate was 4.7%4.4% for the three and nine months ended September 30, 2017.March 31, 2021. As of September 30, 2017,March 31, 2021, the unamortized discount was $36.0$68.8 million and will be amortized through October 1, 2020.
ATM Credit Facility
March 2025. 

1.375% Senior Notes due 2026

On June 27, 2017,May 22, 2019, the Company entered intocompleted 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 new credit facility (the "ATM Facility"rate of 1.375% per year, payable annually in arrears commencing May 22, 2020, until maturity or earlier redemption. As of March 31, 2021, the Company has outstanding €600 million ($703.7 million) agreement in whichprincipal amount of the lender has made available an aggregate $100 million uncommitted short-term credit facility to provide cash to supportSenior 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 obligations

Certain of the Company's ATM network. Interest is charged on this financing on an annual basis at the Overnight LIBOR rate plus 2.0%. The ATM facility expires on November 30, 2017.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 March 31, 2021 and December 31, 2020, borrowings under these arrangements were $0.8 million and $0.9 million, respectively.

(7)
(10) 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) short-term borrowings that are payable in currenciescertain foreign currency denominated other than the U.S. dollar.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 Topic 815Derivatives and Hedging, , primarilydue to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates beingare reflected concurrently in earnings for both the derivative instrument and the transaction and havinghave an offsetting effect.
 

Foreign currency exchange contracts - Ria Operations and Corporate


In the United States, the Company's Ria operations useCompany 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 September 30, 2017, theThe Company held in its Ria operations had foreign currency forward contracts outstanding in the U.S. with a notional value of $244$120 million and $246 million as of March 31, 2021 and December 31, 2020, respectively. The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds eurossterling, euro and Mexican pesos.

12


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 foreign currency denominatedshort-term borrowings that are payable in currencies other asset and liability positions. As of September 30, 2017,than the U.S dollar. The Company had foreign currency forward contracts outstanding with a notional value of $282$593 million and $454 million as of March 31, 2021 and December 31, 2020, respectively, primarily in British pounds, euros and Polish zloty.
euro.

Foreign currency exchange contracts - HiFXxe Operations

HiFXxe 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. HiFXxe aggregates its foreign currency exposures arising from customer contracts and may hedge some or all ofhedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from HiFX'sxe's total portfolio of positions were $16.7$18.5 million and $48.4$18.1 million for the three and nine months ended September 30, 2017, respectively,March 31, 2021 and $14.4 million and $48.3 million for the three and nine months ended September 30, 2016,2020, respectively. All of the derivative contracts used in the Company's HiFXCompany' s xe operations are economic hedges and are not designated as hedges under ASC Topic 815. The duration of these derivative contracts is generally less than one year.


The fair value of HiFX'sxe'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. HiFXxe 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. HiFXxe does not expect any significant losses from counterparty defaults.


The aggregate equivalent U.S. dollar notional amountsamount of foreign currency derivative customer contracts held by the Company in its HiFXxe operations as of September 30, 2017March 31, 2021 and December 31, 2020 was approximately $1.4 billion and $1.3 billion.billion, respectively. The significant majority of customer contracts are written in major currencies such as the euro, U.S. dollar, euro,British pounds sterling, Australian dollar and New Zealand dollar, British pound, and Australian dollar.


Balance Sheet Presentation


The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the dates below:

  Asset Derivatives Liability Derivatives
    Fair Value   Fair Value
(in thousands) Balance Sheet Location September 30, 2017 December 31, 2016 Balance Sheet Location September 30, 2017 December 31, 2016
Derivatives not designated as hedging instruments            
Foreign currency exchange contracts Other current assets $44,603
 $75,307
 Other current liabilities $(31,947) $(63,772)
  Asset Derivatives Liability Derivatives
    Fair Value   Fair Value
(in thousands) Balance Sheet Location March 31, 2021 December 31, 2020 Balance Sheet Location March 31, 2021 December 31, 2020
Derivatives not designated as hedging instruments            
Foreign currency exchange contracts Other current assets $49,390
 $80,879
 Other current liabilities $(41,219) $(65,905)

The following tables summarize the gross and net fair value of derivative assets and liabilities as of September 30, 2017March 31, 2021 and December 31, 20162020 (in thousands):

Offsetting of Derivative Assets
        Gross Amounts Not Offset in the Consolidated Balance Sheet  
As of March 31, 2021 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
Derivatives subject to a master netting arrangement or similar agreement $49,390
 $0—
 $49,390
 $(26,069) $(4,243) $19,078
             
As of December 31, 2020            
Derivatives subject to a master netting arrangement or similar agreement $80,879
 $0—
 $80,879
 $(44,893) $(2,778) $33,208
        Gross Amounts Not Offset in the Consolidated Balance Sheet  
As of September 30, 2017 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
Derivatives subject to a master netting arrangement or similar agreement $44,603
 $—
 $44,603
 $(20,071) $(8,268) $16,264
             
As of December 31, 2016            
Derivatives subject to a master netting arrangement or similar agreement $75,307
 $—
 $75,307
 $(49,752) $(7,562) $17,993

13


Offsetting of Derivative Liabilities

        Gross Amounts Not Offset in the Consolidated Balance Sheet  
As of March 31, 2021 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
Derivatives subject to a master netting arrangement or similar agreement $(41,219) $0—
 $(41,219) $26,069
 $2,307
 $(12,843)
             
As of December 31, 2020            
Derivatives subject to a master netting arrangement or similar agreement $(65,905) $0—
 $(65,905) $44,893
 $12,272
 $(8,740)
        Gross Amounts Not Offset in the Consolidated Balance Sheet  
As of September 30, 2017 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
Derivatives subject to a master netting arrangement or similar agreement $(31,947) $—
 $(31,947) $20,071
 $2,581
 $(9,295)
             
As of December 31, 2016            
Derivatives subject to a master netting arrangement or similar agreement $(63,772) $—
 $(63,772) $49,752
 $1,106
 $(12,914)

See Note 8,11, Fair Value Measurements, for the determination of the fair values of derivatives.


Income Statement Presentation

The following tables summarizetable summarizes the location and amount of gains and losses on derivatives in the Consolidated Statements of Income for the three and nine months ended September 30, 2017March 31, 2021 and 2016:2020:

    Amount of (Loss) Gain Recognized in Income on Derivative Contracts (a)
  Location of (Loss) Gain Recognized in Income on Derivative Contracts 
Three Months Ended
March 31,
(in thousands)  2021 2020
Foreign currency exchange contracts - Ria Operations Foreign currency exchange (loss) gain, net $(2,468) $1,019
    Amount of Gain (Loss) Recognized in Income on Derivative Contracts (a)
  Location of Gain (Loss) Recognized in Income on Derivative Contracts Three Months Ended
September 30,		 Nine Months Ended
September 30,
(in thousands)  2017 2016 2017 2016
Foreign currency exchange contracts Foreign currency exchange gain (loss), net $3,062
 $(1,825) $(3,007) $(646)
(a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its HiFXxe 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.
(8)
See Note 11, Fair Value Measurements, for the determination of the fair values of derivatives. 

(11) FAIR VALUE MEASUREMENTS


Fair value measurements used in the unaudited 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. 

  • 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.
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.
14

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 and liabilities measured and recorded at fair value on a recurring basis:
 As of September 30, 2017 As of March 31, 2021
(in thousands) Balance Sheet Classification Level 1 Level 2 Level 3 Total Balance Sheet Classification Level 1 Level 2 Level 3 Total
Assets                
Foreign currency exchange contracts Other current assets $—
 $44,603
 $—
 $44,603
 Other current assets $0—
 $49,390
 $0—
 $49,390
Liabilities                
Foreign currency exchange contracts Other current liabilities $—
 $(31,947) $—
 $(31,947) Other current liabilities $0—
 $(41,219) $0—
 $(41,219)
    As of December 31, 2020
(in thousands) Balance Sheet Classification Level 1 Level 2 Level 3 Total
Assets          
Foreign currency exchange contracts Other current assets $0—
 $80,879
 $0—
 $80,879
Liabilities          
Foreign currency exchange contracts Other current liabilities $0—
 $(65,905) $0—
 $(65,905)
    As of December 31, 2016
(in thousands) Balance Sheet Classification Level 1 Level 2 Level 3 Total
Assets          
Foreign currency exchange contracts Other current assets $—
 $75,307
 $—
 $75,307
Liabilities          
Foreign currency exchange contracts Other current liabilities $—
 $(63,772) $—
 $(63,772)



Other Fair Value Disclosures


The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable accrued expenses and other currentshort-term debt obligations approximate their fair values because of the relatively short-term maturities of these financial instruments.due to their short maturities. The carrying values of the Company’s long-term debt (other than the Convertible Notes), including the current portion,revolving credit agreements approximate fair valuevalues because interest is primarily based on LIBOR whichthat 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 September 30, 2017 and DecemberMarch 31, 2016, 2021, the fair values of the Convertible Notes and Senior Notes were $550.5$631.4 million and $475.1$712.0 million, respectively, with carrying values of $366.5$456.2 million and $358.3$703.7 million, respectively.

(9)
(12) SEGMENT INFORMATION
The Company’s
Euronet’s reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting.Reporting (“ASC 280”). The Company currently operates in the following three3 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, Asia Pacific, the United States and Africa. The Company provides comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit and debit 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. 
15
1)Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East and Asia Pacific. The Company provides comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, dynamic currency conversion 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 United States and South America.
3)Through the Money Transfer Segment, the Company provides global money transfer services under the brand names Ria, HiFX, IME and xe. Ria 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. HiFX offers account-to-account international payment services to high-income individuals and small-to-medium sized businesses. xe is a provider of foreign currency exchange information and offers money transfers on its currency data websites. 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. The Company provides cash management solutions and foreign currency risk management services to small-to-medium sized businesses under the brand name HiFM.


In addition, the Company accounts for non-operating activity, most 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.


The following tables present the Company’s reportable segment results for the three and nine months ended September 30, 2017March 31, 2021 and 2016:2020:
  For the Three Months Ended March 31, 2021
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate Services,
Eliminations
and Other
 Consolidated
Total revenues $87,076
 $242,303
 $324,900
 $(1,609) $652,670
Operating expenses:          
Direct operating costs 69,612
 182,633
 183,878
 (1,607) 434,516
Salaries and benefits 23,571
 19,369
 60,540
 12,188
 115,668
Selling, general and administrative 11,962
 9,020
 36,116
 1,678
 58,776
Depreciation and amortization 22,027
 2,124
 8,963
 147
 33,261
Total operating expenses 127,172
 213,146
 289,497
 12,406
 642,221
Operating (loss) income $(40,096) $29,157
 $35,403
 $(14,015) $10,449


 For the Three Months Ended September 30, 2017 For the Three Months Ended March 31, 2020
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated 
EFT
Processing
 epay 
Money
Transfer
 
Corporate Services,
Eliminations
and Other
 Consolidated
Total revenues $226,321
 $184,234
 $228,105
 $(826) $637,834
 $145,825
 $172,911
 $266,234
 $(1,063) $583,907
Operating expenses:                    
Direct operating costs 99,024
 143,023
 123,588
 (820) 364,815
 87,536
 130,074
 142,909
 (1,063) 359,456
Salaries and benefits 16,817
 13,955
 44,110
 7,252
 82,134
 22,091
 15,697
 53,864
 9,588
 101,240
Selling, general and administrative 8,878
 9,145
 28,648
 2,608
 49,279
 10,941
 8,838
 38,582
 2,432
 60,793
Depreciation and amortization 14,805
 2,461
 7,403
 36
 24,705
 20,322
 1,844
 8,571
 79
 30,816
Total operating expenses 139,524
 168,584
 203,749
 9,076
 520,933
 140,890
 156,453
 243,926
 11,036
 552,305
Operating income (expense) $86,797
 $15,650
 $24,356
 $(9,902) $116,901
 $4,935
 $16,458
 $22,308
 $(12,099) $31,602

16

  For the Three Months Ended September 30, 2016
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $152,586
 $167,226
 $204,611
 $(398) $524,025
Operating expenses:          
Direct operating costs 62,401
 128,212
 109,944
 (398) 300,159
Salaries and benefits 12,954
 13,352
 38,365
 7,228
 71,899
Selling, general and administrative 7,642
 8,133
 23,924
 1,680
 41,379
Depreciation and amortization 10,151
 2,734
 7,195
 40
 20,120
Total operating expenses 93,148
 152,431
 179,428
 8,550
 433,557
Operating income (expense) $59,438
 $14,795
 $25,183
 $(8,948) $90,468



