Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 30, 2019 | |
Entity Registrant Name | EVO Payments, Inc. | |
Entity Central Index Key | 0001704596 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Class A Common Stock | ||
Entity Common Stock, Shares Outstanding | 36,701,277 | |
Class B Common Stock | ||
Entity Common Stock, Shares Outstanding | 34,663,538 | |
Class C Common Stock | ||
Entity Common Stock, Shares Outstanding | 2,329,955 | |
Class D Common Stock | ||
Entity Common Stock, Shares Outstanding | 8,354,978 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 311,809 | $ 350,697 |
Accounts receivable, net | 16,149 | 13,248 |
Other receivables | 18,530 | 56,518 |
Due from related parties | 34 | 1,871 |
Inventory | 9,899 | 8,867 |
Settlement processing assets | 310,206 | 248,330 |
Other current assets | 14,807 | 11,817 |
Total current assets | 681,434 | 691,348 |
Equipment and improvements, net | 91,712 | 103,046 |
Goodwill | 371,523 | 353,011 |
Intangible assets, net | 261,825 | 290,139 |
Investment in unconsolidated investees | 2,034 | 1,753 |
Due from related parties | 915 | |
Deferred tax asset | 171,016 | 72,296 |
Other assets | 20,105 | 21,879 |
Total assets | 1,599,649 | 1,534,387 |
Current liabilities: | ||
Settlement lines of credit | 17,610 | 41,819 |
Current portion of long-term debt | 5,618 | 7,191 |
Accounts payable | 10,551 | 48,935 |
Accrued expenses | 102,837 | 112,281 |
Settlement processing obligations | 467,776 | 428,328 |
Due to related parties | 4,596 | 4,824 |
Total current liabilities | 608,988 | 643,378 |
Long-term debt, net of current portion | 702,053 | 676,865 |
Due to related parties | 385 | 385 |
Deferred tax liability | 17,364 | 13,519 |
Tax receivable agreement obligations, inclusive of related party liability of $111.5 million and $40.7 million at September 30, 2019 and December 31, 2018, respectively | 120,912 | 47,221 |
ISO reserves | 2,751 | 2,684 |
Other long-term liabilities | 1,758 | 2,924 |
Total liabilities | 1,454,211 | 1,386,976 |
Commitments and contingencies | ||
Redeemable non-controlling interests | 1,108,644 | 1,010,093 |
Shareholders' deficit: | ||
Additional paid-in capital | 178,176 | |
Accumulated deficit attributable to Class A common stock | (471,603) | (223,799) |
Accumulated other comprehensive loss | (8,855) | (2,993) |
Total EVO Payments, Inc. shareholders' deficit | (480,450) | (48,608) |
Nonredeemable non-controlling interests | (482,756) | (814,074) |
Total deficit | (963,206) | (862,682) |
Total liabilities and deficit | 1,599,649 | 1,534,387 |
Class A Common Stock | ||
Shareholders' deficit: | ||
Common stock | 4 | 3 |
Class B Common Stock | ||
Shareholders' deficit: | ||
Common stock | 3 | 4 |
Class C Common Stock | ||
Shareholders' deficit: | ||
Common stock | ||
Class D Common Stock | ||
Shareholders' deficit: | ||
Common stock | $ 1 | $ 1 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Tax receivable agreement, related party | $ 111.5 | $ 40.7 |
Class A Common Stock | ||
Shareholders'/members' equity (deficit): | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock shares issued (in shares) | 36,711,625 | 26,025,189 |
Common stock shares outstanding (in shares) | 36,711,625 | 26,025,189 |
Class B Common Stock | ||
Shareholders'/members' equity (deficit): | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock shares issued (in shares) | 34,663,538 | 35,913,538 |
Common stock shares outstanding (in shares) | 34,663,538 | 35,913,538 |
Class C Common Stock | ||
Shareholders'/members' equity (deficit): | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized (in shares) | 4,000,000 | 4,000,000 |
Common stock shares issued (in shares) | 2,333,955 | 2,461,055 |
Common stock shares outstanding (in shares) | 2,333,955 | 2,461,055 |
Class D Common Stock | ||
Shareholders'/members' equity (deficit): | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized (in shares) | 32,000,000 | 32,000,000 |
Common stock shares issued (in shares) | 8,354,978 | 16,785,552 |
Common stock shares outstanding (in shares) | 8,354,978 | 16,785,552 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income | ||||
Revenue | $ 122,363 | $ 144,758 | $ 356,398 | $ 413,931 |
Operating expenses: | ||||
Cost of services and products, exclusive of depreciation and amortization shown separately below | 24,065 | 46,949 | 72,900 | 141,826 |
Selling, general and administrative | 63,864 | 67,802 | 196,592 | 242,982 |
Depreciation and amortization | 22,804 | 20,488 | 68,412 | 61,308 |
Impairment of intangible assets | 3,872 | 10,504 | ||
Total operating expenses | 114,605 | 135,239 | 348,408 | 446,116 |
Income (loss) from operations | 7,758 | 9,519 | 7,990 | (32,185) |
Other (expense) income: | ||||
Interest income | 858 | 507 | 2,268 | 1,622 |
Interest expense | (11,085) | (10,583) | (34,006) | (47,453) |
Income (loss) from investment in unconsolidated investees | 167 | (36) | 436 | 725 |
Gain on acquisition of unconsolidated investee | 8,659 | 8,659 | ||
Other income (expense), net | 888 | 211 | 2,498 | (2,963) |
Total other expense | (9,172) | (1,242) | (28,804) | (39,410) |
(Loss) income before income taxes | (1,414) | 8,277 | (20,814) | (71,595) |
Income tax (expense) benefit | (3,590) | (32,155) | 618 | (7,974) |
Net loss | (5,004) | (23,878) | (20,196) | (79,569) |
Less: Net income attributable to non-controlling interests in consolidated entities | (2,220) | (2,433) | (4,798) | (4,434) |
Net income (loss) attributable to non-controlling interests of EVO Investco, LLC | 5,380 | (1,078) | 18,323 | 73,328 |
Net loss attributable to EVO Payments, Inc. | $ (1,844) | $ (27,389) | $ (6,671) | $ (10,675) |
Earnings per share | ||||
Basic (in dollars per share) | $ (0.05) | $ (1.51) | $ (0.22) | $ (0.60) |
Diluted (in dollars per share) | $ (0.05) | $ (1.51) | $ (0.22) | $ (0.60) |
Weighted average Class A common stock outstanding | ||||
Basic (in shares) | 34,634,567 | 18,163,344 | 30,996,506 | 17,901,484 |
Diluted (in shares) | 34,634,567 | 18,163,344 | 30,996,506 | 17,901,484 |
Comprehensive income (loss): | ||||
Net loss | $ (5,004) | $ (23,878) | $ (20,196) | $ (79,569) |
Unrealized loss on defined benefit plan, net of tax | (21) | (7) | ||
Unrealized gain (loss) on foreign currency translation adjustment, net of tax | (16,922) | 9,494 | (13,523) | 334 |
Other comprehensive income (loss) | (16,943) | 9,494 | (13,530) | 334 |
Comprehensive loss | (21,947) | (14,384) | (33,726) | (79,235) |
Less: Comprehensive (income) loss attributable to non-controlling interests in consolidated entities | 691 | (5,272) | (2,013) | (3,120) |
Other comprehensive (income) loss attributable to non-controlling interests of EVO Investco, LLC | 13,486 | (1,078) | 24,562 | 76,704 |
Comprehensive loss attributable to EVO Payments, Inc. | $ (7,770) | $ (20,734) | $ (11,177) | $ (5,651) |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Unrealized (loss) gain on foreign currency translation adjustment, tax | $ 5.1 | $ 4.1 |
Maximum | ||
Unrealized (loss) gain on defined benefit pension plan, tax | $ 0.1 | $ 0.1 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Changes in Equity - USD ($) shares in Thousands, $ in Thousands | Total deficit | EVO Payments, Inc. (deficit)/equity | Common StockClass A Common Stock | Common StockClass B Common Stock | Common StockClass C Common Stock | Common StockClass D Common Stock | Member UnitsClass A Units | Member UnitsClass B Units | Member UnitsClass C Units | Member UnitsClass D Units | Member UnitsClass E Units | Additional paid-in capital | Accumulated deficit attributable to Class A common stock | Accumulated deficit | Accumulated other comprehensive loss | Nonredeemable non-controlling interests | Total |
Beginning balance at Dec. 31, 2017 | $ 54,453 | $ 9,463 | $ 71,250 | ||||||||||||||
Beginning balance at Dec. 31, 2017 | $ (166,531) | $ (169,843) | $ (237,330) | $ (67,679) | $ 3,312 | ||||||||||||
Beginning balance (in units) at Dec. 31, 2017 | 6,374 | 3,506 | 375 | 1,107 | 1,012 | ||||||||||||
Shareholders'/members' equity (deficit) | |||||||||||||||||
Net income prior to Reorganization Transaction | (24,412) | (24,412) | (24,412) | ||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (6,337) | (6,337) | (6,337) | ||||||||||||||
Secondary Offering | 190,161 | 190,161 | $ 1 | $ 190,161 | |||||||||||||
Secondary Offering (in shares) | 8,054 | ||||||||||||||||
Distributions prior to Reorganization Transactions | (1,334) | (1,334) | |||||||||||||||
Acquisition of additional shares in a consolidated subsidiary | (22,065) | (20,924) | (20,924) | (1,141) | |||||||||||||
Legacy deficit / accumulated comprehensive loss allocation (Class C&D) | 166,793 | 132,181 | 34,612 | (166,793) | |||||||||||||
Legacy deficit / accumulated comprehensive loss allocation (Class B) | 189,889 | 189,889 | $ 150,485 | 39,404 | |||||||||||||
Equity issued in connection with acquisition prior to Reorganization Transactions | $ 4 | $ 2 | $ (54,453) | $ (9,463) | $ (71,250) | 135,160 | |||||||||||
Equity issued in connection with acquisition prior to Reorganization Transactions (in units and shares) | 1,319 | 35,914 | 2,561 | 24,305 | (6,374) | (3,506) | (375) | (1,107) | (1,012) | ||||||||
Share-based compensation prior to Reorganization Transactions, net of share settlement | 51,339 | 51,339 | 51,339 | ||||||||||||||
Share-based compensation prior to Reorganization Transactions, net of share settlement (in shares) | 494 | ||||||||||||||||
Class B redeemable non-controlling interests fair value adjustment in connection to Reorganization Transactions | (735,775) | (735,775) | |||||||||||||||
Effect of Reorganization Transactions | (715,226) | 186,505 | $ 4 | $ 2 | 186,499 | (901,731) | |||||||||||
Effect of Reorganization Transactions (in shares) | 1,813 | 35,914 | 2,561 | 24,305 | |||||||||||||
Sale of Class A common stock in initial public offering, net | 219,169 | 219,169 | $ 2 | 219,167 | |||||||||||||
Sale of Class A common stock in initial public offering, net (in shares) | 15,434 | ||||||||||||||||
Contingent consideration settled in Class A common stock | 771 | 771 | 771 | ||||||||||||||
Contingent consideration settled in Class A common stock (in shares) | 48 | ||||||||||||||||
Deferred taxes in connection with the Reorganization Transactions | 4,590 | 4,590 | 4,590 | ||||||||||||||
Share-based compensation | 1,758 | 1,758 | 1,758 | ||||||||||||||
Tax receivable agreement obligations in connection with the Reorganization Transactions | 389 | 389 | 389 | ||||||||||||||
Net income subsequent to the Reorganization Transactions | (31,389) | (10,675) | $ (10,675) | (20,714) | |||||||||||||
Cumulative translation adjustment subsequent to the Reorganization Transactions | 1,145 | 293 | 293 | 852 | |||||||||||||
Legacy redeemable non-controlling interest fair value adjustment | (9,742) | (3,824) | (3,824) | (5,918) | |||||||||||||
Distributions subsequent to the Reorganization Transactions | (29) | (29) | $ (29) | ||||||||||||||
Sale of Employee Ownership | (857) | (857) | 857 | ||||||||||||||
Sale of Employee Ownership (in shares) | 22 | (22) | |||||||||||||||
Purchase of MDP Class D Shares | (165,926) | (435,850) | $ (1) | (435,850) | 269,924 | ||||||||||||
Purchase of MDP Class D Shares (in shares) | (7,000) | ||||||||||||||||
Net deferred tax asset realized in Secondary Offering | 2,071 | 2,071 | 2,045 | 26 | |||||||||||||
Tax receivable agreement in connection with the Secondary Offering | 7,170 | 7,170 | 7,170 | 7,170 | |||||||||||||
Additional redeemable non-controlling interest subsequent to the Reorganization Transactions | (296,839) | (116,559) | (116,559) | (180,280) | 9,742 | ||||||||||||
Ending balance at Sep. 30, 2018 | (791,927) | 45,112 | $ 3 | $ 4 | $ 1 | 175,843 | (131,058) | 319 | (837,039) | 177,349 | |||||||
Ending balance (in shares) at Sep. 30, 2018 | 25,371 | 35,914 | 2,561 | 17,283 | |||||||||||||
Beginning balance at Dec. 31, 2017 | 148,266 | ||||||||||||||||
Redeemable non-controlling interests | |||||||||||||||||
Net income prior to Reorganization Transactions | 1,291 | ||||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (2,104) | ||||||||||||||||
Distributions prior to Reorganization Transactions | (3,770) | ||||||||||||||||
Legacy deficit / accumulated comprehensive loss allocation (Class B) | (189,889) | ||||||||||||||||
Legacy redeemable non-controlling interests fair value adjustment | (1,004) | ||||||||||||||||
Class B redeemable non-controlling interests fair value adjustment in connection to Reorganization Transactions | 735,775 | ||||||||||||||||
Effect of Reorganization Transactions | 689,569 | ||||||||||||||||
Net income subsequent to the Reorganization Transactions | (25,059) | ||||||||||||||||
Cumulative translation adjustment subsequent to the Reorganization Transactions | (811) | ||||||||||||||||
Additional redeemable non-controlling interest subsequent to the Reorganization Transactions | 306,581 | ||||||||||||||||
Ending balance at Sep. 30, 2018 | 969,276 | ||||||||||||||||
Beginning balance at Dec. 31, 2017 | (18,265) | ||||||||||||||||
Total equity | |||||||||||||||||
Net (loss) income | (79,569) | ||||||||||||||||
Net income prior to Reorganization Transactions | (23,121) | ||||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (8,441) | ||||||||||||||||
Legacy redeemable non-controlling | (10,746) | ||||||||||||||||
Distributions prior to Reorganization Transactions | (5,104) | ||||||||||||||||
Acquisition of additional shares in a consolidated subsidiary | (22,065) | ||||||||||||||||
Share-based compensation prior to Reorganization Transactions, net of share settlement | 51,339 | ||||||||||||||||
Effect of Reorganization Transactions | (25,657) | ||||||||||||||||
Sale of Class A common stock in initial public offering, net of underwriter fees | 219,169 | ||||||||||||||||
Contingent Consideration Settled In Class A Common Stock | 771 | ||||||||||||||||
Deferred taxes in connection with the Reorganization Transactions and subsequent conversions of shares of class C common stock and class D common stock | 4,590 | ||||||||||||||||
Net deferred tax asset realized in Secondary Offering | 2,071 | ||||||||||||||||
Tax receivable agreement in connection with the Reorganization Transaction, and subsequent conversions of shares of Class C common stock and Class D common stock | 389 | ||||||||||||||||
Net income subsequent to the Reorganization Transactions | (56,448) | ||||||||||||||||
Cumulative translation adjustment subsequent to the Reorganization Transactions | 334 | ||||||||||||||||