  For the Nine Months Ended September 30, 2017
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $488,030
 $512,531
 $649,205
 $(1,989) $1,647,777
Operating expenses:          
Direct operating costs 238,753
 393,269
 348,724
 (1,978) 978,768
Salaries and benefits 46,125
 39,606
 125,273
 21,613
 232,617
Selling, general and administrative 23,960
 27,628
 77,912
 10,208
 139,708
Acquired intangible assets impairment 2,286
 —
 —
 —
 2,286
Depreciation and amortization 39,816
 7,667
 21,941
 96
 69,520
Total operating expenses 350,940
 468,170
 573,850
 29,939
 1,422,899
Operating income (expense) $137,090
 $44,361
 $75,355
 $(31,928) $224,878






  For the Nine Months Ended September 30, 2016
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 
Corporate
Services,
Eliminations
and Other
 Consolidated
Total revenues $354,282
 $497,945
 $587,664
 $(1,105) $1,438,786
Operating expenses:          
Direct operating costs 165,520
 379,423
 309,706
 (1,105) 853,544
Salaries and benefits 37,601
 38,052
 114,582
 22,739
 212,974
Selling, general and administrative 22,154
 25,291
 68,930
 5,303
 121,678
Depreciation and amortization 28,411
 8,498
 21,868
 146
 58,923
Total operating expenses 253,686
 451,264
 515,086
 27,083
 1,247,119
Operating income (expense) $100,596
 $46,681
 $72,578
 $(28,188) $191,667

The following table presents the Company’s property and equipment and total assets by reportable segment:
 Total Assets as of
(in thousands)March 31, 2021 December 31, 2020
EFT Processing$1,400,396
 $1,541,610
epay915,875
 1,135,204
Money Transfer1,764,127
 1,755,651
Corporate Services, Eliminations and Other270,436
 494,246
   Total  $4,350,834
 $4,926,711

The following table presents the Company's revenues disaggregated by segment and region. Sales and usage-based taxes are excluded from revenues. 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. 
  Property and Equipment, net as of Total Assets as of
(in thousands) September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
EFT Processing $181,188
 $139,161
 $1,310,607
 $786,166
epay 27,139
 23,939
 616,596
 733,514
Money Transfer 42,047
 38,954
 1,229,899
 1,136,722
Corporate Services, Eliminations and Other 62
 91
 20,819
 56,470
   Total $250,436
 $202,145
 $3,177,921
 $2,712,872

















  
For the Three Months Ended March 31, 2021

For the Three Months Ended March 31, 2020
(in thousands) 
EFT
Processing
 epay 
Money
Transfer
 Total

EFT
Processing



epay


Money
Transfer



Total
Europe $46,862
 $164,908
 $132,839
 $344,609

$99,474

$115,277

$91,058

$305,809
North America 14,466
 33,841
 152,302
 200,609


15,019


33,852


137,895


186,766
Asia Pacific 25,694
 34,318
 28,469
 88,481


31,328


19,274


30,848


81,450
Other 54
 9,236
 11,290
 20,580


4


4,508


6,433


10,945
Eliminations 0—
 0—
 0—
 (1,609)

0—


0—


0—


(1,063)
Total $87,076
 $242,303
 $324,900
 $652,670

$145,825

$172,911

$266,234

$583,907

(10)
(13) INCOME TAXES


The Company's effective income tax rate was 13.4%(236.9%) and 19.3%58.7% for the three and nine months ended September 30, 2017,March 31, 2021 and 2020, respectively compared to 25.5% and 23.7% for the three and nine months ended September 30, 2016, respectively.. The Company's effective income tax rate for the three and nine months ended September 30, 2017 and 2016March 31, 2021 was lower than the applicable statutory income tax rate of 35% primarily attributable to21%as a result of the releasenon-recognition of tax benefits from losses in 2017 of a $16.3 million valuation allowance against certain foreign netcountries where we have a limited history of profitable earnings, certain foreign earnings of the Company being subject to higher local statutory tax rates, and the Company’s U.S. deferred tax assets and, to a lesser extent, theactivity on foreign exchange positions. The Company's continued U.S.effective income tax positions. Due torate for the recent significant year-over-year and year-to-date profitabilitythree months ended March 31, 2020 was higher than the applicable statutory income tax rate of ATMs under management in Europe,21% primarily as a result of certain foreign earnings of the Company believes certain foreign net deferred tax assets, including net operating loss carryforwards, will more likely than not be realized in future periods. In additionbeing subject to the foreign valuation allowance release, the Company continues to have significant net operating loss carryforwards in the U.S. with no recent history of taxable income; therefore, the Company has recorded a valuation allowance against its U.S. net deferred tax assets. Accordingly, in instances when the Company generates U.S. GAAP income for the period, nohigher local statutory income tax expense is recognized to the extent there are net operating loss carryforwards to offset that income.rates.

(11)

(14) COMMITMENTS


As of September 30, 2017,March 31, 2021, the Company had $73.6$87.4 million of stand-by letters of credit/bank guarantees issued on its behalf, of which $45.1$58.9 million are outstanding under the Credit Facility. The remaining stand-by letters of credit/bank guarantees are collateralized by $3.4$3.8 million of cash deposits held by the respective issuing banks.
Under certain circumstances, Euronet grants guarantees in support of obligations of subsidiaries. As of September 30, 2017,March 31, 2021, the Company had granted off balance sheet guarantees for cash in various ATM networks amounting to $16.9$11.2 million over the terms of the cash supply agreements and performance guarantees amounting to approximately $21.8$45.4 million over the terms of agreements with the customers.

Once each
17
Table of Euronet's subsidiaries reaches a certain size, it is required under the Credit Facility to provide a guarantee of all or a portion of the outstanding obligations under the Credit Facility depending upon whether the subsidiary is a domestic or foreign entity.Contents


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:
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 September 30, 2017, the balance of cash used in the Company's ATM networks for which the Company was responsible was approximately $283 million.
  • 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. As of March 31, 2021, the balance of such cash used in the Company's ATM networks for which the Company was responsible was approximately $486 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.
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 systems of internal controls and 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 September 30, 2017March 31, 2021 or December 31, 2016.2020.

(12)
(15) LITIGATION AND CONTINGENCIES


From time to time, the Company is a party to legal or 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 on the Company's consolidated financial condition or results of operations. 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.


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(16) 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. Since the Company is not reasonably certain not to exercise termination options, payments for ATM site leases with termination options subject to the short-term lease exemption are expensed in the period incurred and corresponding leases are excluded from the right of use lease asset and lease liability balances. 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.

Future minimum lease payments

Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) as of March 31, 2021 are:
 As of March 31, 2021
Maturity of Lease Liabilities (in thousands)
Operating Leases (1)
Remainder of 2021
$35,443
2022
40,777
2023
30,483
2024
21,829
2025
15,220
Thereafter33,594
Total lease payments$177,346
Less: imputed interest(5,625)
Present value of lease liabilities$171,721

(1)Operating lease payments reflect the Company's current fixed obligations under the operating lease agreements. Certain ATM site leases contain termination options that grant the Company the option to terminate the lease prior to the stated term of the agreement. The Company includes the future minimum lease payments for these ATM site leases only to the extent that the termination option is not reasonably certain to be exercised.

Lease expense recognized in the Consolidated Statements of Income is summarized as follows: 
Lease Expense 
(in thousands)
Income Statement Classification
Three Months Ended
March 31, 2021

Three Months Ended
March 31, 2020
Operating lease expenseSelling, general and administrative and Direct operating costs
$
13,858
$33,188
Short-term and variable lease expense Selling, general and administrative and Direct operating costs
 22,549

8,680
Total lease expense 
$
36,407
$41,868

Other information about lease amounts recognized in the consolidated financial statements is summarized as follows: 
Lease Term and Discount Rate of Operating LeasesAs of March 31, 2021
Weighted- average remaining lease term (years)5.3
Weighted- average discount rate2.2%


The following table presents supplemental cash flow and non-cash information related to leases.



Other Information (in thousands)
 
Three Months Ended
March 31, 2021

Three Months Ended
March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities (a)
 $13,669

$32,792
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets:  


ROU assets obtained in exchange for new operating lease liabilities $28,188

$50,525
(a) Included in Net cash provided by operating activities on the Company's Consolidated Statements of Cash Flows.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The terms "Euronet," the "Company," "we" and "us" as used herein refer to Euronet Worldwide, Inc. and its subsidiaries.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report 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 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.


    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 speed and effectiveness of rollouts for vaccines and treatments for COVID-19;  the effects in Europe of the recent Brexit voteU.K.'s departure from the E.U. and economic conditions in specific countries and regions; the effects of demonetization in India; 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, andsanctions, 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;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 of our Annual Report on Form 10-K for the year ended     December 31, 20162020. Our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q areis available on the SEC's EDGAR website at www.sec.gov, and copies may also be obtained by contacting the Company. Any forward-looking statements made in this Form 10-Q 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.

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    OVERVIEW

    OVERVIEW
    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 automated teller machine (“ATM”Automated Teller Machine ("ATM"), point-of-sale (“POS”("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:

    The
    • The EFT Processing Segment, which processes transactions for a network of 38,10536,777 active ATMs and approximately 227,000349,000 POS terminals across Europe, the Middle East, Asia Pacific, the United States and Asia Pacific.Africa. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, dynamic currency conversion ("DCC"), and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.
  • The epay Segment, which provides distribution, processing and collection services for prepaid mobile airtime and other electronic payment products.content. We operate a network of approximately 696,000736,000 POS terminals providing electronic processing of prepaid mobile airtime top-up services and other electronic payment productscontent in Europe, the Middle East, Asia Pacific, the United States and South America. We also provide vouchers and physical gift fulfillment services in Europe.

  • The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, AFEX, IME and xe and global account-to-account money transfer services under the brand name HiFX.xe. We offer services under the brand names Ria, AFEX and IME through a network of sending agents, Company-owned stores (primarily in North America, Europe and Malaysia) and Ria brandedour websites (riamoneytransfer.com and imeremit.com)online.imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately 332,000475,000 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). We offer services under the brand name HiFX through HiFX branded websites and HiFX customer service representatives. 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 HiFMxe 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 3536 principal offices in Europe, 1114 in Asia Pacific, nine10 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 74%72% 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.operations (for a further discussion, see Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020).


    SOURCES OF REVENUES AND CASH FLOW


    Euronet primarily 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 35% and 30%13% of total consolidated revenues for the thirdfirst quarter and first nine months of 2017, 2021, are primarily derived from fees charged for transactions made by cardholders on our proprietary network of ATMs, fixed management fees and transaction fees we charge to customers for operating ATMs and processing debit and credit cards under outsourcing and cross-border acquiring agreements, foreign currency exchange margin on DCC transactions, domestic and international surcharge, foreign currency dispensing and other value added services such as advertising, prepaid telecommunication recharges, bill payment, and money transfers provided over ATMs. Revenues in this segment are also derived from cardless payment, banknote recycling, tax refund services, license fees, professional services and maintenance fees for proprietary application software and sales of related hardware.


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    epay Segment     — Revenues in the epay Segment, which represented approximately 29% and 31%37% of total consolidated revenues for the thirdfirst quarter and first nine months of 2017, 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 payment products,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 non-mobiledigital media content now produces approximately 67%69% of epay Segment revenues. Other electronic payment productscontent offered by this segment includeincludes digital content such as music, games and software, as well as other products, including mobile wallets, prepaid long distance calling card plans, prepaid Internet plans, prepaid debit cards, gift cards, vouchers, transport payments, lottery payments, bill payment and money transfer. Agreements with mobile operators and prepaid content providers are important to the success of our business and these agreements permit us to distribute prepaid mobile airtime and other electronic payment products to retailers.


    Money Transfer Segment     — Revenues in the Money Transfer Segment, which represented approximately 36% and 39%50% of total consolidated revenuesfor the thirdfirst quarter and first nine months of 2017, are2021, 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, xeIME and HiFXxe 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’sRia'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 had an initial term of three years from the launch date of April 2014, and was renewed for an additional three yearsis effective until April 2020 and2023. 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


    Opportunities and Challenges

    Our expansion plans and opportunities are focused on eight primary areas:
    • increasing the number of ATMs and cash deposit terminals in our independent ATM networks;

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

  • signing new outsourced ATM and POS terminal management contracts;

  • expanding value added services and other products offered by our EFT Processing Segment, including the sale of DCC, acquiring and other prepaid card services to banks and retailers;
  • expanding our epay processing network and portfolio of digital content;

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

  • expanding our cash management solutions and foreign currency risk management services; and
  • developing our credit and debit card outsourcing business.
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    EFT Processing Segment — The continued expansion and development of our EFT Processing Segment business will depend on various factors including, but not necessarily limited to, the following:

    • the impact of competition by banks and other ATM operators and service providers in our current target markets;
  • the demand for our ATM outsourcing services in our current target markets;


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

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

  • our entry into additional card acceptance and ATM management agreements with banks;
    • financial institutions;
  • our ability to obtain required licenses in markets we intend to enter or expand services;

  • our ability to enter into sponsorship agreements where our licenses are not applicable;
  • our ability to enter into and renew ATM network cash supply agreements with financial institutions;

  • the availability of financing for expansion;
  • our ability to efficiently to install ATMs contracted under newly awarded outsourcing agreements;
  • our ability to renew existing contracts at profitable rates;

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

  • the impact of changes in rules imposed by international card organizations such as Visa® and Mastercard® on card transactions on ATMs, including reductions in ATM interchange fees;
    • fees, restrictions on the ability to apply direct access fees, the ability to offer DCC transactions on ATMs, and increases in fees charged on DCC transactions;
  • the impact of changes in laws and regulations affecting the profitability of our services, including regulation of DCC transactions by the E.U.;
  • the impact of overall market trends on ATM transactions in our current target markets;
  • our ability to expand and sign additional customers for the cross-border merchant processing and acquiring business; and

  • the continued development and implementation of our software products and their ability to interact with other leading products.
    • products; and
  • the impact of government imposed restrictions on travel into countries where we operate ATMs.


    • We consistently evaluate and add prospects to our list of potential ATM outsource customers. However, we cannot predict the increase or decrease in the number of ATMs we manage under outsourcing agreements because this depends largely on the willingness of banks to enter into outsourcing contracts with us. Due to the thorough internal reviews and extensive negotiations conducted by existing and prospective banking customers in choosing outsource vendors, the process of entering into or renewing outsourcing agreements can take several months. The process is further complicated by the legal and regulatory considerations of local countries. These agreements tend to cover large numbers of ATMs, so significant increases and decreases in our pool of managed ATMs could result from the acquisition or termination of one or more of these management contracts. Therefore, the timing of both current and new contract revenues is uncertain and unpredictable.



    Software products are an integral part of our product lines, and our investment in research, development, delivery and customer support reflects our ongoing commitment to an expanded customer base.
    epay Segment — The continued expansion and development of the epay Segment business will depend on various factors, including, but not necessarily limited to, the following:
    • our ability to maintain and renew existing agreements, and to negotiate new agreements in additional markets with mobile operators, digital content providers, agent financial institutions and retailers;
  • our ability to use existing expertise and relationships with mobile operators, digital content providers and retailers to our advantage;

  • the continued use of third-party providers such as ourselves to supply electronic processing solutions for existing and additional digital content;
    • the development of mobile phone networks in the markets in which we do business and the increase in the number of mobile phone users;

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

  • our market share of the retail distribution capacity;

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

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

  • our ability to fully recover monies collected by retailers;

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

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


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

  • the availability of financing for further expansion.
    • expansion; and
  • the impact of government imposed restrictions on retailers with whom we partner.


    • In all of the markets in which we operate, we are experiencing significant competition which will impact the rate at which we may be able to grow organically. Competition among prepaid mobile airtime and digitalelectronic content distributors results in the increase of commissions paid to retailers and increases in retailer attrition rates. To grow, we must capture market share from other prepaid mobile airtime and digitalelectronic content distributors, offer a superior product offering and demonstrate the value of a global network. In certain markets in which we operate, many of the factors that may contribute to rapid growth (growth in electronic payment products,content, expansion of our network of retailers and access to products of mobile operators and other content providers) remain present.

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

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

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

  • our ability to maintain our agent and correspondent networks;

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

  • the development of new technologies that may compete with our money transfer network;
    • network, and our ability to acquire, develop and implement new technologies;
  • the expansion of our services in markets where we operate and in new markets;

  • our ability to strengthen our brands;

  • our ability to fund working capital requirements;

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

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

  • our ability to take advantage of cross-selling opportunities with theour epay Segment, including providing prepaid services through our stores and agents worldwide;
  • our ability to leverage our banking and merchant/retailer relationships to expand money transfer corridors to Europe, Asia and Africa, including high growth corridors to Central and Eastern European countries;

  • the availability of financing for further expansion;

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

  • our ability to successfully expand our agent network in Europe using our payment institution licenses under the Second Payment Services Directive ("PSD2") and using our various licenses in the United States; and

  • our ability to provide additional value-added products under the xe brand.
    • brand; and
  • the impact of government imposed restrictions on our network of agents and correspondents.


    • 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 first quarter of 2021. These types of orders were first put into effect in late February 2020 or early March 2020.  As the number and rate of new cases has fluctuated in various locations around the global, the closures, restrictions and other social distancing orders have been modified, rescinded and/or re-imposed.  Some version of these orders remains in almost every location in which we operate.  Although vaccines for COVID-19 are becoming widely available in the U.S. and parts of Europe, 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 hat limit customers' ability to access our network of company owned stores and agents. 

    In response to the COVID-19 pandemic driven impacts, we implemented several key measures to offset the impact across the business, including renegotiating certain third party contracts, reducing travel, decreasing capital expenditures, and expanding ATM seasonal deactivations (placing them in dormancy status, terminating, or re-negotiating) in more sites and more markets.

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    SEGMENT SUMMARY RESULTS OF OPERATIONS


    Revenues and operating income by segment for the three and nine months ended     September 30, 2017March 31, 2021 and 20162020 are summarized in the tables below:

      
    Revenues for the Three Months Ended March 31,
    		 Year-over-Year Change
    (dollar amounts in thousands) 
    2021
    		 
    2020
    		 
    Increase
    (Decrease)
    Amount
    		 
    Increase
    (Decrease)
    Percent
    EFT Processing $
    87,076

    		 $
    145,825

    		 $
    (58,749
    		) 
    (40)
    		%
    epay 
    242,303

    		 
    172,911

    		 
    69,392
    		 
    40
    		%
    Money Transfer  
    324,900

    		 
    266,234

    		 
    58,666

    		 
    22
    		%
    Total 
    654,279

    		 
    584,970

    		 
    69,309

    		 
    12
    		%
    Corporate services, eliminations and other 
    (1,609
    		) 
    (1,063
    		) 
    (546
    		) 
    51
    		%
    Total $
    652,670

    		 $
    583,907

    		 $
    68,763

    		 
    12
    		%

      Revenues for the Three Months Ended September 30, Year-over-Year Change Revenues for the Nine Months Ended September 30, Year-over-Year Change
    (dollar amounts in thousands) 2017 2016 
    Increase
    (Decrease)
    Amount
    		 
    Increase
    Percent
    		 2017 2016 Increase
    (Decrease) Amount    		 
    Increase
    Percent
    EFT Processing $226,321
    		 $152,586
    		 $73,735
    		 48% $488,030
    		 $354,282
    		 $133,748
    		 38%
    epay 184,234
    		 167,226
    		 17,008
    		 10% 512,531
    		 497,945
    		 14,586
    		 3%
    Money Transfer 228,105
    		 204,611
    		 23,494
    		 11% 649,205
    		 587,664
    		 61,541
    		 10%
    Total 638,660
    		 524,423
    		 114,237
    		 22% 1,649,766
    		 1,439,891
    		 209,875
    		 15%
    Corporate services, eliminations and other (826) (398) (428) 108% (1,989) (1,105) (884) 80%
    Total $637,834
    		 $524,025
    		 $113,809
    		 22% $1,647,777
    		 $1,438,786
    		 $208,991
    		 15%
     Operating Income (Expense) for the Three Months Ended September 30, Year-over-Year Change Operating Income (Expense) for the Nine Months Ended September 30, Year-over-Year Change 
    Operating Income (Loss) for the Three Months Ended March 31,
    		 Year-over-Year Change
    (dollar amounts in thousands) 2017 2016 Increase
    (Decrease)Amount    		 Increase
    (Decrease) Percent    		 2017 2016 Increase
    (Decrease)Amount    		 Increase
    (Decrease) Percent    		 
    2021
    		 
    2020
    		 
    Increase
    (Decrease)
    Amount
    		 
    Increase
    (Decrease)
    Percent
    EFT Processing $86,797
    		 $59,438
    		 $27,359
    		 46 % $137,090
    		 $100,596
    		 $36,494
    		 36 % $
    (40,096
    		) $
    4,935

    		 $
    (45,031
    		) 
    (912)
    		%
    epay 15,650
    		 14,795
    		 855
    		 6 % 44,361
    		 46,681
    		 (2,320) (5)% 
    29,157

    		 
    16,458

    		 
    12,699
    		 
    77
    		%
    Money Transfer 24,356
    		 25,183
    		 (827) (3)% 75,355
    		 72,578
    		 2,777
    		 4 % 
    35,403

    		 
    22,308

    		 
    13,095

    		 
    59
    		%
    Total 126,803
    		 99,416
    		 27,387
    		 28 % 256,806
    		 219,855
    		 36,951
    		 17 % 
    24,464

    		 
    43,701

    		 
    (19,237
    		) 
    (44)
    		%
    Corporate services, eliminations and other (9,902) (8,948) (954) 11 % (31,928) (28,188) (3,740) 13 % 
    (14,015
    		) 
    (12,099
    		) 
    (1,916
    		) 
    16
    		%
    Total $116,901
    		 $90,468
    		 $26,433
    		 29 % $224,878
    		 $191,667
    		 $33,211
    		 17 % $
    10,449

    		 $
    31,602

    		 $
    (21,153
    		) 
    (67)
    		%



    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 financial 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,If significant, in our discussion we estimate that our reported consolidated operating income for the third quarter and the first nine months of 2017 was 5% and 1% more duewill refer to the changesimpact of fluctuations in foreign currency exchange rates when compared to the same periodsin our comparison of 2016.
    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 of the currencies of the countries in which we have our most significant operations:

     
    Average Translation Rate
    Three Months Ended September 30,
    		 Increase (Decrease) Percent 
    Average Translation Rate
    Nine Months Ended September 30,
    		 Increase (Decrease) Percent 
    Average Translation Rate
    Three Months Ended March 31,
    		 
    Currency (dollars per foreign currency) 2017 2016 2017 2016  2021 2020 
    Increase
    Percent
    Australian dollar $0.7896
    		 $0.7577
    		 4 % $0.7661
    		 $0.7418
    		 3 % $0.7725
    		 $0.6144
    		 26%
    British pound $1.3091
    		 $1.3125
    		 — % $1.2756
    		 $1.3931
    		 (8)%
    British pounds sterling $1.3790
    		 $1.2405
    		 11%
    euro $1.1754
    		 $1.1156
    		 5 % $1.1136
    		 $1.1162
    		 — % $1.2052
    		 $1.1026
    		 9%
    Hungarian forint $0.0038
    		 $0.0036
    		 6 % $0.0036
    		 $0.0036
    		 — % $0.0033
    		 $0.0031
    		 6%
    Indian rupee $0.0156
    		 $0.0149
    		 5 % $0.0153
    		 $0.0149
    		 3 % $0.0137
    		 $0.0133
    		 3%
    Malaysian ringgit $0.2347
    		 $0.2472
    		 (5)% $0.2302
    		 $0.2452
    		 (6)% $0.2461
    		 $0.2319
    		 6%
    New Zealand dollar $0.7309
    		 $0.7221
    		 1 % $0.7156
    		 $0.6922
    		 3 % $0.7188
    		 $0.5966
    		 20%
    Polish zloty $0.2762
    		 $0.2573
    		 7 % $0.2613
    		 $0.2563
    		 2 % $0.2655
    		 $0.2418
    		 10%

    COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017MARCH 31, 2021 AND 20162020

    EFT PROCESSING SEGMENT


    The following table presentssummarizes the results of operations for the three and nine months ended     September 30, 2017 and 2016 for our EFT Processing Segment:Segment for the three months ended March 31, 2021 and 2020:

      Three Months Ended
    September 30,    		 Year-over-Year Change Nine Months Ended
    September 30,    		 Year-over-Year Change
    (dollar amounts in thousands) 2017 2016 Increase Amount Increase Percent 2017 2016 Increase Amount Increase Percent
    Total revenues $226,321
    		 $152,586
    		 $73,735
    		 48% $488,030
    		 $354,282
    		 $133,748
    		 38%
    Operating expenses:                
    Direct operating costs 99,024
    		 62,401
    		 36,623
    		 59% 238,753
    		 165,520
    		 73,233
    		 44%
    Salaries and benefits 16,817
    		 12,954
    		 3,863
    		 30% 46,125
    		 37,601
    		 8,524
    		 23%
    Selling, general and administrative 8,878
    		 7,642
    		 1,236
    		 16% 23,960
    		 22,154
    		 1,806
    		 8%
    Acquired intangible assets impairment —
    		 —
    		 —
    		 n/m
    		 2,286
    		 —
    		 2,286
    		 n/m
    Depreciation and amortization 14,805
    		 10,151
    		 4,654
    		 46% 39,816
    		 28,411
    		 11,405
    		 40%
    Total operating expenses 139,524
    		 93,148
    		 46,376
    		 50% 350,940
    		 253,686
    		 97,254
    		 38%
    Operating income $86,797
    		 $59,438
    		 $27,359
    		 46% $137,090
    		 $100,596
    		 $36,494
    		 36%
    Transactions processed (millions) 615
    		 488
    		 127
    		 26% 1,726
    		 1,370
    		 356
    		 26%
    ATMs as of September 30, 38,105
    		 29,276
    		 8,829
    		 30% 38,105
    		 29,276
    		 8,829
    		 30%
    Average ATMs 38,123
    		 27,350
    		 10,773
    		 39% 36,524
    		 25,802
    		 10,722
    		 42%

      
    Three Months Ended
    March 31,
    		 Year-over-Year Change
    (dollar amounts in thousands) 
    2021
    		 
    2020
    		 Increase (Decrease) Amount 
    Increase
    (Decrease) Percent
    Total revenues $
    87,076

    		 $
    145,825

    		 $
    (58,749
    		) 
    (40)
    		%
    Operating expenses:        
    Direct operating costs 
    69,612

    		 
    87,536

    		 
    (17,924
    		) 
    (20)
    		%
    Salaries and benefits 
    23,571

    		 
    22,091

    		 
    1,480

    		 
    7
    		%
    Selling, general and administrative 
    11,962

    		 
    10,941

    		 
    1,021

    		 
    9
    		%
    Depreciation and amortization 
    22,027

    		 
    20,322

    		 
    1,705

    		 
    8
    		%
    Total operating expenses 
    127,172

    		 
    140,890

    		 
    (13,718
    		) 
    (10)
    		%
    Operating (loss) income $
    (40,096
    		) $
    4,935

    		 $
    (45,031
    		) 
    (912)
    		%
    Transactions processed (millions) 
    925

    		 
    785

    		 
    140

    		 
    18
    		%
    ATMs as of March 31, 
    36,777

    		 
    42,176

    		 
    (5,399
    		) 
    (13)
    		%
    Average Active ATMs 
    36,624

    		 
    44,813

    		 
    (8,189
    		) 
    (18)
    		%
    Revenues
    Revenues

    EFT Processing Segment total revenues for the three and nine months ended September 30, 2017 were $226.3 million and $488.0 million, respectively, an increase of $73.7 million or 48% and $133.7 million or 38% as compared to the same periods in 2016. The increases in total revenues for the three and nine months ended September 30, 2017 were primarily due to an increase in the number of ATMs under management in Europe. Specifically, the increase in the number of ATMs contributed to increases in the number of transactions processed, including dynamic currency conversion ("DCC") transactions. For the
    three months ended September 30, 2017, revenues were also higher than the same period in the prior year as a result of a higher
    volume of sales of POS devices in Greece and the acquisition of YourCash, completed during the fourth quarter of 2016. The acquisition of YourCash also contributed to the increase in total revenues for the first nine months of 2017. The increase for the nine months ended September 30, 2017 was partially offset by the impact of a cash shortage due to the demonetization initiated in the fourth quarter of 2016 in India. In the third quarter, the India cash supply was returned to near pre-demonetization levels. Foreign currency movements increased total revenues by approximately $10.3$87.1 million for the three months ended September 30, 2017 asMarch 31, 2021, a decrease of $58.7 million or 40% compared to the same period in 20162020. The decrease in revenues was primarily due to the impact of fewer active ATMs and had minimalfewer high-margin cross-border transactions (DCC), related to COVID-19 pandemic-driven government imposed border and business closures, travel restrictions and lockdowns. The government imposed border and business closures, travel restrictions and lockdowns were in effect on totalto varying degrees for all of the first quarter of 2021 compared to similar restrictions that were primarily limited to the month of March in 2020. These closures, restrictions and other orders resulted in a significant decline in tourism throughout Europe which led to a decrease in DCC and surcharge revenues for the first ninethree months of 2017 asended March 31, 2021 compared to the same period in 2016.
    2020. Foreign currency movements increased revenues by approximately $3.2 million for the three months ended March 31, 2021 compared to the same period in 2020.

    Average monthly revenues per ATM were $1,979 and $1,485decreased to $793 for the three and nine months ended September 30, 2017, respectively,March 31, 2021 compared to $1,860 and $1,526$1,085 for the three and nine months ended September 30, 2016, respectively. The decrease for the nine months ended September 30, 2017 was primarily due to the India cash shortage and low-margin ATMssame period in India.2020. Revenues per transaction were $0.37decreased to $0.09 for the third quarter and $0.28 three months ended March 31, 2021 compared to $0.19 for the first nine months of 2017, respectively, compared to $0.31 for the third quartersame period in 2020. The decreases in average monthly revenues per ATM and $0.26 for the first nine months of     2016, respectively. The increases in revenuerevenues per transaction were attributable to a shift in the mix in our transaction volume as COVID-19 restrictions significantly reduced the volume of higher revenue transactions (DCC and surcharge) throughout Europe while we experienced a significant increase in the volume of lower revenue transactions (processing bank wallet transactions and payments for e-commerce sites) primarily the result of revenue growth from DCC, which earns higher revenues per transaction than other ATM or card-based services, which were partially offset by the impact of the low margin ATM transactions in India.
    our Asia Pacific region.

    Direct operating costs


    EFT Processing Segment direct operating costs were $99.0 million and $238.8$69.6 million for the three and nine months ended September 30, 2017, respectively, an increaseMarch 31, 2021, a decrease of $36.6$17.9 million or 59% and $73.2 million or 44% as20% compared to the same periodsperiod in 2016.2020. Direct operating costs in the EFT Processing Segmentprimarily consist primarily 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.
    28
    Table of Contents
    The increasesdecrease in direct operating costs for the three and nine months ended September 30, 2017 werewas primarily due to an increasethe decrease in the number of ATMs under management, particularly our independent ATM network which has more seasonal revenue generationrenegotiated and the impact of our acquisition of YourCash. The increasereduced site rental fees, and reduced operating costs for ATM's seasonally deactivated during COVID-19 pandemic imposed restrictions. Foreign currency movements increased direct operating costs by approximately $3.2 million for the three months ended September 30, 2017 was also dueMarch 31, 2021 compared to the net impact of the U.S. dollar weakening against key foreign currencies.
    same period in 2020.

    Gross profit


    Gross profit, which is calculated as revenues less direct operating costs, was $127.3 million and $249.3$17.5 million for the three and nine months ended September 30, 2017, respectively, asMarch 31, 2021, a decrease of $40.8 million or 70% compared to $90.2 million and $188.8$58.3 million for the three and nine months ended September 30, 2016, respectively. The increasessame period in gross profit were primarily due to the growth in revenues from the increase in ATMs under management, DCC transactions processed and the net impact of the U.S. dollar weakening against key foreign currencies.2020. Gross profit as a percentage of revenues (“gross margin”) was 56.2% and 51.1%decreased to 20.1% for the three and nine months ended September 30, 2017, respectively, asMarch 31, 2021, compared to 59.1%40.0% for the same period in 2020. The decrease in gross profit and 53.3%gross margin was attributable to the decrease in DCC transactions and domestic and international surcharges.

    Salaries and benefits

    Salaries and benefits expenses were $23.6 million for the three and nine months ended September 30, 2016, respectively. The decreases in gross profit as a percentageMarch 31, 2021, an increase of revenue were primarily due to increased operating costs due to the expansion of our ATM network, which includes fixed costs for our independent ATMs, the YourCash transactions which earn lower margins per transaction than other ATM or card-based services in Europe, along with ATM growth in the India market where we earn lower revenue per transaction and have experienced a cash shortage due to the demonetization initiative in the region. For the third quarter, the decrease in gross margins was also attributable to the higher volume of sales of POS devices in Greece from which we earn a lower margin from these transactions.
    Salaries and benefits
    Salaries and benefits expense increased $3.9$1.5 million or 30% and $8.5 million or 23% for the three and nine months ended September 30, 2017, respectively,7% compared to the same periodsperiod in 2016. The increases in salaries and benefits were primarily attributable to additional headcount to support an increase2020. Foreign currency movements in the number of ATMs and POS devices under management. countries we employ our workforce increased these expenses by $1.3 million for the three months ended March 31, 2021 compared to the same period in 2020. As a percentage of revenues, these costs decreasedexpenses increased to 7.4%27.1% for the third quarter and 9.5% for the first ninethree months of 2017, respectively,ended March 31, 2021, compared to 8.5% 15.1% for the third quarter and 10.6% forsame period in 2020. We made a decision to retain our employees during the first nine months of 2016, respectively. The decreases were primarily due to the growth in revenues earned from DCC and other value added service transactions on our ATMs under management, which require minimal incremental support costs.
    pandemic.

    Selling, general and administrative


    Selling, general and administrative expenses were $12.0 million for the three and nine months ended September 30, 2017 were $8.9 million and $24.0 million, respectively,March 31, 2021, an increase of $1.2$1.0 million or 16% and $1.8 million or 8% as9% compared to the same periodsperiod in 2016. The increases in selling, general and administrative2020. Foreign currency movements increased these expenses were primarily dueby $1.2 million for the three months ended March 31, 2021 compared to the impact of our acquisition of YourCashsame period in 2020, which was partlywere partially offset by an increasedecreases in additional support cost in 2016 that did not recur in 2017. travel related expenses and bad debt expense. As a percentage of revenues, selling, general and administrativethese expenses were 3.9% and 4.9%increased to 13.7% for the three and nine months ended September 30, 2017, respectively,March 31, 2021, compared to 5.0% and 6.3%7.5% for the three and nine months ended September 30, 2016, respectively. The decreases were primarily due to the growthsame period in revenues earned from DCC and other value added service transactions on our ATMs under management, which require minimal incremental support costs.
    Acquired intangible assets impairment
    The Company recorded a non-cash impairment charge of $2.3 million for the nine months ended September 30, 2017 related to certain customer relationships as a result of the closure of the Pure Commerce office in South Korea. No impairment charges were recorded in 2016.
    2020.

    Depreciation and amortization


    Depreciation and amortization expense increased $4.7 million and $11.4expenses were $22.0 million for the three and nine months ended September 30, 2017, respectively,March 31, 2021, an increase of $1.7 million or 8% compared to the same periodsperiod in 2016. The increases were primarily attributable2020.Foreign currency movements increased these expenses by $1.2 million for the three months ended March 31, 2021 compared to the deploymentsame period in 2020, with the remainder of additional ATMs under management, including more expensive cash recycling ATMs, software assets, and the amortization of intangible assets related toincrease driven by the acquisition of YourCash. additional ATMs and software assets. As a percentage of revenues, depreciation and amortization expense was 6.5%these expenses increased to 25.3% for the third quarter and 8.2% for the first ninethree months of 2017 asended March 31, 2021, compared to 6.7% and 8.0%13.9% for the same periods of 2016.

    period in 2020.