Sale of Class A common stock in Secondary Offering, net of underwriter fees | 190,161 | ||||||||||||||||
Sale of MDP Class D Shares | (165,926) | ||||||||||||||||
Share-based compensation | 1,758 | ||||||||||||||||
Ending balance at Dec. 31, 2018 | (862,682) | (48,608) | $ 3 | $ 4 | $ 1 | 178,176 | (223,799) | (2,993) | (814,074) | (862,682) | |||||||
Ending balance (in shares) at Dec. 31, 2018 | 26,025 | 35,914 | 2,461 | 16,786 | |||||||||||||
Beginning balance at May. 23, 2018 | 689,569 | ||||||||||||||||
Ending balance at Dec. 31, 2018 | 1,010,093 | ||||||||||||||||
Ending balance at Dec. 31, 2018 | 147,411 | ||||||||||||||||
Beginning balance at Jun. 30, 2018 | (679,827) | 356,146 | $ 2 | $ 4 | $ 2 | 412,845 | (55,076) | (1,631) | (1,035,973) | ||||||||
Beginning balance (in shares) at Jun. 30, 2018 | 17,295 | 35,914 | 2,561 | 24,305 | |||||||||||||
Shareholders'/members' equity (deficit) | |||||||||||||||||
Net income (loss) | (26,806) | (27,388) | (27,388) | 582 | |||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | 4,765 | 1,924 | 1,924 | 2,841 | |||||||||||||
Distributions | (29) | (29) | (1,004) | ||||||||||||||
Secondary Offering | 190,162 | 190,162 | $ 1 | 190,161 | 190,162 | ||||||||||||
Secondary Offering (in shares) | 8,054 | ||||||||||||||||
Share-based compensation | 1,758 | 1,758 | 1,758 | ||||||||||||||
eService redeemable non-controlling interest fair value adjustment | (15,098) | (5,928) | (5,928) | (9,170) | |||||||||||||
Sale of Employee Ownership | (857) | (857) | 857 | ||||||||||||||
Sale of Employee Ownership (in shares) | 22 | (22) | |||||||||||||||
Purchase of MDP Class D Shares | (165,927) | (435,851) | $ (1) | (435,850) | 269,924 | (165,927) | |||||||||||
Purchase of MDP Class D Shares (in shares) | (7,000) | ||||||||||||||||
Net deferred tax asset realized in Secondary Offering | 2,071 | 2,071 | 2,045 | 26 | 2,071 | ||||||||||||
Tax receivable agreement in connection with the Secondary Offering | 7,170 | 7,170 | 7,170 | 7,170 | |||||||||||||
Blueapple redeemable non-controlling interest | (108,737) | (42,666) | (42,666) | (66,071) | |||||||||||||
Other | (1,429) | (1,429) | (1,429) | (1,429) | |||||||||||||
Ending balance at Sep. 30, 2018 | (791,927) | 45,112 | $ 3 | $ 4 | $ 1 | 175,843 | (131,058) | 319 | (837,039) | 177,349 | |||||||
Ending balance (in shares) at Sep. 30, 2018 | 25,371 | 35,914 | 2,561 | 17,283 | |||||||||||||
Beginning balance at Jun. 30, 2018 | 838,789 | ||||||||||||||||
Redeemable non-controlling interests | |||||||||||||||||
Net income (loss) | 2,928 | ||||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | 4,728 | ||||||||||||||||
eService redeemable non-controlling interest fair value adjustment | 108,737 | ||||||||||||||||
Share-based compensation | 15,098 | ||||||||||||||||
Ending balance at Sep. 30, 2018 | 969,276 | ||||||||||||||||
Beginning balance at Jun. 30, 2018 | 158,962 | ||||||||||||||||
Total equity | |||||||||||||||||
Net (loss) income | (23,878) | ||||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | 9,493 | ||||||||||||||||
Distributions | (1,033) | ||||||||||||||||
Tax receivable agreement in connection with the Reorganization Transaction, and subsequent conversions of shares of Class C common stock and Class D common stock | 1,758 | ||||||||||||||||
Beginning balance at Dec. 31, 2018 | (862,682) | (48,608) | $ 3 | $ 4 | $ 1 | 178,176 | (223,799) | (2,993) | (814,074) | (862,682) | |||||||
Beginning balance (in shares) at Dec. 31, 2018 | 26,025 | 35,914 | 2,461 | 16,786 | |||||||||||||
Shareholders'/members' equity (deficit) | |||||||||||||||||
Prior period adjustment | (20,629) | (20,629) | 20,629 | ||||||||||||||
Net income (loss) | (12,719) | (6,671) | (6,671) | (6,048) | |||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (7,987) | (5,862) | (5,862) | (2,125) | |||||||||||||
Distributions | (284) | (284) | |||||||||||||||
Secondary Offering | 53,752 | (303,400) | $ 1 | $ (1) | (303,400) | 357,152 | |||||||||||
Secondary Offering (in shares) | 9,750 | (1,250) | (7,750) | ||||||||||||||
Decrease in redemption amount in connection with redemption of Blueapple Class B shares | 2,460 | 1,721 | 1,721 | 739 | (2,460) | ||||||||||||
Share-based compensation | 7,841 | 7,841 | 7,841 | ||||||||||||||
Vesting of equity awards | (1,716) | (1,716) | (1,716) | ||||||||||||||
Vesting of equity awards (in shares) | 80 | ||||||||||||||||
Stock options exercised | 810 | 810 | 810 | 810 | |||||||||||||
Stock options exercised (in shares) | 49 | ||||||||||||||||
Deferred taxes in connection with share exchanges | 3,395 | 3,395 | 3,395 | ||||||||||||||
Tax receivable agreement in connection with share exchanges | 13,005 | 13,005 | 13,005 | 13,005 | |||||||||||||
Exchange of Class C and Class D common stock for Class A common stock | (37,385) | (37,385) | 37,385 | ||||||||||||||
Exchange of Class C and Class D common stock for Class A common stock (in shares) | 808 | (127) | (681) | ||||||||||||||
eService redeemable non-controlling interest fair value adjustment | (8,380) | (5,817) | (5,817) | (2,563) | |||||||||||||
Blueapple redeemable non-controlling interest | (150,701) | (77,134) | (77,134) | (73,567) | |||||||||||||
Reclassification of additional paid-in-capital to accumulated deficit | 159,903 | (159,903) | |||||||||||||||
Ending balance at Sep. 30, 2019 | (963,206) | (480,450) | $ 4 | $ 3 | $ 1 | (471,603) | (8,855) | (482,756) | (963,206) | ||||||||
Ending balance (in shares) at Sep. 30, 2019 | 36,712 | 34,664 | 2,334 | 8,355 | |||||||||||||
Beginning balance at Dec. 31, 2018 | 1,010,093 | ||||||||||||||||
Redeemable non-controlling interests | |||||||||||||||||
Net income (loss) | (7,477) | ||||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (9,616) | ||||||||||||||||
Distributions | (6,209) | ||||||||||||||||
Secondary Offering | (34,768) | ||||||||||||||||
eService redeemable non-controlling interest fair value adjustment | 8,380 | ||||||||||||||||
Blueapple redeemable non-controlling interest subsequent to the Reorganization Transactions | 150,701 | ||||||||||||||||
Ending balance at Sep. 30, 2019 | 1,108,644 | ||||||||||||||||
Beginning balance at Dec. 31, 2018 | 147,411 | ||||||||||||||||
Total equity | |||||||||||||||||
Net (loss) income | (20,196) | ||||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (17,603) | ||||||||||||||||
Distributions | (6,493) | ||||||||||||||||
Secondary Offering | 18,984 | ||||||||||||||||
Vesting of equity awards | (1,716) | ||||||||||||||||
Deferred taxes in connection with share conversions | 3,395 | ||||||||||||||||
Share-based compensation | 7,841 | ||||||||||||||||
Ending balance at Sep. 30, 2019 | 145,438 | ||||||||||||||||
Beginning balance at Jun. 30, 2019 | (1,086,758) | (420,867) | $ 3 | $ 4 | $ 1 | (419,722) | (1,153) | (665,891) | |||||||||
Beginning balance (in shares) at Jun. 30, 2019 | 32,490 | 35,414 | 2,370 | 11,765 | |||||||||||||
Shareholders'/members' equity (deficit) | |||||||||||||||||
Net income (loss) | (3,880) | (1,844) | (1,844) | (2,036) | |||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (10,454) | (7,702) | (7,702) | (2,752) | |||||||||||||
Distributions | (53) | (53) | |||||||||||||||
Secondary Offering | 21,188 | (132,100) | $ 1 | $ (1) | (132,100) | 153,288 | |||||||||||
Secondary Offering (in shares) | 4,000 | (750) | (3,250) | ||||||||||||||
Decrease in redemption amount in connection with redemption of Blueapple Class B shares | 2,460 | 1,721 | 1,721 | 739 | (2,460) | ||||||||||||
Share-based compensation | 3,019 | 3,019 | 3,019 | ||||||||||||||
Vesting of equity awards | (78) | (78) | (78) | ||||||||||||||
Vesting of equity awards (in shares) | 5 | ||||||||||||||||
Stock options exercised | 519 | 519 | 519 | 519 | |||||||||||||
Stock options exercised (in shares) | 21 | ||||||||||||||||
Deferred taxes in connection with share exchanges | 1,323 | 1,323 | 1,323 | 1,323 | |||||||||||||
Tax receivable agreement in connection with share exchanges | 6,065 | 6,065 | 6,065 | 6,065 | |||||||||||||
Exchange of Class C and Class D common stock for Class A common stock | (10,615) | (10,615) | 10,615 | ||||||||||||||
Exchange of Class C and Class D common stock for Class A common stock (in shares) | 196 | (36) | (160) | ||||||||||||||
eService redeemable non-controlling interest fair value adjustment | (1,968) | (1,524) | (1,524) | (444) | |||||||||||||
Blueapple redeemable non-controlling interest | 105,411 | 81,633 | 81,633 | 23,778 | |||||||||||||
Reclassification of additional paid-in-capital to accumulated deficit | $ 131,867 | (131,867) | |||||||||||||||
Ending balance at Sep. 30, 2019 | $ (963,206) | $ (480,450) | $ 4 | $ 3 | $ 1 | $ (471,603) | $ (8,855) | $ (482,756) | (963,206) | ||||||||
Ending balance (in shares) at Sep. 30, 2019 | 36,712 | 34,664 | 2,334 | 8,355 | |||||||||||||
Beginning balance at Jun. 30, 2019 | 1,248,448 | ||||||||||||||||
Redeemable non-controlling interests | |||||||||||||||||
Net income (loss) | (1,124) | ||||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (11,589) | ||||||||||||||||
Secondary Offering | (21,188) | ||||||||||||||||
eService redeemable non-controlling interest fair value adjustment | 1,968 | ||||||||||||||||
Blueapple redeemable non-controlling interest subsequent to the Reorganization Transactions | (105,411) | ||||||||||||||||
Ending balance at Sep. 30, 2019 | 1,108,644 | ||||||||||||||||
Beginning balance at Jun. 30, 2019 | 161,690 | ||||||||||||||||
Total equity | |||||||||||||||||
Net (loss) income | (5,004) | ||||||||||||||||
Cumulative translation adjustment prior to Reorganization Transactions | (22,043) | ||||||||||||||||
Distributions | (53) | ||||||||||||||||
Vesting of equity awards | (78) | ||||||||||||||||
Share-based compensation | 3,019 | ||||||||||||||||
Ending balance at Sep. 30, 2019 | $ 145,438 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (20,196) | $ (79,569) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 68,412 | 61,308 |
Amortization of deferred financing costs | 2,006 | 7,856 |
Change in fair value of contingent consideration | 2,362 | |
Loss on extinguishment of debt | 2,055 | |
Loss on sale of investment | (250) | |
Share-based compensation expense | 7,841 | 53,893 |
Impairment of intangible assets | 10,504 | |
Deferred taxes, net | (7,880) | 504 |
Other | 233 | (8,053) |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable, net | (2,546) | 5,822 |
Other receivables | 32,739 | 3,993 |
Inventory | (1,487) | 3,555 |
Other current assets | (2,816) | (5,165) |
Other assets | (666) | 53 |
Related parties, net | 2,288 | (3,001) |
Accounts payable | (38,973) | (16,744) |
Accrued expenses | (7,234) | 28,900 |
Settlement processing funds, net | (15,579) | 10,899 |
Other | 67 | 42 |
Net cash provided by operating activities | 28,825 | 66,348 |
Cash flows from investing activities: | ||
Acquisition of businesses, net of cash acquired | (38,832) | (48,547) |
Purchase of equipment and improvements | (24,639) | (38,963) |
Acquisition of intangible assets | (4,759) | (19,893) |
Net proceeds from sale of investments | 250 | |
Issuance of notes receivable | (20) | |
Collections of notes receivable | 1,812 | 91 |
Collection of deferred cash consideration | 4,882 | |
Net cash used in investing activities | (61,286) | (107,332) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 316,479 | 655,732 |
Repayments of long-term debt | (318,919) | (743,342) |
Deferred financing costs paid | (2) | (3,899) |
Contingent consideration paid | (5,919) | (1,621) |
Deferred cash consideration paid | (65,000) | |
Acquisition of additional non-controlling interest | (16,916) | |
IPO proceeds, net of underwriter fees | 231,500 | |
September 2018 Secondary Offering, April 2019 Secondary Offering, and August 2019 Secondary Offering proceeds | 258,522 | 24,967 |
Purchase of LLC Interests, Class B common stock, and Class D common stock in connection with the April 2019 Secondary Offering and the August 2019 Secondary Offerings | (239,538) | |
Repurchases of shares to satisfy minimum tax withholding | (1,716) | |
Proceeds from exercise of common stock options | 810 | |
Distribution to non-controlling interests holders | (6,493) | (6,136) |
Net cash provided by financing activities | 3,224 | 75,285 |
Effect of exchange rate changes on cash and cash equivalents | (9,651) | (3,959) |
Net (decrease) increase in cash and cash equivalents | (38,888) | 30,342 |
Cash and cash equivalents, beginning of period | 350,697 | 205,142 |
Cash and cash equivalents, end of period | $ 311,809 | $ 235,484 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Description of Business and Summary of Significant Accounting Policies | |