    Operating (loss) income


    EFT Processing Segment had an operating loss of ($40.1 million) for the three months ended March 31, 2021, a decrease of $45.0 million or (912%) compared to the operating income for the three and nine months ended September 30, 2017 was $86.8 million and $137.1 million, respectively, an increase of $27.4 million or 46% and $36.5 million or 36% as compared to the same periodsperiod in 2016. EFT Processing Segment operating income for the three and nine months ended September 30, 2017 increased primarily due to higher operating revenues from the additional number of ATMs under management, the YourCash acquisition, growth in revenues earned from DCC transactions and the net impact of the U.S. dollar weakening against key foreign currencies.
    Operating2020. Operating (loss) income as a percentage of revenues (“operating margin”) was 38.4%decreased to (46.0%) for the third quarter and 28.1%three months ended March 31, 2021, compared to 3.4% for the first nine months of 2017 compared to 39.0% for the third quarter and 28.4% for the first nine months of 2016. The slight decreasessame period in operating margins were attributable to additional costs for ATMs added throughout the year and the impact of lower margin ATM transactions for YourCash and in India. 2020. Operating (loss) income per transaction was $0.14($0.04) for the third quarter and $0.08 for the first ninethree months of 2017 asended March 31, 2021, compared to $0.12 and $0.07$0.01 for the same periodsperiod in 2020. The decreases in operating income, operating margin and operating income per transaction were primarily driven by the decrease in travel throughout Europe that led to the significant decrease in DCC and surcharge revenues compared to the same period in 2020. 

    29
    Table of 2016.Contents

    EPAY SEGMENT
    EPAY SEGMENT
    The following table presents the results of operations for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 for our epay Segment:
      Three Months Ended
    September 30,    		 Year-over-Year Change Nine Months Ended
    September 30,    		 Year-over-Year Change
    (dollar amounts in thousands) 2017 2016 Increase (Decrease) Amount Increase (Decrease) Percent 2017 2016 Increase
    (Decrease)Amount    		 Increase
    (Decrease)Percent
    Total revenues $184,234
    		 $167,226
    		 $17,008
    		 10 % $512,531
    		 $497,945
    		 $14,586
    		 3 %
    Operating expenses:                
    Direct operating costs 143,023
    		 128,212
    		 14,811
    		 12 % 393,269
    		 379,423
    		 13,846
    		 4 %
    Salaries and benefits 13,955
    		 13,352
    		 603
    		 5 % 39,606
    		 38,052
    		 1,554
    		 4 %
    Selling, general and administrative 9,145
    		 8,133
    		 1,012
    		 12 % 27,628
    		 25,291
    		 2,337
    		 9 %
    Depreciation and amortization 2,461
    		 2,734
    		 (273) (10)% 7,667
    		 8,498
    		 (831) (10)%
    Total operating expenses 168,584
    		 152,431
    		 16,153
    		 11 % 468,170
    		 451,264
    		 16,906
    		 4 %
    Operating income $15,650
    		 $14,795
    		 $855
    		 6 % $44,361
    		 $46,681
    		 $(2,320) (5)%
    Transactions processed (millions) 293
    		 314
    		 (21) (7)% 901
    		 949
    		 (48) (5)%
    Revenues
      
    Three Months Ended
    March 31,
    		 Year-over-Year Change
    (dollar amounts in thousands) 
    2021
    		 
    2020
    		 Increase (Decrease) Amount 
    Increase
    (Decrease) Percent
    Total revenues $
    242,303

    		 $
    172,911

    		 $
    69,392

    		 
    40
    		%
    Operating expenses:        
    Direct operating costs 
    182,633

    		 
    130,074

    		 
    52,559

    		 
    40
    		%
    Salaries and benefits 
    19,369

    		 
    15,697

    		 
    3,672

    		 
    23
    		%
    Selling, general and administrative 
    9,020

    		 
    8,838

    		 
    182

    		 
    2
    		%
    Depreciation and amortization 
    2,124

    		 
    1,844

    		 
    280

    		 
    15
    		%
    Total operating expenses 
    213,146

    		 
    156,453

    		 
    56,693

    		 
    36
    		%
    Operating income $
    29,157

    		 $
    16,458

    		 $
    12,699
    		 
    77
    		%
    Transactions processed (millions) 
    667

    		 
    447

    		 
    220

    		 
    49
    		%

    Revenues

    epay Segment total revenues were $242.3 million for the three and nine months ended September 30, 2017 were $184.2 million and $512.5 million, respectively,March 31, 2021, an increase of $17.0$69.4 million or 10% and $14.6 million or 3% as40% compared to the same periodsperiod in 2016.2020. The increasesincrease in total revenues werewas primarily due to an increase in the number of non-mobile transactions processed in Germany, an increase in vouchers distributeddriven by our cadooz subsidiary following the acquisition of new customerscontinued digital media growth and the net impact of of the U.S. dollar weakening against key foreign currencies.currencies during the first quarter of 2021. Foreign currency movements increased totalincreased revenues by approximately $7.6$12.9 million for the three months ended September 30, 2017March 31, 2021 compared to the same period in 20162020. The epay segment was impacted by COVID-19 pandemic-driven government imposed lockdowns and had minimal effect on totalbusiness closures, primarily at retail outlets, which were offset by increases in digital media offerings in Asia and revenues derived from businesses that were classified as essential and remained open during the pandemic.

    Revenues per transaction decreased to $0.36 for the first ninethree months ended March 31, 2021, compared to $0.39 for the same period in 2020. The decrease in revenues per transaction was primarily driven by the increase in the number of 2017 asmobile transactions processed in a region where we generally earn lower revenues per transaction.

    Direct operating costs

    epay Segment direct operating costs were $182.6 million for the three months ended March 31, 2021, an increase of $52.6 million or 40% compared to the same period in 2016. The increases in total revenues were partially offset by the decrease in prepaid mobile transactions processed in the U.S. and U.K. due to competitive pressures on prepaid mobile carriers and the result of high promotion driven revenues from non-mobile transactions in a particular market during the prior year which did not recur in the current period.
    Revenues per transaction were $0.63 for the third quarter and $0.57 for the first nine months of 2017 compared to $0.53 and $0.52 for the same periods in 20162020. The increases in revenues per transaction were primarily driven by the revenue growth from non-mobile transactions processed, for which we generally earn higher revenues per transaction than mobile transactions and the net impact of the U.S. dollar weakening against key foreign currencies. The increase in revenues per transaction was also favorably impacted by the loss of a high-volume, low-margin customer in the Middle East.

    Direct operating costs
    epay Segment direct operating costs were $143.0 million and $393.3 million for the three and nine months ended September 30, 2017, respectively, an increase of $14.8 million and $13.8 million as compared to the same periods in 2016. Direct operating costs in our epay Segment includeprimarily consist of the commissions we paypaid 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 increasesincrease in direct operating costs werewas primarily due to the increase in vouchers distributedtransaction volumes of low-value mobile top-up transactions and by our cadooz subsidiary and non-mobile transactions processed in Germany. The increase for the three months ended September 30, 2017 was also partly due to the net impact of the U.S. dollar weakening against key foreign currencies.
    Gross profit
    Gross profit was $41.2 million and $119.3currencies in the first quarter of 2021. Foreign currency movements increased direct operating costs by approximately $9.4 million for the three and nine months ended September 30, 2017, respectively, as March 31, 2021 compared to $39.0 million and $118.5the same period in 2020.

    Gross profit

    Gross profit was $59.7 million for the three and nine months ended September 30, 2016, respectively.March 31, 2021, an increase of $16.9 million or 39% compared to $42.8 million for the same period in 2020. Gross margin decreased to 24.6% for the three months ended March 31, 2021, compared to 24.8% for the same period in 2020. The increasesincrease in gross profit were primarily due to growthand decrease in non-mobile transactionsgross margin is driven by the increase in transaction volumes processed in Germany partly offset by a decrease in promotional activities for non-mobile transactions processed in a particular market. For the third quarter, the increase was also partly due to the net impactregions where we generally earn lower revenues per transaction.

    30
    Table of the U.S. dollar weakening against key foreign currencies.Contents
    During the three and nine months ended September 30, 2017, the gross margin was 22.4% and 23.3%, as compared to 23.3% and 23.8% for the same periods in 2016. The decreases in gross margins for the third quarter were impacted by lower gross margins realized on voucher distributions and the result of high promotion driven revenues from non-mobile transactions in a particular market during the prior year which did not recur in the current period.
    Salaries and benefits


    Salaries and benefits expense increased slightlyexpenses were $19.4 million for the three and nine months ended September 30, 2017March 31, 2021, an increase of $3.7 million or 23% compared to the same periodsperiod in 2016. 2020. The increases were mainlyincrease in salaries and benefits was driven by higheran increase in headcount to support the growth of the business as well as a $1.2 million increase from foreign currency movements for the three months ended March 31, 2021 compared to the same period in an effort to grow the segment. 2020. As a percentage of revenues, salaries and benefits were 7.6% and 7.7%these expenses decreased to 8.0% for the three and nine months ended September 30, 2017, asMarch 31, 2021, compared to 8.0% and 7.6%9.1% for the same periodsperiod in 2016.
    2020. 

    Selling, general and administrative


    Selling, general and administrative expenses were $9.1 million and $27.6$9.0 million for the three and nine months ended September 30, 2017, respectively,March 31, 2021, an increase of 12% and 9% as$0.2 million or 2% compared to the same periodsperiod in 2016. The increases in selling, general and administrative expenses were mainly due to increased promotional cost for our non-mobile products in Germany and other costs related to the settlement of disputes in certain foreign markets.2020. As a percentage of revenues, selling, general and administrativethese expenses were 5.0% and 5.4%decreased to 3.7% for the three and nine months ended September 30, 2017, respectively, asMarch 31, 2021, compared to 4.9% and 5.1% for the same periodsperiod in 2016.
    2020.

    Depreciation and amortization


    Depreciation and amortization expenses were $2.1 million for the three months ended March 31, 2021, an increase of $0.3 million or 15% compared to the same period in 2020. Depreciation and amortization expense primarily represents depreciation of POS terminals we placeinstall in retail stores and the amortization of acquired intangible assets. Depreciation and amortization expense decreased slightly for the three and nine months ended September 30, 2017 as compared to the same periods in 2016. As a percentage of revenues, depreciation and amortization expense was 1.3% and 1.5% for the three and nine months ended September 30, 2017, respectively, and 1.6% and 1.7% for the three and nine months ended September 30, 2016, respectively.
    Operating income
    epay Segment operating income for the three and nine months ended September 30, 2017 was $15.7 million and $44.4 million, respectively, an increase of $0.9 million and a decrease of $2.3 million as comparedthese expenses decreased to the same periods in 2016. Operating income for the nine months ended September 30, 2017 decreased as the result of additional cost to support the transaction growth of our non-mobile products in Germany and a decrease in promotion driven revenues from non-mobile transactions, partly offset by an increase in gross profit from non-mobile products in Germany. Operating income0.9% for the three months ended September 30, 2017 improved as a result of increased gross profit from non-mobile productsMarch 31, 2021, compared to 1.1% for same period in Germany, along with the net impact of the U.S. dollar weakening against key foreign currencies, partly offset by the decrease in promotion driven revenues from non-mobile transactions processed in a particular market.
    2020.

    Operating margin decreased to 8.5% and 8.7%income

    epay Segment operating income was $29.2 million for the three and nine months ended September 30, 2017, respectively, from 8.8% and 9.4%March 31, 2021, an increase of $12.7 million or 77% compared to the same period in 2020. Operating margin increased to 12.0% for the three months ended March 31, 2021, compared to 9.5% for the same periodsperiod in 2016. 2020. Operating income per transaction was $0.05$0.04 for both the three months ended March 31, 2021 and 2020. The increases in operating income and operating margin for the three and nine months ended September 30, 2017 and 2016, respectively.March 31, 2021 compared to the same period in 2020 were primarily due to an increase in the number of higher-margin digital media transactions.