Description of Business and Summary of Significant Accounting Policies | (1) (a) EVO Payments, Inc. (“EVO, Inc.” or the “Company”) is a Delaware corporation whose primary asset is its ownership of approximately 44.7% o f the membership interests of EVO Investco, LLC (“EVO, LLC”) as of September 30, 2019. EVO, Inc. was incorporated on April 20, 2017 for the purpose of completing a series of reorganization transactions (the “Reorganization Transactions”), in order to consummate the initial public offering of EVO, Inc.’s Class A common stock (“IPO”), and to carry on the business of EVO, LLC. EVO, Inc. is the sole managing member of EVO, LLC and operates and controls all of the businesses and affairs conducted by EVO, LLC and its subsidiaries. The Company is a leading payment technology and services provider, offering an array of innovative, reliable and secure payment solutions to merchants across North America and Europe and servicing over 550,000 merchants across 50 markets. The Company supports all major card types in the markets it serves. The Company provides card-based payment processing services to small and middle market merchants, multinational corporations, government agencies, and other business and nonprofit enterprises located throughout North America and Europe. These services enable merchants to accept credit and debit cards and other electronic payment methods as payment for their products and services by providing terminal devices, card authorization, data capture, funds settlement, risk management, fraud detection and chargeback services. The Company operates two reportable segments: North America and Europe. (b) The accompanying unaudited condensed consolidated balance sheet as of September 30, 2019 and audited consolidated balance sheet as of December 31, 2018 , the unaudited condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended September 30, 2019 and 2018, the unaudited condensed consolidated statements of changes in equity for the three and nine months ended September 30, 2019 and 2018, and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018, reflect all adjustments that are of a normal, recurring nature and that are considered necessary for a fair presentation of the results for the periods shown in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting periods. Accordingly, certain information and footnote disclosures have been condensed or omitted in accordance with SEC rules that would ordinarily be required under U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported assets and liabilities, as of the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Estimates used for accounting purposes include, but are not limited to, valuation of redeemable non-controlling interests (“RNCI”), calculation of income taxes, and determination of the fair value of long-lived assets. Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity at December 31, 2018: The previously presented nonredeemable non-controlling interests, which relate to the portion of equity in a consolidated subsidiary not attributable, directly or indirectly, to the Company as of December 31, 2018, were retrospectively adjusted to reflect the exchange of certain Class C and D shares to Class A shares. The Company has deemed the correction to be immaterial as there is no impact to the Company’s results of operations, cash flows from operating, investing, or financing activities, or consolidated shareholders’ deficit. This immaterial adjustment decreased the previously reported amounts of $178.2 million and ($814.1) million of additional paid-in capital and nonredeemable non-controlling interests, as reported in the consolidated balance sheet and consolidated statement of changes in equity as of December 31, 2018, to $157.5 million and ($793.4) million, respectively. (c) The accompanying unaudited condensed consolidated financial statements include the accounts of the Company. As the sole managing member of EVO, LLC, the Company exerts control over the Group. In accordance with Accounting Standards Codification (“ASC”) 810, Consolidation , EVO, Inc. consolidates the Group’s consolidated financial statements and records the interests in EVO, LLC that it does not own as non-controlling interests. All intercompany accounts and transactions have been eliminated in consolidation. The Company accounts for investments over which it has significant influence but not a controlling financial interest using the equity method of accounting. (d) Cash and cash equivalents include all cash balances and highly liquid securities with original maturities of three months or less when acquired. Cash equivalents consist primarily of overnight money market funds. Cash balances often exceed federally insured limits; however, concentration of credit risk is limited due to the payment of funds on the day following receipt in satisfaction of the settlement process. Included in cash and cash equivalents are merchant reserve cash balances, which represent funds collected from the Company’s merchants that serve as collateral to minimize the liabilities associated with any losses that may occur under the respective merchant agreements (“Merchant Reserves”). While this cash is not restricted in its use, the Company believes that maintaining the Merchant Reserves to collateralize merchant losses strengthens its fiduciary standings with its card network sponsors (“Member Banks”) and is in accordance with the guidelines set by the card networks. As of September 30, 2019 and December 31, 2018, Merchant Reserves were $92.2 million and $107.8 million, respectively. (e) New accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company are adopted as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s unaudited condensed consolidated financial statements upon adoption. As the Company is considered an emerging growth company under the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), adoption of new accounting standards will be consistent with private company effective dates. The Company expects to become a large accelerated filer effective December 31, 2019, at which point the Company will follow the public company timeline for adoption of new accounting pronouncements. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue From Contracts With Customers (“ASC 606”), with amendments in 2015, 2016 and 2017. T his ASU supersedes the revenue recognition requirements in ASC 605, Revenue Recognition (“ASC 605”). The new standard provides a five-step analysis of transactions to determine when and how revenue is recognized, based upon the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASC 606 on January 1, 2019, using the modified retrospective method and applying the standard to all contracts not completed on the date of adoption. Results for the reporting period beginning January 1, 2019 are presented under ASC 606, while prior period amounts continue to be reported in accordance with the Company's historic accounting practices under previous guidance. The primary impact to the Company’s unaudited condensed consolidated financial statements as a result of the adoption of ASC 606 is a change in total net revenue attributable to the presentation of network processing fees on a net basis, driven by changes in principal and agent considerations, as compared to previously being presented on a gross basis. Under the modified retrospective method, the Company has not restated its comparative unaudited condensed consolidated financial statements for these effects. The following table presents the impact of adopting ASC 606 on the Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2019: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 As reported Adjustment Presented As reported Adjustment Presented (In thousands) (In thousands) Revenue $ 122,363 $ 30,234 $ 152,597 $ 356,398 $ 81,608 $ 438,006 Operating expenses Cost of services and products, exclusive of depreciation and amortization $ 24,065 $ 30,234 $ 54,299 $ 72,900 $ 81,608 $ 154,508 The adoption of ASC 606 did not have a material impact on the Company’s unaudited condensed consolidated balance sheets and statements of cash flows as of and for the three and nine months ended September 30, 2019. The Company has expanded its unaudited condensed consolidated financial statement disclosures as required by this new standard. See Note 2, “Revenue” for additional disclosures provided as a result of the adoption of ASC 606. Recently Issued Accounting Pronouncements Not Yet Adopted Leases In February 2016, the FASB issued ASU 2016-02, Leases , with amendments in 2018 and 2019. This update aims to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years; however, the Company has elected to take advantage of the extended transition period as provided for under the JOBS Act. The new standard is therefore effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, provided that the Company maintains its emerging growth company status through December 31, 2019. The Company expects to become a large accelerated filer effective December 31, 2019, at which point the Company will follow the timeline for adoption of new accounting pronouncements for public companies, and will be required to retroactively adopt this standard effective January 1, 2019. The Company is currently in the process of evaluating its leasing arrangements and assessing the impact of adopting the new guidance on its consolidated financial statements, disclosures, accounting policies, and controls over financial reporting. The Company is also in process of implementing a new lease accounting software solution to comply with the requirements of the standard. The Company’s existing leases consist primarily of real estate and personal property leases throughout the markets in which the Company operates. As disclosed in Note 16, “Commitments and Contingencies” to the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, minimum annual lease payments for the years subsequent to December 31, 2018 amounted to $42.4 million on an undiscounted basis. The Company expects that substantially all of these lease commitments will be subject to the new standard and will be recognized, on a discounted basis, as operating lease liabilities and right-of-use assets upon adoption. The Company plans to elect the package of practical expedients intended to ease transition whereby the Company will not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases and (3) initial direct costs for any existing leases. The Company also intends to elect the practical expedient allowing to not separate lease and non-lease components. Furthermore, the Company will apply the provisions of ASU 2018-11, Leases (Topic 842)- Targeted Improvements, with the initial application of the new guidance at the adoption date with a cumulative effect adjustment in the opening balance of retained earnings. Under this method, the Company would not adjust its comparative period financial statements for the effects of the new standard or make the new required lease disclosures for periods prior to the effective date. The Company expects the evaluation and implementation activities to continue throughout the remainder of 2019. Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , with amendments in 2019. This update requires the companies to immediately recognize the estimate for credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company will adopt this ASU, prospectively, effective January 1, 2020. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . This update provides clarification and modifies the disclosure requirements on fair value measurement in Topic 820, Fair Value Measurement. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 with early adoption permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements. Internal Use Software In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . The update aligns the requirements for capitalizing certain implementation costs incurred in a cloud computing hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. Entities are permitted to apply either a retrospective or prospective transition approach to adopt the guidance. The Company is currently evaluating the effect of ASU 2018-15 on its consolidated financial statements. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2019 | |
Revenue | |
Revenue | (2) Revenue The Company primarily earns revenue from payment processing services, and has contractual agreements with its customers that set forth the general terms and conditions of the service relationship, including line item pricing, payment terms and contract duration. Payment processing service revenue is based on a percentage of transaction value and on specified amounts per transaction or service, and is measured as the amount of consideration to which the Company expects to be entitled in exchange for providing services. The Company’s core performance obligation is to stand ready to provide continuous access to the Company’s processing services in order to be able to process as many transactions as its customers require on a daily basis over the contract term as the timing and quantity of transactions to be processed is not determinable. Under a stand-ready obligation, the Company’s performance obligation is defined by each time increment rather than by the underlying activities satisfied over time based on days elapsed. Because the service of standing ready is substantially the same each day and has the same pattern of transfer to the customer, the Company has determined that its stand-ready performance obligation comprises a series of distinct days of service. The Company also earns revenue from the sale and rental of electronic point-of-sale (“POS”) equipment. The sale of equipment to a customer represents the transfer of a promised good that has a benefit to the customer in conjunction with the payment processing services provided by the Company and, therefore, is accounted for as a separate performance obligation. The Company’s contractual agreements outline the pricing related to payment processing services and pricing related to the sale or rental of POS equipment. The Company allocates the variable fees charged for payment processing services to the day in which it has the contractual right to bill under the contract. Revenue from the sale of POS equipment is recognized at a point in time when the POS equipment is shipped and title passes to the customer. Revenue from the rental of electronic POS equipment is recognized monthly as earned. The revenue recognized from the sale and rental of POS equipment totaled $12.2 million and $10.8 million for the three months ended September 30, 2019 and 2018, respectively. The revenue recognized from the sale and rental of POS equipment totaled $32.4 million and $32.1 million for the nine months ended September 30, 2019 and 2018, respectively. Commissions payable to referral and reseller partners are recognized as incurred. The Company does not capitalize costs to obtain contracts with customers or costs incurred to fulfill contracts with customers as such amounts are considered immaterial. The Company follows the requirements of ASC 606-10, Principal Agent Considerations , which states that the determination of whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement and that certain factors should be considered in determining payment processing service revenue reporting. The determination of gross versus net recognition for interchange, card network fees, commissions and other fees requires judgment that depends on whether the Company controls the good or service before it is transferred to the merchant or whether the Company is acting as an agent of a third party. The Company frequently enters into agreements with third parties under which the third party engages the Company to provide payment processing services to all of their customers. Under these agreements the third party acts as supplier of products or services by achieving most of the shared risks and rewards of customer contracts; the Company passes the third party’s share of merchant receipts to them as commissions. The Company incurs interchange and card network pass-through charges from the card issuers and payment networks respectively, and