    31
    Table of Contents
    MONEY TRANSFER SEGMENT
    The following table presents the results of operations for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 for the Money Transfer Segment:
      Three Months Ended
    September 30,    		 Year-over-Year Change Nine Months Ended
    September 30,    		 Year-over-Year Change
    (dollar amounts in thousands) 2017 2016 Increase (Decrease) Amount Increase (Decrease) Percent 2017 2016 Increase
    Amount    		 Increase Percent
    Total revenues $228,105
    		 $204,611
    		 $23,494
    		 11 % $649,205
    		 $587,664
    		 $61,541
    		 10%
    Operating expenses:                
    Direct operating costs 123,588
    		 109,944
    		 13,644
    		 12 % 348,724
    		 309,706
    		 39,018
    		 13%
    Salaries and benefits 44,110
    		 38,365
    		 5,745
    		 15 % 125,273
    		 114,582
    		 10,691
    		 9%
    Selling, general and administrative 28,648
    		 23,924
    		 4,724
    		 20 % 77,912
    		 68,930
    		 8,982
    		 13%
    Depreciation and amortization 7,403
    		 7,195
    		 208
    		 3 % 21,941
    		 21,868
    		 73
    		 —%
    Total operating expenses 203,749
    		 179,428
    		 24,321
    		 14 % 573,850
    		 515,086
    		 58,764
    		 11%
    Operating income $24,356
    		 $25,183
    		 $(827) (3)% $75,355
    		 $72,578
    		 $2,777
    		 4%
    Transactions processed (millions) 23.9
    		 21.3
    		 2.6
    		 12 % 67.4
    		 60.5
    		 6.9
    		 11%
    Revenues
      
    Three Months Ended
    March 31,
    		 Year-over-Year Change
    (dollar amounts in thousands) 
    2021
    		 
    2020
    		 Increase (Decrease) Amount 
    Increase
    (Decrease) Percent
    Total revenues $
    324,900

    		 $
    266,234

    		 $
    58,666

    		 
    22
    		%
    Operating expenses:        
    Direct operating costs 
    183,878

    		 
    142,909

    		 
    40,969

    		 
    29
    		%
    Salaries and benefits 
    60,540

    		 
    53,864

    		 
    6,676

    		 
    12
    		%
    Selling, general and administrative 
    36,116

    		 
    38,582

    		 
    (2,466
    		) 
    (6)
    		%
    Depreciation and amortization 
    8,963

    		 
    8,571

    		 
    392

    		 5%
    Total operating expenses 
    289,497

    		 
    243,926

    		 
    45,571

    		 
    19
    		%
    Operating income $
    35,403

    		 $
    22,308

    		 $
    13,095
    		 
    59
    		%
    Transactions processed (millions) 
    31.2

    		 
    27.4

    		 
    3.8

    		 
    14
    		%
    Revenues

    Money Transfer Segment total revenues were $324.9 million for the three and nine months ended September 30, 2017 were $228.1 million and $649.2 million, respectively,March 31, 2021, an increase of $23.5$58.7 million or 11% and $61.5 million or 10% as22% compared to the same periodsperiod in 2016.2020. The increasesincrease in total revenues for the three and nine months ended September 30, 2017 werewas primarily due to increases in the number ofU.S. outbound and international-originated money transfers, processed, drivenpartially offset by growthdecreases in the U.S. and foreign agent and correspondent payout networks, and an increase in transactions in our domestic Walmart-2-Walmart money transfer service. These increases were partly offset by the reduced rates for our Walmart-2-Walmart product beginning in the second quarter of 2017, the effects of the hurricanes in Texas, Florida and Puerto Rico and a decrease in transactions processed by HiFX as a result of currency volatility from the Brexit vote during the prior year which did not recur in the current period.
    business. Revenues per transaction decreasedincreased to $9.54$10.41 for the third quarter and $9.63three months ended March 31, 2021, compared to $9.72 for the first nine months of 2017 from $9.61 same period in 2020. Foreign currency movements increased revenues by approximately $14.3 millionfor the third quarter and $9.71 for the first ninethree months of 2016. The decreases were primarily dueended March 31, 2021 compared to the impact of the increasesame period in volume from our Walmart money transfer product, which earns lower revenues per transaction than other money transfer services and reduced rates charged for the Walmart-2-Walmart product beginning in the second quarter of 2017. In the fourth quarter of 2016, the Company took over the processing of xe money transfers from a third party and began recording the full customer fees as revenues, which partly offset the decreases in revenues per transaction.
    2020.

    Direct operating costs


    Money Transfer Segment direct operating costs were $123.6 million and $348.7$183.9 million for the three and nine months ended September 30, 2017, respectively,March 31, 2021, an increase of $13.6$41.0 million or 12% and $39.0 million or 13% as29% compared to the same periodsperiod in 2016.2020. Direct operating costs in the Money Transfer Segment 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 increasesincrease in direct operating costs for the three and nine months of 2017 werewas primarily due to growththe increase in the number of U.S. outbound and international-originated money transfer transactions processed in bothand the impact of the U.S. anddollar weakening against key foreign markets.
    Gross profit
    Gross profit was $104.5 million and $300.5currencies. Foreign currency movements increased direct operating costs by approximately $7.1 million for the three and nine months ended September 30, 2017, respectively, asMarch 31, 2021 compared to $94.7 million and $278.0the same period in 2020.

    Gross profit

    Gross profit was $141.0 million for the three and nine months ended September 30, 2016, respectively.March 31, 2021, an increase of $17.7 million or 14% compared to $123.3 million for the same period in 2020. The increasesincrease in gross profit werewas primarily due to growthto increases in the number ofU.S. outbound and international-originated money transfer transactions processed in both the U.S. and foreign markets.

    During the three and nine months ended September 30, 2017, grosstransfers. Gross margin decreased to 45.8% and 46.3%43.4% for the three and nine months ended September 30, 2017, respectively, asMarch 31, 2021, compared to 46.3% and 47.3% for the three and nine months ended September 30, 2016, respectively.same period in 2020. The decreases aredecrease in gross margin is primarily dueattributable to the growth of our Walmart money transfer productincrease in direct operating costs driven by increased agent commissions in the U.S., which earns a lower gross profit per transaction than other money transfer services and reduced rates charged for the Walmart-2-Walmart product beginning in the secondfirst quarter of 2017.
    Salaries and benefits
    Salaries and benefits expense increased $5.7 million or 15% and $10.7 million or 9% for the three and nine months ended September 30, 2017, respectively, as2021 compared to the same periodsperiod in 2016. 2020.
    Salaries and benefits

    Salaries and benefits expenses were $60.5 million for the three months ended March 31, 2021, an increase of $6.7 million or 12% compared to the same period in 2020. The increasesincrease in salaries and benefits werewas primarily duedriven by an increase in headcount to support the growth of the business, an increase in bonus expense and an increase of $2.6 million from foreign currency movements for the three months ended March 31, 2021 compared to the expansion of our operationssame period in foreign markets. 2020. As a percentage of revenues, salaries and benefits were 19.3%these expenses decreased to 18.6% for the three and nine months ended September 30, 2017, asMarch 31, 2021, compared to 18.8% and 19.5%20.2% for the three and nine months ended September 30,     2016, respectively.
    same period in 2020. 

    Selling, general and administrative


    Selling, general and administrative expenses were $36.1 million for the three and nine months ended September 30, 2017 were $28.6 million and $77.9 million, an increaseMarch 31, 2021, a decrease of $4.7$2.5 million or 20% and $9.0 million or 13% as6% compared to the same periodsperiod in 2016.2020. The increases weredecrease was primarily due to a $3.7 million decrease in bad debt expense and a $1.6 million decrease in travel related expenses, incurredpartially offset by a $2.6 million increase from foreign currency movements for the three months ended March 31, 2021 compared to support the growth of our money transfer services and the expansion of new productssame period in both the U.S. and foreign markets.
    2020. As a percentage of revenues, selling, general and administrativethese expenses increaseddecreased to 12.6% and 12.0%11.1% for the three and nine months ended September 30, 2017, respectively, asMarch 31, 2021, compared to 11.7%14.5% for both of the same periodsperiod in 2016. This increase was primarily due to the growth rate of support costs exceeding the growth rate of money transfer revenues as we develop and promote expanded payout locations and new products.
    2020.

    Depreciation and amortization


    Depreciation and amortization expenses were $9.0 million for the three months ended March 31, 2021, an increase of $0.4 million or 5% compared to the same period in 2020. Depreciation and amortization primarily represents amortization of acquired intangible assets and depreciation of money transfer terminals, computers and software, leasehold improvements and office equipment. Depreciation and amortization expense was essentially flat for the three and nine months ended September 30, 2017 as compared to the same periods in 2016.
    As a percentage of revenues, depreciation and amortization expense wasthese expenses decreased to 2.8% for the three months ended March 31, 2021, compared to 3.2% for the third quarter and 3.4% for the first nine months of 2017 as compared to 3.5% and 3.7% for the same periods of 2016. The decreases were primarily due to the effect of revenues earned from our Walmart money transfer product, which requires less capital investment than other money transfer products.
    period in 2020.

    Operating income
    Money Transfer Segment operating income for the three and nine months ended September 30, 2017 was $24.4$35.4 million and $75.4 million, a decrease of $0.8 million or 3% and an increase of $2.8 million or 4% as compared to the same periods of 2016. Operating income for the three months ended September 30, 2017 decreased primarily as a resultMarch 31, 2021, an increase of the the reduced rates for our Walmart-2-Walmart product, the effects of the hurricanes in Texas, Florida and Puerto Rico and additional salaries and benefits and other costs incurred to support the current and future growth in the business. Operating income for the nine months ended September 30, 2017 increased primarily due$13.1 million or 59% compared to the growthsame period in the number of money transfers processed. The increase was partly offset by the additional salaries and benefits and other costs incurred, reduced rates for Walmart-2-Walmart transfer services as well as2020. Operating margin increased transactions processed by HiFX as a result of the Brexit vote in the prior period, which did not recur in the current period.
    As a percentage of revenues, operating margin was 10.7% and 11.6%to 10.9% for the three and nine months ended September 30, 2017 asMarch 31, 2021, compared to 12.3% and 12.4%8.4% for the same periodsperiod in 2016. 2020. The increases in operating income and operating margin were primarily driven by the increase in transaction volume, specifically the higher margin transactions for U.S. outbound and international-originated money transfers. Operating income per transaction decreasedincreased to $1.02$1.13 for the third quarter and $1.12 for the first ninethree months of 2017 from $1.18 and $1.20ended March 31, 2021, compared to $0.81 for the same periodsperiod in 2016. Operating margin and operating income per transaction decreased primarily due to the decrease in margin realized with the renewal of the Walmart-2-Walmart agreement and the additional salaries and benefits and other costs incurred to support the growth in the business.


    2020.
    CORPORATE SERVICES
    The following table presents the operating expenses for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 for Corporate Services:

     Three Months Ended
    September 30,    		 Year-over-Year Change Nine Months Ended
    September 30,    		 Year-over-Year Change 
    Three Months Ended
    March 31,
    		 Year-over-Year Change
    (dollar amounts in thousands) 2017 2016 Increase (Decrease) Amount Increase (Decrease) Percent 2017 2016 Increase (Decrease) Amount Increase (Decrease) Percent 
    2021
    		 
    2020
    		 Increase (Decrease) Amount 
    Increase
    (Decrease) Percent
    Salaries and benefits $7,252
    		 $7,228
    		 $24
    		 — % $21,613
    		 $22,739
    		 $(1,126) (5)% $12,188
    		 $9,588
    		 $2,600
    		 
    27
    		%
    Selling, general and administrative 2,614
    		 1,680
    		 934
    		 56 % 10,219
    		 5,303
    		 4,916
    		 93 % 
    		1,680
    		 
    		2,432
    		 
    		(752) 
    (31)
    		%
    Depreciation and amortization 36
    		 40
    		 (4) (10)% 96
    		 146
    		 (50) (34)% 
    147

    		 
    		79
    		 
    		68
    		 
    86
    		%
    Total operating expenses $9,902
    		 $8,948
    		 $954
    		 11 % $31,928
    		 $28,188
    		 $3,740
    		 13 % $
    14,015

    		 $12,099
    		 $1,916
    		 
    16
    		%


    33
    Table of Contents
    Corporate operating expenses
    Overall,

    Total Corporate operating expenses for Corporate Services were $9.9 million and $31.9$14.0 million for the three and nine months ended September 30, 2017,March 31, 2021, an increase of 11% and 13% as$1.9 million or 16% compared to the same periodsperiod in 2016.2020. The decrease in salaries and benefits for the first nine months of 2017 wasincrease is primarily due to a decrease$2.2 million increase in bonus expense related to the Company's performance relative to its targets. The increases in selling, general and administrative expenses were primarily attributable to professional services and other costs incurred in connection with the proposed acquisition of MoneyGram International, Inc.share based compensation. 