does not have the ability to direct the use of or receive the benefits from the services provided by the card issuers or the payment networks. The Company has no discretion over which card issuing bank will be used to process a transaction and is unable to direct the activity of the merchant to another card issuing bank. Interchange and card network rates are pre-established by the card networks, and the Company has no latitude in determining these fees. Based on these factors, the Company has determined that it is acting as an agent with respect to these services. Revenue generated from payment processing is presented net of interchange and card network fees paid to the card issuing banks and card networks respectively. The table below presents a disaggregation of the Company’s revenue from contracts with customers by division. The Company’s divisions are defined as follows: · Direct – Includes long-term, exclusive referral relationships with leading financial institutions. In the aggregate, these banks represent more than 12,000 branch locations which actively pursue new merchant relationships on the Company’s behalf. These financial institutions provide the Company with access to their brands, significantly enhancing the Company’s credibility and recognition. The Company also utilizes a direct sales force to build and maintain direct relationships with its merchants and other referral partners in order to control sales, price negotiation, underwriting, boarding, and support processes. · Tech-enabled – Includes partnerships with independent software vendors, integrated software dealers, enterprise resource planning (“ERP”) software dealers and eCommerce gateway providers. These partnerships function by way of a technical integration between the Company and the third party in which the third party seamlessly passes information to the Company’s systems in order to streamline the merchant boarding process. The Company also drives growth through its own ERP integrations, which support its B2B offering, and its proprietary eCommerce gateway. · Traditional – Represents the Company’s heritage U.S. portfolio composed primarily of independent sales organization (“ISO”) relationships. The Company is not focused on this sales model, and it will represent an increasingly smaller portion of the business over time. Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 North America Europe Total North America Europe Total (In thousands) (In thousands) Divisions: Direct $ 38,025 $ 36,383 $ 74,408 $ 113,246 $ 105,248 $ 218,494 Tech-enabled 28,914 10,958 39,872 84,912 28,507 113,419 Traditional 8,083 — 8,083 24,485 — 24,485 $ 75,022 $ 47,341 $ 122,363 $ 222,643 $ 133,755 $ 356,398 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 North America Europe Total North America Europe Total (In thousands) (In thousands) Divisions: Direct $ 40,946 $ 51,385 $ 92,331 $ 117,738 $ 141,733 $ 259,471 Tech-enabled 28,855 13,886 42,741 84,757 39,511 124,268 Traditional 9,686 — 9,686 30,192 — 30,192 $ 79,487 $ 65,271 $ 144,758 $ 232,687 $ 181,244 $ 413,931 |
Settlement Processing Assets an
Settlement Processing Assets and Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Settlement Processing Assets and Liabilities | |
Settlement Processing Assets and Liabilities | (3) In certain markets, the Company is a member of various card networks, allowing it to process and fund transactions without third-party sponsorship. In other markets, the Company has Member Banks for whom the Company facilitates payment transactions. These arrangements allow the Company to route transactions under the Member Banks’ control and identification numbers to clear card transactions through card networks. Funds settlement refers to the process of transferring funds for sales and credits between card issuers and merchants. The standards of the card networks restrict non-members from performing funds settlement or accessing merchant settlement funds and, instead, require that these funds be in the possession of the Member Banks until the merchant is funded. However, in certain markets and in accordance with the terms of the Company’s Bank Sponsorship Agreements with its Member Banks, funds settlement generally follows a net settlement process. Timing differences, interchange expense, Merchant Reserves and exception items cause differences between the amount the Member Banks receive from the card networks and the amount funded to the merchants. Settlement processing assets and obligations represent intermediary balances arising in the settlement process. A summary of these amounts is as follows: September 30, December 31, 2019 2018 (In thousands) Settlement processing assets: Receivable from card networks $ 219,654 $ 195,817 Receivable from merchants 90,552 52,513 Totals $ 310,206 $ 248,330 Settlement processing obligations: Settlement liabilities $ (375,552) $ (320,492) Merchant reserves (92,224) (107,836) Totals $ (467,776) $ (428,328) |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share | |
Earnings Per Share | (4) On May 22, 2018, EVO, LLC’s limited liability company agreement (the “EVO LLC Agreement”) was amended and restated effective as of May 25, 2018, to, among other things, reclassify all of the then existing membership interests of EVO, LLC into a new single class of common membership interests. Additionally, the Company entered into a series of transactions that resulted in the issuance of Class A common stock, Class B common stock, Class C common stock and Class D common stock to the holders of LLC Interests and commenced the IPO, resulting in the public issuance of additional shares of the Company’s Class A common stock. Earnings per share information prior to May 23, 2018 is not presented since the ownership structure of EVO, LLC is not a common unit of ownership of the Company. The following table sets forth the computation of the Company's basic and diluted net loss per Class A common share (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, May 23 - September 30 2019 2018 Numerator: Net loss attributable to EVO Payments, Inc. $ (1,844) $ (6,671) $ (27,389) $ (10,675) Denominator: Weighted average Class A common stock outstanding 34,634,567 30,996,506 18,163,344 17,901,484 Effect of dilutive securities — — — — Total dilutive securities 34,634,567 30,996,506 18,163,344 17,901,484 Earnings per share: Basic $ (0.05) $ (0.22) $ (1.51) $ (0.60) Diluted $ (0.05) $ (0.22) $ (1.51) $ (0.60) Antidilutive securities: Stock options 3,307,082 3,002,231 2,097,054 2,097,054 RSUs 844,616 790,719 499,510 499,510 RSAs 14,672 22,359 58,809 58,809 Convertible Class C common stock 2,327,511 2,399,326 2,560,955 2,560,955 Convertible Class D common stock 10,019,169 12,829,719 17,282,930 17,282,930 Earnings per share information is not separately presented for Class B common stock, Class C common stock and Class D common stock since they have no economic rights to the income or loss of the Company. Class B common stock is not considered when calculating dilutive EPS as this class of common stock may not be exchanged for Class A common stock. Class C common stock and Class D common stock are considered in the calculation of dilutive EPS on an if-converted basis as these classes, together with the related LLC Interests, have exchange rights into Class A common stock that could result in additional Class A common stock being issued. All other potentially dilutive securities are determined based on the treasury stock method. Refer to Note 18, “Shareholders’ Equity,” for further information on the rights of each class of stock. |
Tax Receivable Agreement
Tax Receivable Agreement | 9 Months Ended |
Sep. 30, 2019 | |
Tax Receivable Agreement | |
Tax Receivable Agreement | (5) In connection with the IPO, the Company entered into a Tax Receivable Agreement (the “TRA”) that requires the Company to make payments to the Continuing LLC Owners, as defined in Note 18, “Shareholders’ Equity,” that are generally equal to 85% of the applicable cash tax savings, if any, realized as a result of favorable tax attributes that will be available to the Company as a result of the Reorganization Transactions, exchanges of LLC Interests for Class A common stock, and payments made under the TRA. Payments will occur only after the filing of U.S. federal and state income tax returns and realization of cash tax savings from the favorable tax attributes. Due to net losses attributable to the Company in 2018, there were no realized tax savings attributable to the TRA, therefore no payments have been made related to the TRA obligation. As a result of the exchange of LLC Interests and shares of Class C common stock and Class D common stock for shares of Class A common stock sold in connection with the IPO, the September 2018 Secondary Offering, the April 2019 Secondary Offering, the August 2019 Secondary Offering and other member exchanges, through September 30, 2019, the Company’s deferred tax asset and payment liability pursuant to the TRA were approximately $142.2 million and $ 120.9 million, respectively. The Company recorded a corresponding increase to paid-in capital for the difference between the TRA liability and the related deferred tax asset. The amounts recorded as of September 30, 2019, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S. federal and state income tax returns for the year ended December 31, 2019. Future payments under the TRA with respect to subsequent exchanges would be in addition to these amounts. For the TRA, the cash savings realized by the Company are computed by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been no increase to the tax basis of the assets from member exchanges of LLC Interests, and no tax benefit as a result of the Net Operating Losses (“NOLs”) generated by the increase in the Company’s tax basis of the assets in LLC. Subsequent adjustments of the TRA obligations due to certain events (e.g., changes to the expected realization of NOLs or changes in tax rates) will be recognized within other (expense) income in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2019 | |
Acquisitions | |
Acquisitions | (6) The Company determined t he pro forma impact of the acquisitions below was not material to the Company’s historical consolidated operating results and is, therefore, not separately presented. 2019 Acquisitions (a) Delego Software ULC In September 2019, a subsidiary of EVO, Inc. acquired 100% of the outstanding shares of Delego Software ULC (“Delego”), an unlimited liability company governed by the laws of the Province of British Columbia, Canada, for CAD 42.6 million ($32.4 million, based on the foreign exchange rate at the time of the acquisition), funded with cash drawn from the Company’s debt facilities and fully paid at closing. The acquisition of Delego expands the Company’s integrated payment solutions business as Delego is a provider of SAP integrated payments for business to business customers. The results of operations of Delego are included in the Company’s consolidated results of operations from the date of the acquisition in the North America segment through the end of the period. The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed are as follows: As of the acquisition date (In thousands ) Estimated Useful Life Finite-lived intangible assets Purchased software $ 7 years Customer relationships 15 years Tradename 2 years Deferred tax liabilities Other assets (liabilities), net Goodwill Total purchase price $ Goodwill in the amount of $22.6 million represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. Goodwill generated from the Delego acquisition is deductible for U.S. income tax purposes. Pro forma information for Delego acquisition is not presented, as the effect of this acquisition is not material to the Company’s consolidated operating results or North America segment. As of September 30, 2019, the Company considers the purchase price allocation to be preliminary and continues to gather the information to support the valuation of assets acquired and liabilities assumed. (b) SF Systems In July 2019, a subsidiary of EVO, Inc. completed the acquisition of 100% of SF Systems, S.A.P.I. (“SF Systems”) for total consideration of $5.0 million, which includes an upfront payment of $4.0 million and a holdback liability of $1.0 million payable 18 months after the closing date. Net assets acquired in the SF Systems acquisition included purchased software of $2.6 million with a useful life of 5 years and goodwill of $2.4 million. Goodwill generated from the SF Systems acquisition is deductible for U.S. income tax purposes. SF Systems is presented in the Company’s North America segment. (c) Way2Pay Ltd In March 2019, a subsidiary of EVO, Inc. completed the acquisition of 100% of the outstanding shares of Way2Pay Ltd (“Way2Pay”) for total consideration of €3.0 million ($3.4 million, based on the foreign exchange rate at the time of the acquisition), which includes an upfront payment of €2.7 million and a holdback liability of €0.3 million payable 18 months after the date of the agreement. Net assets acquired in the Way2Pay acquisition included purchased software of $4.0 million with a useful life of 5 years. Way2Pay is presented in the Company’s Europe segment. 