    OTHER INCOME (EXPENSE),EXPENSE, NET
      Three Months Ended
    September 30,    		 Year-over-Year Change Nine Months Ended
    September 30,    		 Year-over-Year Change
    (dollar amounts in thousands) 2017 2016 Increase (Decrease) Amount  Increase (Decrease) Percent 2017 2016 Increase (Decrease) Amount  Increase (Decrease) Percent
    Interest income $380
    		 $349
    		 $31
    		 9 % 2,009
    		 1,244
    		 765
    		 61%
    Interest expense (9,534) (7,724) (1,810) 23 % (25,058) (20,968) (4,090) 20%
    Foreign currency exchange gain (loss), net 8,179
    		 (1,527) 9,706
    		 n/m
    		 21,035
    		 (1,299) 22,334
    		 n/m
    Other gains —
    		 —
    		 —
    		 n/m
    		 35
    		 19,903
    		 (19,868) n/m
    Other expense, net $(975) $(8,902) $7,927
    		 (89)% $(1,979) $(1,120) $(859) 77%
    ________________
      
    Three Months Ended
    March 31,
    		 Year-over-Year Change
    (dollar amounts in thousands) 
    2021
    		 
    2020
    		 Increase (Decrease) Amount 
    Increase
    (Decrease) Percent
    Interest income $182
    		 $
    567

    		 $(385) 
    (68)
    		%
    Interest expense 
    (9,189
    		) 
    (9,233
    		) 
    44

    		 
    (0)
    		%
    Foreign currency exchange loss, net 
    (4,032
    		) 
    (18,806
    		) 
    14,774

    		 (79)%
    Other gains, net 
    31

    		 
    31

    		 
    —

    		 0%
    Other expense, net $
    (13,008
    		) $
    (27,441
    		) $
    14,433
    		 
    (53)
    		%
    n/m — Not meaningful
    Interest income
    The increases in interest income for the three and nine months ended September 30, 2017 compared to the same periods in 2016 were primarily due to interest earned on a tax refund received in India in the first quarter of 2017.
    Interest expense
    The increases in interest expense for the three and nine months ended September 30, 2017 compared to the same periods in 2016 were primarily related to higher interest rates and additional borrowings under the Credit Facility throughout the third quarter and first nine months of 2017 to fund the operating cash for our Independent ATM Deployed (“IAD”) networks.

    Foreign currency exchange gain (loss),loss, net


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


    We recorded net foreign currency exchange gainslosses of     $8.2$4.0 million and $21.0$18.8 million for the three and nine months ended September 30, 2017, respectively, as compared to a net foreign currency loss of $1.5 millionMarch 31, 2021 and gain of $1.3 million for the same periods in 2016.2020, respectively. These realized and unrealized net foreign currency exchange gains and losses reflect the fluctuation in the value of the U.S. dollar against the currencies of the countries in which we operated during the respective periods.
    Other gains
    The results for the first nine months of 2016 included an investment gain of $19.4 million related to the sale of the sale of our membership in Visa Europe Limited ("Visa Europe") to Visa, Inc. ("Visa") on June 21, 2016.
    INCOME TAX EXPENSE
    The Company's

    Our effective income tax rate was 13.4%(236.9%) and 19.3% 58.7% for the three and nine months ended     September 30, 2017, respectively, as compared to 25.5%March 31, 2021 and 23.7% for the same periods in 2016. The Company's2020, respectively. Our effective income tax rate for the three and nine months ended September 30, 2017 and 2016March 31, 2021 was lower than the applicable statutory income tax rate of 35% primarily attributable to21%as a result of the releasenon-recognition of tax benefits from losses in 2017 of a $16.3 million valuation allowance against certain foreign netcountries where we have a limited history of profitable earnings, certain foreign earnings being subject to higher local statutory tax rates, and our U.S. deferred tax assets and, to a lesser extent, the Company's continued U.S.activity on foreign exchange positions. Our effective income tax positions. Due torate for the recent significant year over year and year to date profitabilitythree months ended March 31, 2020 was higher than the applicable statutory income tax rate of ATMs under management in Europe, the Company believes21% primarily as a result of certain foreign net deferred tax assets, including net operating loss carryforwards, will more likely than not be realized in future periods. In additionearnings being subject to the foreign valuation allowance release, the Company continues to have significant net operating loss carryforwards in the U.S. with no recent history of taxable income; therefore, the Company has recorded a valuation allowance against its U.S. net deferred tax assets. Accordingly, in instances when the Company generates U.S. GAAP income for the period, nohigher local statutory income tax expense is recognized to the extent there are net operating loss carryforwards to offset that income. The decrease in the effective tax rates for 2017 compared to 2016 is largely due to the the releaserates.

    34
    Table of valuation allowance against certain foreign net deferred tax assets.Contents

    NET (INCOME) LOSSINCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

    Noncontrolling interests representsrepresent the elimination of net income or loss attributable to the minority shareholders’ portion of the following consolidated subsidiaries that are not wholly owned:
    Subsidiary 
    Percent
    Owned
    		 Segment - Country
    Movilcarga 95% epay - Spain
    Euronet China 85% EFT - China
    Euronet Pakistan 70% EFT - Pakistan
    Universal Solution Providers (1)Euronet Infinitium Solutions 100%65% EFT - UAEIndia
    ______________

    (1) The Company purchased the 49% noncontrolling interest duringNET INCOME (LOSS) ATTRIBUTABLE TO EURONET

    Net loss attributable to Euronet was ($8.7 million) for the three months ended September 30, 2017.

    NET INCOME ATTRIBUTABLE TO EURONET
    Net income attributable to Euronet was $100.3March 31, 2021, a decrease of $10.6 million and $179.8 million for the three and nine months ended September 30, 2017, respectively, an increase of $39.6 million and $34.3 million as or 551% compared to the net income in the same periodsperiod in 2016.2020. The increasedecrease in net income for the first nine months of 2017 was primarily dueattributable to anthe $6.3 million decrease in gross profit that was largely driven by the decrease in revenues in the EFT Segment, a $14.4 million increase in operatingsalaries and benefits expense and a $3.6 million increase in income of $33.2 million, an increase of $22.3 milliontax expense, partially offset by a decrease in net foreign currency exchange gains, an increase in interest incomelosses of $0.8 million and a decrease in income tax expense of $2.0$14.8 million. The increase was partly offset by a $19.4 million gain from the sale of our investment in Visa Europe in 2016 which did not recur in the current period and increase in interest expense of $4.1 million.



    LIQUIDITY AND CAPITAL RESOURCES


    Working capital


    As of September 30, 2017 and DecemberMarch 31, 2016,2021, we had working capital of $1,210.5 million, which is calculated as the difference between total current assets and total current liabilities, compared to working capital of $626.1$1,510.5 million and $405.9as of December 31, 2020. The decrease in working capital was primarily due to the $270.4 million respectively.repayment of the outstanding balance on the Credit Facility during the first quarter of 2021. Our ratio of current assets to current liabilities was 1.76 and 1.81  at September 30, 2017March 31, 2021 and December 31, 2016 was 1.48 and 1.34,2020, respectively.


    We require substantial working capital to finance operations. In theThe Money Transfer Segment we fundfunds 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 international 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 muchsome of itwhich 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, 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 ourthe revolving credit facilities and cash flows from operations. As of September 30, 2017,March 31, 2021, we had approximately $626$339.9 million of our own cash in use or designated for use in our ATM network, which is recorded in ATM cash and cash equivalents and trade accounts receivable, for ATM withdrawals pending settlement, on theEuronet's Consolidated Balance Sheet.
    We had ATM cash decreased $71.2 million from $411.1 million as of December 31, 2020 to $339.9 million as of March 31, 2021 as a result of the reduction in number of active ATMs as of March 31, 2021 compared to December 31, 2020.

    The Company has $1,145.4 million of unrestricted cash as of March 31, 2021 compared to $1,420.3 million as of December 31, 2020. The decrease in unrestricted cash was primarily due to the $270.4 million repayment of the outstanding balance on the Credit Facility during the first quarter of 2021. Including the $339.9 million of cash in ATMs at March 31, 2021, the Company has access to $1,485.3 million in available cash, and cash equivalents$941.1 million available under the Credit Facility with no significant long-term debt principal payments until March 2025.
    35
    Table of $1,062.2 million at September 30, 2017, of which $939.1 million was held outside of the United States 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.Contents

    The following table identifies cash and cash equivalents provided by/(used in) our operating, investing and financing activities for the nine month periodsthree months ended September 30, 2017March 31, 2021 and 20162020 (in thousands):
    Nine Months Ended
    September 30,    		Three Months Ended
    March 31,
    Liquidity2017 20162021 2020
    Cash and cash equivalents provided by (used in):   
    Cash and cash equivalents and restricted cash provided by (used in):   
    Operating activities$230,496
    		 $217,491
    		$(2,645) $105,884
    Investing activities(74,023) (55,581)(18,225) (31,606)
    Financing activities126,615
    		 31,234
    		(269,211) (242,644)
    Effect of foreign currency exchange rate changes on cash and cash equivalents44,739
    		 10,634
    Increase in cash and cash equivalents$327,827
    		 $203,778
    Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash(53,188) (59,260)
    Decrease in cash and cash equivalents and restricted cash$(343,269) $(227,626)

    Operating activity cash flow


    Cash flows (used in) provided by operating activities were     $230.5 million($2.6 million) for the first ninethree months of 2017ended March 31, 2021 compared to $217.5$105.9 million for the first nine months of 2016.same period in 2020. The increase isdecrease in operating cash flows was primarily due to improved operating results, partly offset by fluctuations in working capital mainly associated with the timing of the settlement processes with content providers in the epay Segment, and with correspondents in the Money Transfer Segment.
    Segment, and with card organizations and banks in the EFT Processing Segment, and the decrease in net income.

    Investing activity cash flow


    Cash flows used in investing activities were     $74.0$18.2 million for the first ninethree months of 2017ended March 31, 2021 compared to $55.6$31.6 million for the first nine months of 2016. The increase is primarily due to increased capital expenditures mainly related to our ATM network expansion and the proceeds of $11.9same period in 2020. We used $16.4 million received for the sale of our ownership interest in Visa Europe in 2016. During the first nine months of 2017, we used $70.9 million for purchases of property and equipment for the three months ended March 31, 2021 compared to $61.6$30.4 million duringfor the first nine monthssame period in 2020. The decrease in purchases of 2016.property and equipment is primarily driven by the COVID-19 related impacts to the EFT segment. Cash used for software development and other investing activities totaled $3.2$1.8 million and $3.7$1.7 million for the three months ended March 31, 2021 and 2020, respectively.

    Financing activity cash flow

    Cash flows used in financing activities were $269.2 million for the three months ended March 31, 2021 compared to $242.6 million for the first nine months of 2017 and 2016, respectively.

    Financing activity cash flow
    Cash flows provided by financingsame period in 2020. Our borrowing activities were $126.6 millionfor the first ninethree months of 2017 compared to $31.2 million for the first nine months of 2016. Our financing activities for the first nine months of 2017ended March 31, 2021 consisted of net borrowingscash outflows of $123.8$270.4 million compared to net debt borrowings of $103.9 million for the first nine months of 2016. The increase inno net borrowings for the first ninesame period in 2020. The decrease in net borrowings for the three months of 2017ended March 31, 2021 compared to the same period of 2016in 2020 was the result of additional borrowings under the credit facilitiesrepayment of the outstanding balance on the Credit Facility. We repurchased $0.8 million of common stock during the first quarter of 2021 compared to fund the operating cashrepurchases of our IAD networks. Additionally, we used $3.5 million and $2.0  $240.5 million during the first nine monthsquarter of 2017 and 2016, respectively, for capital lease repayments. We repurchased $2.3 million and $76.5 million of our stock during the first nine months of 2017 and 2016, respectively. During the first nine months of 2017, we paid $2.3 million for the amount of payroll taxes represented by the common stock withheld on restricted stock vestings and stock option exercises compared to $0.9 million for the same period of 2016. 2020. We received proceeds from stock option exercises of $8.3$3.7 million and $5.1$1.7 million during the three months ended March 31, 2021 and 2020, respectively, for the first nine monthsissuance of 2017 and 2016, respectively.
    stock in connection with our Stock Incentive Plan.