2018 Acquisitions (a) ClearONE, S.L. In October 2018, a subsidiary of EVO, Inc. acquired 100% of the outstanding shares of ClearONE for €5.4 million ($6.3 million based on the foreign exchange rate at the time of the acquisition). The total consideration includes a holdback liability of €0.5 million. ClearONE is presented in the Company’s Europe segment. Equipment and intangible assets consist of card processing equipment, merchant contract portfolios, trademarks, internally developed software, and non-competition agreements with useful lives of 3 to 5 years, 5 years, 5 years, 5 years, and 2 to 3 years, respectively. (b) Federated Payment Systems, LLC/Federated Payment Canada Corp. In September 2018, a subsidiary of EVO, Inc. acquired the remaining 67% of the outstanding membership interests of Federated Payment Systems, LLC (“Federated US”) and 100% of the outstanding shares of Federated Payment Canada Corporation (“Federated Canada,” together with Federated US, “Federated”) for $38.2 million. The total consideration includes an aggregate holdback liability of $0.5 million. Certain acquisition-related expenses were incurred in conjunction with the Federated acquisition in the amount of $0.4 million. Federated maintains diverse sales channels which complement the Company’s strategic distribution relationships. As a result of this acquisition, the Company recognized goodwill. Federated is presented in the Company’s North America segment. The purchase price allocation is as follows: c As of the acquisition date (in thousands) Tangible assets acquired $ 1,702 Deferred tax liability (1,357) Amortizable intangible assets Trademarks 1,200 Merchant contract portfolios 11,400 Goodwill 33,677 Total net assets acquired $ 46,622 Intangible assets of $12.6 million have been allocated to amortizable intangible assets consisting of trademarks and merchant contract portfolios, with estimated useful lives of 5 years and 10 years, respectively. The change in the estimated values of amortizable intangible assets is primarily due to obtaining information related to the merchant portfolio acquired from Federated and therefore, revising certain estimates in determining fair value. On the date of acquisition, the book value of the investment in Federated US was zero. The Company recorded a gain on the acquisition of the unconsolidated investee of $8.4 million to step-up carrying value of the investment to fair value as of the acquisition date. The gain on acquisition of unconsolidated investee was recorded on the consolidated statements of operations and comprehensive (loss) income for the year ended December 31, 2018. Goodwill, totaling $33.7 million, represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. Goodwill generated from the Federated acquisition is deductible for U.S. income tax purposes. (c) Nodus Technologies, Inc. In May 2018, a subsidiary of EVO, Inc. acquired 100% of the outstanding shares of Nodus Technologies, Inc. (“Nodus”) for $18.0 million. The total consideration includes a holdback liability of $0.8 million. Nodus is presented in the Company’s North America segment. Equipment and intangible assets consist of office equipment, computer software, merchant contract portfolios, trademarks, internally developed software, and non-competition agreements with useful lives of 5 to 7 years, 3 years, 15 years, 20 years, 10 years and 3 years, respectively. (d) Liberbank, S.A. In April 2018, a subsidiary of EVO, Inc. acquired a portion of the merchant acquiring assets of Liberbank, S.A. and Banco de Castilla la Mancha, S.A. for €7.9 million ($9.5 million, based on the foreign exchange rate at the time of the acquisition). This asset acquisition is presented in the Company’s Europe segment. Equipment and intangible assets acquired consist of card processing equipment, merchant contract portfolios, marketing alliance agreements, and trademarks with useful lives of 3 years, 5 years, 15 years, and 15 years, respectively. (e) Nationwide Payment Solutions, LLC In March 2018, a subsidiary of EVO, Inc. acquired the remaining 38% membership interest in Nationwide Payment Solutions, LLC (“NPS”) for an upfront payment of $16.9 million and contingent consideration of $3.8 million paid on April 1, 2019. This transaction resulted in a reduction to members’ deficit and nonredeemable non-controlling interests of $20.1 million and $0.6 million, respectively. NPS is presented in the Company’s North America segment. (f) EVO Payments International Corp. - Canada In February 2018, a subsidiary of EVO, Inc. acquired the remaining 30% membership interest in EVO Payments International Corp. - Canada (“EVO Canada”) from 7097794 Canada, Inc. for $0.9 million of contingent consideration. This transaction resulted in a reduction to members’ deficit and nonredeemable non-controlling interests of $0.4 million and $0.5 million, respectively. EVO Canada is presented in the Company’s North America segment. |
Equipment and Improvements
Equipment and Improvements | 9 Months Ended |
Sep. 30, 2019 | |
Equipment and Improvements | |
Equipment and Improvements | (7) Equipment and improvements consist of the following: Estimated Useful Lives in September 30, December 31, Years 2019 2018 (In thousands) Card processing 3-5 $ 136,384 $ 128,244 Office equipment 3-5 44,311 41,771 Computer software 3 47,266 44,373 Leasehold improvements various 16,594 16,234 Furniture and fixtures 5-7 6,549 5,673 Totals 251,104 236,295 Less accumulated depreciation (158,794) (136,947) Foreign currency translation adjustment (598) 3,698 Totals $ 91,712 $ 103,046 Depreciation expense related to equipment and improvements was $10.0 million and $9.1 million for the three months ended September 30, 2019 and 2018, respectively. Depreciation expense related to equipment and improvements was $31.5 million and $27.6 million for the nine months ended September 30, 2019 and 2018, respectively. In the nine months ended September 30, 2019, equipment and improvements and accumulated depreciation were each reduced by $10.8 million and $10.7 million, respectively, and in the nine months ended September 30, 2018 by $8.5 million and $7.6 million, respectively, primarily related to asset retirements. The Company infrequently sells or disposes of assets that are not fully depreciated, and this activity represents an insignificant portion of the total reduction. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (8) Intangible assets, net consist of the following: September 30, December 31, 2019 2018 (In thousands) Intangible assets with finite lives: Merchant contract portfolios and customer relationships: Gross carrying value $ 296,033 $ 293,069 Accumulated amortization (157,394) (139,159) Accumulated impairment losses (7,089) (5,658) Foreign currency translation adjustment (29,441) (27,975) Net 102,109 120,277 Marketing alliance agreements: Gross carrying value 191,879 191,879 Accumulated amortization (56,650) (47,777) Accumulated impairment losses (11,920) (7,585) Foreign currency translation adjustment (20,488) (18,634) Net 102,821 117,883 Trademarks, finite-lived: Gross carrying value 29,493 28,657 Accumulated amortization (12,536) (10,748) Foreign currency translation adjustment (4,639) (4,446) Net 12,318 13,463 Internally developed and acquired software: Gross carrying value 80,881 60,876 Accumulated amortization (23,375) (15,794) Accumulated impairment losses (10,190) (9,324) Foreign currency translation adjustment (3,417) (2,260) Net 43,899 33,498 Non-competition agreements: Gross carrying value 6,462 6,462 Accumulated amortization (5,782) (5,316) Foreign currency translation adjustment (2) — Net 678 1,146 Total finite-lived, net 261,825 286,267 Trademarks, indefinite-lived: Gross carrying value 18,499 18,499 Accumulated impairment losses (18,499) (14,627) Net — 3,872 Total intangible assets, net $ 261,825 $ 290,139 Amortization expense related to intangible assets was $12.8 million and $11.5 million for the three months ended September 30, 2019 and 2018, respectively. Amortization expense related to intangible assets was $36.9 million and $33.7 million for the nine months ended September 30, 2019 and 2018, respectively. In September 2019 the Company retired the indefinite-lived trademarks due to an internal reorganization. As a result, the Company recorded an impairment of $3.9 million for the nine months ended September 30, 2019. In March 2019 the Company’s marketing alliance agreement with Raiffeisen Bank Polska was terminated. As a result of the termination, the Company recorded an impairment of $4.4 million for the six months ended June 30, 2019. For the nine months ended September 30, 2019 additional impairments of $1.4 million and $0.8 million were recognized, related to merchant contract portfolios and internally developed and acquired software, respectively. Estimated amortization expense to be recognized during each of the five years, and thereafter, subsequent to September 30, 2019: Amount (In thousands) Years ending: 2019 (remainder of the year) $ 12,400 2020 44,833 2021 40,015 2022 34,470 2023 26,951 2024 and thereafter 103,156 Total $ 261,825 The following represents net intangible assets by segment: September 30, December 31, 2019 2018 (In thousands) Intangible assets, net: North America Merchant contract portfolios and customer relationships $ 77,197 $ 88,141 Marketing alliance agreements 71,975 76,590 Trademarks, finite-lived 3,187 2,585 Internally developed software 29,488 20,167 Non-competition agreements 639 1,089 Trademarks, indefinite-lived — 3,872 Total 182,486 192,444 Europe Merchant contract portfolios and customer relationships 24,912 32,136 Marketing alliance agreements 30,846 41,293 Trademarks, finite-lived 9,131 10,878 Internally developed software 14,411 13,331 Non-competition agreements 39 57 Total 79,339 97,695 Total intangible assets, net $ 261,825 $ 290,139 Changes in goodwill for the nine months ended September 30, 2019, in total and by reportable segment, were as follows: Reportable Segment North America Europe Total (In thousands) Goodwill, gross, as of December 31, 2018 $ 240,837 $ 136,465 $ 377,302 Accumulated impairment losses — (24,291) (24,291) Goodwill, net, as of December 31, 2018 240,837 112,174 353,011 Business combinations 25,030 40 25,070 Foreign currency translation adjustment 35 (6,593) (6,558) Goodwill, net as of September 30, 2019 $ 265,902 $ 105,621 $ 371,523 For the nine months ended September 30, 2019 and 2018 there was no goodwill impairment. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | (9) Accounts Payable and Accrued Expenses The Company’s accounts payable and accrued expenses consist of the following: September 30, December 31, 2019 2018 (In thousands) Compensation and related benefits $ 17,679 $ 22,280 Third-party processing and payment network fees 37,056 37,702 Trade payables 8,336 44,581 Taxes payable 13,344 16,292 Commissions payable to third parties and agents 14,483 13,141 Unearned revenue 4,198 4,579 Other 18,292 22,641 Total accounts payable and accrued expenses $ 113,388 $ 161,216 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | (10) Related Party Transactions Related party commission expense incurred with unconsolidated investees of the Company amounted to $5.2 million and $4.3 million for the three months ended September 30, 2019 and 2018, respectively. Related party commission expense incurred with unconsolidated investees of the Company amounted to $15.0 million and $13.8 million for the nine months ended September 30, 2019 and 2018, respectively. The sale of equipment and services to these unconsolidated investees amounted to $0.1 million and less than $0.1 million for the three months ended September 30, 2019 and 2018, respectively. The sale of equipment and services to these unconsolidated investees amounted to $0.3 million and $0.2 million for the nine months ended September 30, 2019 and 2018, respectively. Related party balances consist of the following: September 30, December 31, 2019 2018 (In thousands) Receivables from sale of POS devices and peripherals $ — $ 303 Receivables from related companies 34 1,568 Due from related parties, current $ 34 $ 1,871 Notes receivable, long term — 915 Due from related parties, long term $ — $ 915 Liabilities to related companies 4,596 4,824 Due to related parties, current $ 4,596 $ 4,824 ISO commission reserve 385 385 Due to related parties, long term $ 385 $ 385 Madison Dearborn Partners, LLC (“MDP”), a member of EVO, LLC and shareholder of EVO, Inc., provides the Company with consulting services related to business development, financing matters, and potential acquisition activities on an as-needed basis. In addition, the Company reimburses MDP for certain out of pocket expenses. The Company made payments to MDP of less than $0.1 million for each of the nine months ended September 30, 2019 and 2018 for consulting services and expense reimbursement. The Company made no payments for the three months ended September 30, 2019 and 2018. Additionally, the Company provides certain professional and other services to Blueapple Inc. (“Blueapple”), a member of EVO, LLC and owner of all outstanding shares of Class B common stock of EVO, Inc. Blueapple is controlled by entities affiliated with the Company’s founder and chairman, Rafik R. Sidhom. The expense related to these services was less than $0.1 million for each of the three months ended September 30, 2019 and 2018. The expense relates to these services was $0.2 million and $0.1 million for the nine months ended September 30, 2019 and 2018, respectively. During 2018, the Company paid Blueapple $2.4 million in satisfaction of the obligation to pay any further commissions associated with processing revenue to Blueapple and all such future revenue will be retained by the Company. Prior to the Company’s acquisition of the remaining 67% membership interests of Federated US and 100% of the outstanding shares of Federated Canada in September 2018, the Company’s chairman owned one-third of the shares of Federated Canada and an entity wholly owned by relatives of the Company’s chairman owned one-third of the membership interests of Federated US. As a result of the ownership interests, the Company’s founder and chairman and relatives received $15.5 million of the September 2018 Federated acquisition purchase price. In addition, prior to the acquisition, the Company provided card-based processing services and risk assessment services to Federated US in the ordinary course of business for a nominal fee. For the three and nine months ended September 30, 2018, the Company received $0.1 million and $0.4 million, respectively, in revenues in connection with providing services to Federated US. In addition, prior to the acquisition, Federated Canada provided certain marketing services to the Company’s business in Canada. For the three and nine months ended September 30, 2018, the Company paid $1.9 million and $5.8 million, respectively, in fees to Federated Canada for these services. The Company leases office space located at 515 Broadhollow Road in Melville, New York for $0.1 million per month from 515 Broadhollow, LLC. 515 Broadhollow, LLC is majority owned, directly and indirectly, by the Company’s founder and chairman. Receivables from related companies include amounts receivable from the Company’s founder and chairman, or entities controlled by the Company’s founder and chairman, of less than $0.1 million and $0. 7 million as of September 30, 2019 and December 31, 2018, respectively. Liabilities held by related companies include payables to a minority held affiliate of $4.0 million and $3.0 million as of September 30, 2019 and December 31, 2018, respectively. A portion of the TRA obligation is payable to members of management and current employees. Refer to Note 5, “Tax Receivable Agreement,” for further information on the tax receivable agreement. The Company, through one wholly owned subsidiary and one unconsolidated investee, conducts business under ISO agreements with a relative of the Company’s founder and chairman pursuant to which the relative of the Company’s founder and chairman provides certain marketing services and equipment in exchange for a commission based on the volume of transactions processed for merchants acquired by the relative of the Company’s founder and chairman. For each of the three months ended September 30, 2019 and 2018, the Company paid commissions of $0.1 million related to this activity. For each of the nine months ended September 30, 2019 and 2018, the Company paid commissions $0.4 million, related to this activity. NFP, the Company’s benefit broker, is a portfolio company of MDP and one of the Company’s executive officers owns a minority interest in NFP. For the three months ended September 30, 2019 and 2018, the Company paid $0.1 million and less than $0.1 million, respectively, in commissions and other expenses to NFP. For the nine months ended September 30, 2019 and 2018, the Company paid $0.2 million and $0.1 million, respectively, in commissions and other expenses to NFP. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Income Taxes | (11) In accordance with ASC 740, Income Taxes , each interim period is considered integral to the annual period, and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the interim periods. If, however, the entity is unable to reliably estimate its annual effective tax rate, then the actual effective tax rate for the year-to-date may be the best estimate of the entity’s annual effective tax rate. For the three and nine months ended September 30, 2019, the Company determined that it was unable to make a reliable estimate of its annual effective tax rate due to the sensitivity of the rate as it relates to its forecasted full year 2019 results. Therefore, the Company recorded a tax expense and tax benefit for the three and nine months ended September 30, 2019, respectively based on its actual effective tax rate. The Company’s effective tax rate (“ETR”) was (231.6 )% and 2.8% for the three and nine months ended September 30, 2019, respectively. The Company’s ETR was 388.5% and (11.1)% for the three and nine months ended September 30, 2018, respectively. The Company recorded a tax benefit in the nine months ended September 30, 2019 of $ (8.2) million as a result of a tax free reorganization to consolidate its foreign operation and reversed a deferred tax liability related to foreign tax withholding on unremitted foreign earnings. The variance in the ETR for the three and nine months ended September 30, 2019 primarily relates to the mix of U.S. and non-U.S. earnings and related tax expense. The ETR for the three and nine months ended September 30, 2019 and 2018 differs from the statutory federal rate primarily due to foreign income taxes, the tax treatment of income attributable to non-controlling interests, the exclusion of tax benefits related to losses recorded in certain foreign operations, and the recognition of the tax benefit from a tax free reorganization. The income attributable to the non-controlling interests is taxable to EVO, LLC’s individual owners other than the Company. Income tax liabilities are incurred with respect to foreign operations whereas income of EVO, LLC in the U.S. flows through and is taxable to EVO, LLC’s owners. The Company’s deferred tax asset increased from December 31, 2018 to September 30, 2019 primarily due to the increase in the tax basis of the assets of EVO, LLC as a result of exchanges of LLC Interests for Class A common stock of the Continuing LLC Owners. Management assesses the available and objectively verifiable evidence to estimate whether sufficient future taxable income will be generated to use existing deferred tax assets. A significant piece of objective, negative evidence evaluated was the cumulative loss incurred in certain jurisdictions over the preceding twelve quarters ended September 30, 2019. Such objective evidence limits the ability to consider other subjective evidence such as the Company’s projections of future growth. On the basis of this assessment, valuation allowances were established in the current and prior periods to reduce the carrying amount of deferred tax assets to an amount that is more likely than not to be realized in certain European jurisdictions. Release of a valuation allowance would result in the realization of all or a portion of the related deferred tax assets and a decrease to income tax expense for the period in which the release is recorded. Based on the Company’s assessment, no significant changes to the Company’s valuation allowances were recorded during the three and nine months ended September 30, 2019 and 2018. |
Long-Term Debt and Lines of Cre
Long-Term Debt and Lines of Credit | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt and Lines of Credit | |
Long-Term Debt and Lines of Credit | (12) The Company has entered into a first lien senior secured credit facility and a second lien senior secured credit facility pursuant to a credit agreement dated December 22, 2016, and amended on October 24, 2017, April 3, 2018, and June 14, 2018 (the “Senior Secured Credit Facilities”). On May 25, 2018, the Company repaid all outstanding amounts under the second lien credit facility using a portion of the proceeds from the IPO. As of September 30, 2019, the Senior Secured Credit Facilities include revolver commitments of $200.0 million and a term loan of $665.0 million that are scheduled to mature in June 2023 and December 2023, respectively. As of September 30, 2019 and December 31, 2018, the Company’s long-term debt consists of the following: September 30, December 31, 2019 2018 (In thousands) First lien term loan $ 649,794 $ 654,775 First lien revolver 68,496 42,266 Less debt issuance costs (10,619) (12,985) Total long-term debt 707,671 684,056 Less current portion of long-term debt (5,618) (7,191) Total long-term debt, net of current portion $ 702,053 $ 676,865 Principal payment requirements on the above obligations in each of the years remaining subsequent to September 30, 2019 are as follows: Amounts (In thousands) Years ending December 31: 2019 (remainder of the year) $ 2,630 2020 6,593 2021 6,593 2022 6,593 2023 695,881 2024 and thereafter — $ 718,290 In addition, the Senior Secured Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Senior Secured Credit Facilities will be entitled to take various actions, including the acceleration of amounts due thereunder and exercise of the remedies on the collateral. As of September 30, 2019, the Company was in compliance with all its financial covenants. The Company maintains intraday and overnight facilities to fund its settlement obligations. These facilities are short-term in nature, have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. At September 30, 2019 and December 31, 2018, the Company had $17.6 million and $41.8 million outstanding under these lines of credit, respectively, with additional capacity of $175.6 million and $57.9 million, respectively, to fund its settlement obligations. The weighted-average interest rate on these borrowings was 3.02% and 4.52% at September 30, 2019 and December 31, 2018, respectively. Refer to Note 11, "Long-Term Debt and Lines of Credit" to the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, for discussion regarding the Company’s long-term debt and lines of credit. |
Supplemental Cash Flows Informa
Supplemental Cash Flows Information | 9 Months Ended |
Sep. 30, 2019 | |
Supplemental Cash Flows Information | |
Supplemental Cash Flows Information | (13) Supplemental cash flow disclosures and non-cash financing activities are as follows for the nine months ended September 30, 2019 and 2018: 2019 2018 (In thousands) Supplemental disclosure of cash flow data: Interest paid $ 31,289 $ 37,819 Income taxes paid 14,842 5,672 Supplemental disclosure of non-cash investing and financing activities: Contingent consideration and acquisition holdback payable 1,337 6,400 Contingent consideration settled with the issuance of Class A common stock — 771 Exchange of Class C and Class D common stock for Class A common stock (20,985) — |
Redeemable Non-controlling Inte
Redeemable Non-controlling Interests | 9 Months Ended |
Sep. 30, 2019 | |
Redeemable Non-controlling Interests | |
Redeemable Non-controlling Interests | (14) The Company owns 66% of eService, the Company’s Polish subsidiary. The eService shareholders’ agreement includes a provision whereby PKO Bank Polski, beginning on January 1, 2018, has the option to compel the Company to purchase 14% of the shares of eService held by PKO Bank Polski, at a price per share based on their fair value. Commencing on January 1, 2020, PKO Bank Polski may exercise an option to sell all of its remaining shares of eService to the Company. Because the exercise of this option is not solely within the Company’s control, the Company has classified this interest as RNCI and presents the redemption value as temporary within the mezzanine equity section of the unaudited condensed consolidated balance sheets. The change in fair value at each measurement date is recorded with a corresponding adjustment to accumulated deficit, nonredeemable non-controlling interests, and redeemable non-controlling interests. As of September 30, 2019, EVO, Inc. owns 44.7% of the outstanding LLC Interests of EVO, LLC. The EVO, LLC operating agreement includes a provision whereby Blueapple may deliver a sale notice to EVO, Inc., upon receipt of which EVO, Inc. will use its commercially reasonable best efforts to pursue a public offering of shares of its Class A common stock and use the net proceeds therefrom to purchase LLC Interests from Blueapple. Upon receipt of such a sale notice, the Company may elect, at the Company’s option (determined solely by its independent directors (within the meaning of the rules of the NASDAQ stock market (“Nasdaq”)) who are disinterested), to cause EVO, LLC to instead redeem the applicable LLC Interests for cash; provided that Blueapple consents to any election by the Company to cause EVO, LLC to redeem the LLC Interests based on the fair value of the Company’s Class A common shares on such date. Because this option is not solely within the Company’s control, the Company has classified this interest as RNCI and reports the redemption value as temporary within the mezzanine equity section of the consolidated balance sheets. The change in fair value at each measurement date is recorded with a corresponding adjustment to accumulated deficit and nonredeemable non-controlling interests. The following table details the components of RNCI for the nine months ended September 30, 2019 and for the year ended December 31, 2018: Post-IPO Pre-IPO September 30, 2019 December 31 May 23, Blueapple eService Total 2018 2018 (In thousands) Beginning balance $ 885,986 $ 124,107 $ 1,010,093 $ 689,569 $ 148,266 Net income attributable to RNCI - eService — 4,891 4,891 4,914 1,291 Net loss attributable to RNCI - Blueapple (12,368) — (12,368) (39,129) — Gain (loss) on OCI - eService — (3,621) (3,621) (2,368) (2,104) Gain (loss) on OCI - Blueapple (5,999) — (5,999) (3,935) — Gain (loss) on defined benefit plan revaluation - Blueapple 4 — 4 (192) — Legacy accumulated deficit allocation — — — — (150,485) Legacy AOCI allocation — — — — (39,404) Purchase of Blueapple Class B common stock in connection with secondary offerings (34,768) — (34,768) — — Decrease in maximum redemption amount in connection with purchase of Blueapple Class B common stock (2,460) — (2,460) — — Increase (decrease) in the maximum redemption amount of RNCI: eService — 14,749 14,749 (19,741) — Blueapple 150,701 — 150,701 374,616 735,775 Allocation of eService fair value RNCI adjustment to Blueapple (6,369) — (6,369) 8,739 — Distributions - eService — (6,209) (6,209) (2,380) (3,770) Ending balance $ 974,727 $ 133,917 $ 1,108,644 $ 1,010,093 $ 689,569 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value | |
Fair Value | (15) The table below presents information about items which are carried at fair value on a recurring basis: September 30, 2019 (In thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 20,997 $ — $ — $ 20,997 Contingent consideration — — (3,200) (3,200) Blueapple RNCI (974,727) — — (974,727) eService RNCI — — (133,917) (133,917) Total $ (953,730) $ — $ (137,117) $ (1,090,847) December 31, 2018 (In thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 106,164 $ — $ — $ 106,164 Contingent consideration — — (8,189) (8,189) Blueapple RNCI (885,986) — — (885,986) eService RNCI — — (124,107) (124,107) Total $ (779,822) $ — $ (132,296) $ (912,118) Cash equivalents consist of a money market fund that is valued using a market price in an active market (Level 1). Level 1 instrument valuations are obtained from real‑time quotes for transactions in active exchange markets involving identical assets. Contingent consideration relates to potential payments that the Company may be required to make associated with acquisitions. To the extent that the valuation of these liabilities are based on inputs that are less observable or not observable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for measures categorized in Level 3. In the determination of the fair value of the RNCI in eService, the Company used an income approach based on internal forecasts of expected future cash flows. Significant unobservable inputs included the Weighted Average Cost of Capital (“WACC”) used to discount the future cash flows, which was 15.0%, based on the markets in which the business operates and growth rate used within the future cash flows, which were between 3.0% and 10.7%, based on historic trends, current and expected market conditions, and management’s forecast assumptions. A future increase in the WACC would result in a decrease in the fair value of RNCI in eService. The fair value of the RNCI in Blueapple is derived from the closing stock price of the Company’s Class A common stock on the last day of the period. The estimated fair value of receivables, settlement processing assets and liabilities, due to and due from related parties and settlement lines of credit approximate their respective carrying values due to their short term nature. The estimated fair value of total long term debt, which approximates its carrying value, is based on quoted bid-ask spreads within the lender syndicate (Level 2). Visa Series C preferred stock are carried at cost in the amount of $14.7 million as of September 30, 2019 and December 31, 2018, respectively, and are presented in other assets on the consolidated balance sheets. The estimated fair value of the Visa Series C preferred stock of $32.5 million as of September 30, 2019 is based upon inputs classified as Level 3 of the fair value hierarchy. These inputs include the fair value of Visa Class A common stock as of September 30, 2019 and the conversion factor of Visa Series C preferred stock to Visa Class A common stock, inclusive of a discount rate due to the lack of liquidity, which represents a measure of fair value that is unobservable or requires management’s judgment. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies. | |