    Other sources of capital


    Credit Facility     - As of September 30, 2017, we hadOn October 17, 2018, the Company entered into a $675 million senior secured$1.0 billion unsecured credit facility that matures on April 9, 2019agreement (the "Credit Facility") consisting of a $590 million revolving credit facility, a $10 million India revolving credit facility and a $75 million term loan ("Term Loan A"), which has been reduced to $53.4 million through principal amortization payments.that expires on October 17, 2023. The revolving credit facilityCredit Facility allows for borrowings in U.S.Australian dollars, euros, British pounds Australiansterling, Canadian dollars, and/or Indian rupeesCzech 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, and a $25$50 million sublimit for U.S. Dollar swingline loans, and a $90 million sublimit for certain foreign currencies swingline loans. We use the revolving credit facility primarily to fund working capital requirements which are expected to increase as we expand the Money Transfer business and our independent ATM network. Based on our current projected working capital requirements, we anticipate that our revolving credit facility will be sufficient to fund our working capital needs.


    As of September 30, 2017,March 31, 2021, fees and interest on borrowings variedare based upon the Company's consolidated total leverage ratioour corporate credit rating (as defined in the Credit Facility)credit agreement) and are based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over LIBORthe London InterBank Offered Rate ("LIBOR") or a margin over the base rate, as selected by us, with the applicable margin ranging from 1.375%1.125% to 2.375% for LIBOR loans and 0.375%2.0% (or 0.175% to 1.375%1.0% for base rate loans.
    loans).

    As of September 30, 2017,March 31, 2021, we had borrowings of $53.4 million outstanding under the term loan. We had $191.6 million ofno borrowings and $45.1$58.9 million of stand-by letters of credit outstanding under the revolving credit facility as of September 30, 2017.Credit Facility. The remaining $363.3$941.1 million under the revolving credit facilityCredit Facility was available for borrowing. As
    Convertible debt - On March 18, 2019, we completed the weighted average interest rates under the revolving credit facility and Term Loan A were 3.04% and 2.86%, respectively, excluding amortizationsale of deferred financing costs.
    Convertible debt - We have $402.5$525.0 million in principal amount of Convertible Senior Notes due 20442049 (“Convertible Notes”). The Convertible Notes were issued pursuant to an indenture, dated as of March 18, 2019 (the “Indenture”), by and between us and U.S. Bank National Association, as trustee. The Convertible Notes have an interest rate of 1.5%0.75% per annum payable semi-annually in AprilMarch and October,September, and are convertible into shares of Euronet Common Stock common stock at a conversion price of approximately $72.18$188.73 per share if certain conditions are met (relating to the closing prices of Euronet Common Stock common stock exceeding certain thresholds for specified periods). During the quarter ended September 30, 2017, a conversion condition was met and the Convertible Notes became convertible at the holders’ option beginning on October 1, 2017 and ending on December 31, 2017.
    While the Convertible Notes are convertible during the fourth quarter of 2017, we believe holders are unlikely to exercise their conversion rights, primarily due to the fair value of the Convertible Notes exceeding their conversion value. As of September 30, 2017, the fair value of the Convertible Notes was $550.5 million and their conversion value was $528.5 million. However, should any holders exercise their conversion rights, we believe our capital resources are sufficient to satisfy any conversion.
    Additionally, holdersHolders of the Convertible Notes have the option to require us to purchaserepurchase for cash all or part of their notesConvertible Notes on each of March 15, 2025, 2029, 2034, 2039 and 2044 at par on October 1, 2020, and have additional optionsa repurchase price equal to require us to purchase their notes at par on October 1, 2024, 2029, 2034, and 2039, or upon a change in control100% of the Company.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 $10.7$12.8 million in debt issuance costs, which are being amortized through OctoberMarch 1, 2020.
    ATM Facility2025.

    Senior Notes - On June, 27, 2017,May 22, 2019, we entered into a short-term credit facility incompleted the sale of €600 million ($669.9 million) aggregate principal amount of $100 million for the sole purpose of providing cash for our ATM network. Interest is chargedSenior Notes that expire on this financing on an annual basis at the Overnight LIBOR rate plus 2.0%May 2026 (the “Senior Notes”). The facility expiresSenior Notes accrue interest at a rate of 1.375% per year, payable annually in arrears on November 30, 2017.
    May 22 of each year, until maturity or earlier redemption. As of March 31, 2021, we have outstanding €600 million ($703.7 million) principal amount of the Senior Notes. In addition, we may redeem some or all of these notes on or after February 22, 2026 at their principal amount plus any accrued and unpaid interest.

    Other debt obligations     - — Certain of our subsidiaries also have available credit lines and overdraft facilities to generally supplement short-term working capital requirements. As of September 30, 2017, there was $24.8requirements, when necessary. There were $0.8 million and $0.9 million outstanding under these other obligation arrangements. Short-term debt obligations, excluding the ATM facility,arrangements as of September 30, 2017 were primarily comprised of $24.7 million due in the next twelve months under these other obligation arrangementsMarch 31, 2021 and $12.2 million of payments due in the next twelve months under the Term Loan A.

    December 31, 2020, respectively.

    Other uses of capital


    Capital expenditures and needs     - Total capital expenditures including capital lease expenditures, for the first ninethree months of 2017ended March 31, 2021 were $76.8 million.$16.4 million. These capital expenditures were made primarily for the purchase of ATMs to expand our independent ATM 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 20172021 are currently estimated to range from approximately $105 million to $115 million.
    $110 million. 

    At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts available under our revolving credit facilityCredit Facility and other existing and potential future financing sources, 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.
    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


    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. As of     September 30, 2017March 31, 2021, there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 20162020. To date, we are not aware of any significant claims made by the indemnified parties or parties to whom we have provided guarantees on behalf of our subsidiaries and, accordingly, no liabilities have been recorded as of September 30, 2017March 31, 2021. See also Note 11,14, Commitments, to the unaudited consolidated financial statements included elsewhere in this report.


    CONTRACTUAL OBLIGATIONS


    As of September 30, 2017,March 31, 2021, there have been no material changes outside the ordinary course of business in our future contractual obligations have not changed significantly from the amounts reported within our 2016Annual Report on Form 10-K other than those resulting from changes infor the amountyear ended December 31, 2020. 

    38
    Table of outstanding debt discussed in the Liquidity and Capital Resources section.Contents


    ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Interest rate risk


    As of    September 30, 2017March 31, 2021, our total debt outstanding, excluding unamortized debt issuance costs, was $736.3$1,160.7 million. Of this amount, $366.5$456.2 million, net of debt discounts, or 50%39% of our total debt obligations, relates to our contingent Convertible Notes that have a fixed coupon rate. Our $402.5$525.0 million outstanding principal amount of Convertible Notes issued in October 2014, accrue cash interest at a rate of 1.5%0.75% of the principal amount per annum. Based on quoted market prices, as of September 30, 2017,March 31, 2021, the fair value of our fixed rate Convertible Notes was $550.5$631.4 million, compared to a carrying value of $366.5$456.2 million. Interest expense for these notes,the Convertible Notes, including accretion and amortization of deferred debt issuance costs, has a weighted average interest rate of 4.7%4.4% annually. Further, as of March 31, 2021 we had no borrowings under our Credit Facility. Additionally, $345.0$703.7 million, or 47%61% of our total debt obligations, relates to debt borrowings underSenior 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 amount per annum. Based on quoted market prices, as of March 31, 2021, the fair value of our Credit Facility and ATM Facility. If we werefixed rate Senior Notes was $712.0 million, compared to maximize the potential borrowings available under the revolving credit facility and maintain these borrowings for one year, a 1% (100 basis points) increase in the applicable interest rate would result in additional annual interest expense to the Companycarrying value of approximately $6.1$703.7 million.
    The remaining $24.8$0.8 million, or 3%,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 September 30, 2017, we had approximately $14.1 million of capitalized leases with fixed payment and interest terms that expire between 2017 and 2021.


    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 first ninethree months of 2017,ended March 31, 2021, approximately 74%72% and of our revenues were generated in non-U.S. dollar countries and 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     September 30, 2017,March 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 $140$45 million to $145 million.$50 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 exchange 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. and our Senior Notes. We estimate that a 10% fluctuation in foreign currency exchange rates would have a non-cash impact on total comprehensive income of approximately $100$152 million to $105$157 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 isare 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, a significant portion of 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.


    39
    Table of Contents

    A majority of our consumer-to-consumer money transfer operations involvesinvolve 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 Income. As of September 30, 2017,March 31, 2021, we had foreign currency derivative contracts outstanding with a notional value of $244$120 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 HiFXxe operations write forto 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 Income. As of September 30, 2017,March 31, 2021, we held foreign currency derivative contracts outstanding with a notional value of $1.3$1.4 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 September 30, 2017,March 31, 2021, the Company had foreign currency forward contracts outstanding with a notional value of $282$593 million, primarily in British pounds, euros and Polish zloty.
    euros.

    See Note 7,10, Derivative Instruments and Hedging Activities, to our Consolidated Financial Statementsunaudited consolidated financial statements for additional information.


    ITEM 4. 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     September 30, 2017March 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 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.


    Change in Internal Controls

    There have nothas been any changesno change in our internal control over financial reporting during the three months ended September 30, 2017first quarter of 2021 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.


    PART II—OTHER INFORMATION


    ITEM 1. 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 contingencies in Part I, Item 1 — Financial Statements (unaudited), Note 12,15, Litigation and Contingencies, to the unaudited consolidated financial statements 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 on the Company's consolidated financial condition or results of operations. In accordance with 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 1A. RISK FACTORS
    There
    Except as otherwise described herein, there     were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended     December 31, 2016, 2020, as filed with the SEC.


    ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

    The following table provides information with respect to shares of the Company's common stock that were purchased by the Company during the three months ended March 31, 2021.
    None.

    Period 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)
    January 1 - January 31, 2021
    		 —
    		 $—
    		 —
    		 $259,362
    February 1 - February 28, 2021
    		 —
    		 —
    		 —
    		 
    		259,362
    March 1 - March 31, 2021 —
    		 —
    		 —
    		 $250,000
    Total —
    		 $—
    		 —
    		  
    (1) On March 11, 2019, in connection with the issuance of the Convertible Notes, the Board of Directors authorized a repurchase program of $120 million in value of Euronet’s common stock through March 11, 2021. Euronet 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. Repurchases 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. EXHIBITS
    Exhibit Description
       
    12.1*
    Computation of Ratio of Earnings to Fixed Charges
    31.1* 
    Section 302 — Certification of Chief Executive Officer
    31.2* 
    Section 302 — Certification of Chief Financial Officer
    32.1** 
    Section 906 — Certification of Chief Executive Officer
    32.2** 
    Section 906 — Certification of Chief Financial Officer
    101* 
    The following materials from Euronet Worldwide, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017,March 31, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2017March 31, 2021 (unaudited) and December 31, 2016,2020, (ii) Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, (iv) Consolidated Statements of Changes in Equity (unaudited) for the three months ended March 31, 2021 and 2020 (v) Consolidated Statements of Cash Flows (unaudited) for the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, and (v)(vi) Notes to the Unaudited Consolidated Financial Statements.
    104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
    _________________________
    * Filed herewith.
    ** Pursuant to Item 601(b)(32) of Regulation S-K, this Exhibit is furnished rather than filed with this Form 10-Q.


    PLEASE NOTE: Pursuant to the rules and regulations of the Securities and Exchange Commission,SEC, we have filed or incorporated by reference the agreements referenced above as exhibits to this QuarterlyAnnual Report on Form 10-Q.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'sour 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 Companyus or itsour business or operations on the date hereof.




    SIGNATURES
    Pursuant to the requirements 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.
    October 27, 2017May 4, 2021
    Euronet Worldwide, Inc.
    By:/s/ MICHAEL J. BROWN 
     Michael J. Brown  
     Chief Executive Officer  
       
       
    By:/s/ RICK L. WELLER
    Rick L. Weller  
     Rick L. WellerChief Financial Officer  
    Chief Financial Officer 



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