Commitments and Contingencies | (16) Litigation The Company is party to various claims and lawsuits incidental to its business. The Company does not believe the ultimate outcome of such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2019 | |
Segment Information | |
Segment Information | (17) Information on segments and reconciliations to net income (loss) attributable to the shareholders of EVO, Inc. and members of EVO, LLC are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Segment revenue: North America $ 75,022 $ 79,487 $ 222,643 $ 232,687 Europe 47,341 65,271 133,755 181,244 Revenue $ 122,363 $ 144,758 $ 356,398 $ 413,931 Segment profit: North America $ 23,086 $ 30,962 $ 65,616 $ 73,616 Europe 18,542 15,985 41,858 42,657 Total segment profit 41,628 46,947 107,474 116,273 Corporate (9,212) (8,518) (25,095) (31,879) Depreciation and amortization (22,804) (20,488) (68,412) (61,308) Net interest expense (10,227) (10,076) (31,738) (45,831) Provision for income tax (expense) benefit (3,590) (32,155) 618 (7,974) Share-based compensation expense (3,019) (2,021) (7,841) (53,284) Net income (loss) attributable to non-controlling interests of EVO Investco, LLC 5,380 (1,078) 18,323 73,328 Net loss attributable to EVO Payments, Inc. $ (1,844) $ (27,389) $ (6,671) $ (10,675) Capital expenditures: North America $ 5,393 $ 7,010 $ 12,948 $ 19,802 Europe 5,983 19,161 Consolidated total capital expenditures $ $ 12,993 $ 24,639 $ 38,963 For the purpose of discussing segment operations, the Company refers to “segment profit” which is segment revenue less (1) segment expenses plus (2) segment income from unconsolidated investees plus (3) segment other income, net less (4) segment non-controlling interests of EVO, LLC consolidating entities. The expenses related to certain Company-wide governance functions, depreciation and amortization, share-based compensation expense, and EVO, LLC non-controlling interests are not allocated to segments; they are reported in the captions “Corporate” and “Net income attributable to non-controlling interest of EVO Investco, LLC,” respectively. Information on total assets by segment is as follows: September 30, December 31, 2019 2018 (In thousands) Segment total assets: North America $ 1,094,614 $ 994,952 Europe 505,035 539,435 Total assets $ 1,599,649 $ 1,534,387 Revenue from external customers is attributed to individual countries based on the location where the relationship is managed. For the three months ended September 30, 2019, revenue from external customers in the United States, Mexico, and Poland, as a percentage of total revenue, was 40.2%, 18.9%, and 18.2%, respectively. For the three months ended September 30, 2018, revenue from external customers in the United States, Poland, and Mexico, as a percentage of total revenue, was 37.1%, 24.1%, and 19.0%, respectively. For the nine months ended September 30, 2019, revenue from external customers in the United States, Mexico, and Poland, as a percentage of total revenue, was 41.0%, 19.4%, and 18.0%, respectively. For the nine months ended September 30, 2018, revenue from external customers in the United States, Poland and Mexico, as a percentage of total revenue, was 35.7%, 24.2%, and 19.9%, respectively. For the three and nine months ended September 30, 2019 and 2018, there is no one customer that represents more than 10% of total revenue. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Shareholders' Equity | |
Shareholders' Equity | (18) Organizational structure prior to the Reorganization Transactions Prior to the completion of the Reorganization Transactions, EVO, LLC had limited liability company interests outstanding in the form of Class A units, Class B Units, Class C units, Class D units and Class E units. EVO, LLC also granted unit appreciation rights (“UARs”) to certain of its officers and certain current and former employees. Immediately prior to the completion of the Reorganization Transactions, the limited liability company interests of EVO, LLC were beneficially owned as set forth below. The percentage of economic interest in EVO, LLC set forth below is based on a hypothetical liquidation of EVO, LLC based on the IPO price per share of $16.00 and the underwriting discounts and commission paid in the IPO. · Blueapple owned 6,374,245 Class A units, representing a 54.0% economic interest in EVO, LLC on a fully-diluted basis. · MDP owned an aggregate of 3,506,087 Class B units, representing a 29.7% economic interest in EVO, LLC on a fully-diluted basis. · Current and former management and employees owned an aggregate of 374,559 Class C units and 1,106,528 Class D units, representing a combined 6.9% economic interest in EVO, LLC on a fully-diluted bases. The Class D units were granted pursuant to the EVO, LLC Incentive Equity Plan and contained certain vesting restrictions, including time-based and performance-based conditions. The Class D units also contained a participation threshold used to determine if a particular grant was eligible to participate in distributions, including distributions made in connection with a sale, liquidation event or public offering. · Blueapple, MDP and certain members of management and current and former employees owned an aggregated of 1,011,931 Class E units, representing a combined 8.6% economic interest in EVO, LLC on a fully-diluted basis. · Management and current and former employees owned 297,121 vested UAR awards. The UAR awards were granted pursuant to the EVO, LLC Unit Appreciation Equity Plan and provided a right to the recipient to receive an amount in cash or other consideration equal to the value of a hypothetical Class D unit in connection with a sale, liquidation event or public offering. Organizational structure subsequent to the Reorganization Transactions EVO, Inc. is a holding company and its principal asset is the LLC Interests in EVO, LLC held by the Company. As the sole managing member of EVO, LLC, the Company operates and controls all of the business and affairs of EVO, LLC and its subsidiaries. Although EVO, Inc. has a minority economic interest in EVO, LLC, the Company has the sole voting interest in, and controls the management of, EVO, LLC. Therefore, EVO, Inc. has consolidated the financial results of EVO, LLC and its subsidiaries. The Company has four classes of common stock outstanding: Class A common stock, Class B common stock, Class C common stock and Class D common stock. The voting and economic rights associated with the Company’s classes of common stock are summarized in the following table: Class of Common Stock Holders Voting rights* Economic rights Class A common stock Public, MDP, Executive Officers, and Current and Former Employees One vote per share Yes Class B common stock Blueapple 15.9% No Class C common stock Executive Officers 3.5 votes per share, subject to aggregate cap No Class D common stock MDP and Current and Former Employees One vote per share No * Blueapple has a sale right under the EVO LLC Agreement providing that, upon the receipt of a sale notice from Blueapple, the Company will use its commercially reasonable best efforts to pursue a public offering of shares of Class A common stock and use the net proceeds therefrom to purchase LLC Interests from Blueapple. Upon the Company’s receipt of such a sale notice, the Company may elect, at its option (determined solely by its independent directors (within the meaning of the rules of Nasdaq) who are disinterested), to cause EVO, LLC to instead redeem the applicable LLC Interests for cash; provided that Blueapple consents to any election by the Company to cause EVO, LLC to redeem the LLC Interests. Continuing LLC Owners (other than Blueapple) have an exchange right providing that, upon receipt of an exchange notice from such Continuing LLC Owners, the Company will exchange the applicable LLC Interests from such Continuing LLC Owners for newly issued shares of its Class A common stock on a one-for-one basis pursuant to an exchange agreement (the “Exchange Agreement”). Upon its receipt of such an exchange notice, the Company may elect, at its option (determined solely by its independent directors (within the meaning of the rules of Nasdaq)) who are disinterested, to cause EVO, LLC to instead redeem the applicable LLC Interests for cash; provided that such Continuing LLC Owners consents to any election by the Company to cause EVO, LLC to redeem the LLC Interests. In the event that Continuing LLC Owners do not consent to an election by the Company to cause EVO, LLC to redeem the LLC Interests, the Company is required to exchange the applicable LLC Interests for newly issued shares of Class A common stock. If the Company elects to cause EVO, LLC to redeem LLC Interests in lieu of exchanging LLC Interests for newly issued shares of its Class A common stock, the Company will offer the other Continuing LLC Owners the right to have their respective LLC Interests redeemed in an amount up to such person’s pro rata share of the aggregate LLC Interests to be redeemed. The Company is not required to redeem any LLC Interests from Blueapple or any other Continuing LLC Owners in response to a sale notice from Blueapple if the Company elects to pursue, but is unable to complete, a public offering of shares of its Class A common stock. Continuing LLC Owners also hold certain registration rights pursuant to a registration rights agreement. MDP holds demand registration rights that require the Company to register shares of Class A common stock held by it, including any Class A common stock received upon its exchange of Class A common stock for its LLC Interests. All Continuing LLC Owners (other than Blueapple) hold customary piggyback registration rights, which includes the right to participate on a pro rata basis in any public offering the Company conducts in response to its receipt of a sale notice from Blueapple. Blueapple also has the right, in connection with any public offering the Company conducts (including any offering conducted as a result of an exercise by MDP of its registration rights), to request that the Company use its commercially reasonable best efforts to pursue a public offering of shares of its Class A common stock and use the net proceeds therefrom to purchase a like amount of Blueapple’s LLC Interests. |
Stock Compensation Plans and Sh
Stock Compensation Plans and Share-Based Compensation Awards | 9 Months Ended |
Sep. 30, 2019 | |
Stock Compensation Plans and Share-Based Compensation Awards | |
Stock Compensation Plans and Share-Based Compensation Awards | (19) The Company provides share-based compensation awards to its employees under the 2018 Omnibus Equity Incentive Plan (the “2018 Plan”), which the Company adopted in conjunction with its IPO. The 2018 Plan became effective on May 22, 2018. A total of 7,792,162 shares of the Company’s Class A common stock are reserved for issuance under the 2018 Plan. The 2018 Plan provides for accelerated vesting under certain conditions. The following table summarizes share-based compensation expense, and the related income tax benefit recognized for share-based compensation awards. Share-based compensation expense is presented within selling, general, and administrative expenses within the unaudited condensed consolidated statements of operations. Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (In thousands) Share-based compensation expense $ 3,019 $ 1,758 $ 7,841 $ 53,893 Income tax benefit $ 289 $ 68 $ 688 $ 3,914 Unit appreciation rights/Restricted stock awards The Company assumed EVO, LLC’s obligations under the EVO, LLC Unit Appreciation Rights Plan (“UAR Plan”) and converted all of the outstanding UARs held by members of management and current and former employees at the consummation of the IPO to restricted Class A common stock (“RSAs”). In connection with the Company’s assumption of EVO, LLC’s obligation under the UAR Plan and the issuance of the RSAs, on the IPO date, the Company recorded share-based compensation expense based on the modification date fair value of the RSAs of $16.00 per share. The Company recognized share-based compensation expense related to RSAs of less than $0.1 million and $0.3 million for the three months ended September 30, 2019 and 2018, respectively. The Company recognized share-based compensation expense related to RSAs of $0.2 million and $9.0 million, respectively, for the nine months ended September 30, 2019 and 2018, respectively. Prior to the consummation of the IPO, no liquidity event was probable and, as such, no share-based compensation expense had been recognized for these awards. On the modification date, there were 35 members of management and current and former employees who held UARs. A summary of RSA activity is as follows (in thousands, except per share data): Number of RSAs Weighted average grant date fair value Balance at December 31, 2018 42 $ 16.00 Granted — — Vested (25) 16.00 Forfeited (2) 16.00 Balance at September 30, 2019 15 $ 16.00 Restricted stock units The Company recognized share-based compensation expense for unvested restricted stock units (“RSUs”) of $1.3 million and $0.6 million for the three months ended September 30, 2019 and 2018, respectively. The Company recognized share-based compensation expense for unvested RSUs of $3.4 million and $0.8 million, respectively, for the nine months ended September 30, 2019 and 2018. A summary of RSU activity is as follows (in thousands, except per share data): Number of RSUs Weighted average grant date fair value Balance at December 31, 2018 506 $ 16.30 Granted 515 26.21 Vested (139) 16.27 Forfeited (36) 21.79 Balance at September 30, 2019 846 $ 22.11 As of September 30, 2019, total unrecognized share-based compensation expense related to outstanding RSUs was $16.1 million. Each RSU vests in equal annual vesting installments over a period of four years from the grant date and will settle in Class A common stock. The weighted average period outstanding for unvested RSUs is 3.0 years. Stock options The Company recognized share-based compensation expense for unvested stock options of $1.7 million and $0.9 million for the three months ended September 30, 2019 and 2018, respectively. The Company recognized share-based compensation expense for unvested stock options of $4.2 million and $1.3 million, respectively, for the nine months ended September 30, 2019 and 2018. A summary of stock option activity is as follows (in thousands, except per share data): Number of Options Weighted average grant date fair value Weighted average exercise price Weighted average remaining contractual term Balance at December 31, 2018 2,086 $ 6.77 $ 16.22 Granted 1,384 9.47 26.19 Exercised (50) 6.80 16.32 Forfeited (128) 8.07 20.78 Balance at September 30, 2019 3,292 $ 7.85 $ 20.24 8.98 Exercisable at September 30, 2019 455 $ 6.70 $ 16.06 8.65 As of September 30, 2019, total unrecognized share-based compensation expense related to unvested stock options was $19.9 million. The weighted average period outstanding for unvested stock options is 3.3 years. Each stock option vests in equal annual installments over a period of four years from grant date, and stock options expire no later than 10 years from the date of grant. For the purpose of calculating share-based compensation expense, the fair value of the stock option grants was determined through the application of the Black-Scholes model with the following assumptions: Nine Months Ended September 30, 2019 2018 Expected life (in years) Weighted average risk-free interest rate Expected volatility Dividend yield Weighted average fair value at grant date $ $ The risk-free interest rate is based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the stock option from the date of the grant. The assumption for expected volatility is based on the historical volatility of a peer group of market participants as the Company has limited historical volatility. It is the Company’s intent to retain all profits for the operations of the business for the foreseeable future, as such the dividend yield assumption is zero. The Company applied the simplified method in determining the expected life of the stock options as the Company has limited historical basis upon which to determine historical exercise periods. The Company based the assumptions of the expected term of the options as the expected term plus half of the remaining life through expiration. All stock options exercised will be settled in Class A common stock. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events | |
Subsequent Events | (20) Subsequent events have been evaluated from the balance sheet date through the date on which the unaudited condensed consolidated financial statements were available to be issued. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Description of Business and Summary of Significant Accounting Policies | |
Basis of Presentation and Use of Estimates | (b) The accompanying unaudited condensed consolidated balance sheet as of September 30, 2019 and audited consolidated balance sheet as of December 31, 2018 , the unaudited condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended September 30, 2019 and 2018, the unaudited condensed consolidated statements of changes in equity for the three and nine months ended September 30, 2019 and 2018, and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018, reflect all adjustments that are of a normal, recurring nature and that are considered necessary for a fair presentation of the results for the periods shown in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting periods. Accordingly, certain information and footnote disclosures have been condensed or omitted in accordance with SEC rules that would ordinarily be required under U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported assets and liabilities, as of the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Estimates used for accounting purposes include, but are not limited to, valuation of redeemable non-controlling interests (“RNCI”), calculation of income taxes, and determination of the fair value of long-lived assets. Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity at December 31, 2018: The previously presented nonredeemable non-controlling interests, which relate to the portion of equity in a consolidated subsidiary not attributable, directly or indirectly, to the Company as of December 31, 2018, were retrospectively adjusted to reflect the exchange of certain Class C and D shares to Class A shares. The Company has deemed the correction to be immaterial as there is no impact to the Company’s results of operations, cash flows from operating, investing, or financing activities, or consolidated shareholders’ deficit. This immaterial adjustment decreased the previously reported amounts of $178.2 million and ($814.1) million of additional paid-in capital and nonredeemable non-controlling interests, as reported in the consolidated balance sheet and consolidated statement of changes in equity as of December 31, 2018, to $157.5 million and ($793.4) million, respectively. |
Principles of Consolidation | (c) The accompanying unaudited condensed consolidated financial statements include the accounts of the Company. As the sole managing member of EVO, LLC, the Company exerts control over the Group. In accordance with Accounting Standards Codification (“ASC”) 810, Consolidation , EVO, Inc. consolidates the Group’s consolidated financial statements and records the interests in EVO, LLC that it does not own as non-controlling interests. All intercompany accounts and transactions have been eliminated in consolidation. The Company accounts for investments over which it has significant influence but not a controlling financial interest using the equity method of accounting. |
Cash and Cash Equivalents and Merchant Reserves | (d) Cash and cash equivalents include all cash balances and highly liquid securities with original maturities of three months or less when acquired. Cash equivalents consist primarily of overnight money market funds. Cash balances often exceed federally insured limits; however, concentration of credit risk is limited due to the payment of funds on the day following receipt in satisfaction of the settlement process. Included in cash and cash equivalents are merchant reserve cash balances, which represent funds collected from the Company’s merchants that serve as collateral to minimize the liabilities associated with any losses that may occur under the respective merchant agreements (“Merchant Reserves”). While this cash is not restricted in its use, the Company believes that maintaining the Merchant Reserves to collateralize merchant losses strengthens its fiduciary standings with its card network sponsors (“Member Banks”) and is in accordance with the guidelines set by the card networks. As of September 30, 2019 and December 31, 2018, Merchant Reserves were $92.2 million and $107.8 million, respectively. |
Recent Accounting Pronouncements | (e) New accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company are adopted as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s unaudited condensed consolidated financial statements upon adoption. As the Company is considered an emerging growth company under the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), adoption of new accounting standards will be consistent with private company effective dates. The Company expects to become a large accelerated filer effective December 31, 2019, at which point the Company will follow the public company timeline for adoption of new accounting pronouncements. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue From Contracts With Customers (“ASC 606”), with amendments in 2015, 2016 and 2017. T his ASU supersedes the revenue recognition requirements in ASC 605, Revenue Recognition (“ASC 605”). The new standard provides a five-step analysis of transactions to determine when and how revenue is recognized, based upon the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted ASC 606 on January 1, 2019, using the modified retrospective method and applying the standard to all contracts not completed on the date of adoption. Results for the reporting period beginning January 1, 2019 are presented under ASC 606, while prior period amounts continue to be reported in accordance with the Company's historic accounting practices under previous guidance. The primary impact to the Company’s unaudited condensed consolidated financial statements as a result of the adoption of ASC 606 is a change in total net revenue attributable to the presentation of network processing fees on a net basis, driven by changes in principal and agent considerations, as compared to previously being presented on a gross basis. Under the modified retrospective method, the Company has not restated its comparative unaudited condensed consolidated financial statements for these effects. The following table presents the impact of adopting ASC 606 on the Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2019: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 As reported Adjustment Presented As reported Adjustment Presented (In thousands) (In thousands) Revenue $ 122,363 $ 30,234 $ 152,597 $ 356,398 $ 81,608 $ 438,006 Operating expenses Cost of services and products, exclusive of depreciation and amortization $ 24,065 $ 30,234 $ 54,299 $ 72,900 $ 81,608 $ 154,508 The adoption of ASC 606 did not have a material impact on the Company’s unaudited condensed consolidated balance sheets and statements of cash flows as of and for the three and nine months ended September 30, 2019. The Company has expanded its unaudited condensed consolidated financial statement disclosures as required by this new standard. See Note 2, “Revenue” for additional disclosures provided as a result of the adoption of ASC 606. Recently Issued Accounting Pronouncements Not Yet Adopted Leases In February 2016, the FASB issued ASU 2016-02, Leases , with amendments in 2018 and 2019. This update aims to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years; however, the Company has elected to take advantage of the extended transition period as provided for under the JOBS Act. The new standard is therefore effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, provided that the Company maintains its emerging growth company status through December 31, 2019. The Company expects to become a large accelerated filer effective December 31, 2019, at which point the Company will follow the timeline for adoption of new accounting pronouncements for public companies, and will be required to retroactively adopt this standard effective January 1, 2019. The Company is currently in the process of evaluating its leasing arrangements and assessing the impact of adopting the new guidance on its consolidated financial statements, disclosures, accounting policies, and controls over financial reporting. The Company is also in process of implementing a new lease accounting software solution to comply with the requirements of the standard. The Company’s existing leases consist primarily of real estate and personal property leases throughout the markets in which the Company operates. As disclosed in Note 16, “Commitments and Contingencies” to the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, minimum annual lease payments for the years subsequent to December 31, 2018 amounted to $42.4 million on an undiscounted basis. The Company expects that substantially all of these lease commitments will be subject to the new standard and will be recognized, on a discounted basis, as operating lease liabilities and right-of-use assets upon adoption. The Company plans to elect the package of practical expedients intended to ease transition whereby the Company will not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases and (3) initial direct costs for any existing leases. The Company also intends to elect the practical expedient allowing to not separate lease and non-lease components. Furthermore, the Company will apply the provisions of ASU 2018-11, Leases (Topic 842)- Targeted Improvements, with the initial application of the new guidance at the adoption date with a cumulative effect adjustment in the opening balance of retained earnings. Under this method, the Company would not adjust its comparative period financial statements for the effects of the new standard or make the new required lease disclosures for periods prior to the effective date. The Company expects the evaluation and implementation activities to continue throughout the remainder of 2019. Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , with amendments in 2019. This update requires the companies to immediately recognize the estimate for credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company will adopt this ASU, prospectively, effective January 1, 2020. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . This update provides clarification and modifies the disclosure requirements on fair value measurement in Topic 820, Fair Value Measurement. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 with early adoption permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements. Internal Use Software In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . The update aligns the requirements for capitalizing certain implementation costs incurred in a cloud computing hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. Entities are permitted to apply either a retrospective or prospective transition approach to adopt the guidance. The Company is currently evaluating the effect of ASU 2018-15 on its consolidated financial statements. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
ASU 2014-09 | |
Recently Adopted Accounting Pronouncements | |
Schedule of the impact of adopting ASC 606 | Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 As reported Adjustment Presented As reported Adjustment Presented (In thousands) (In thousands) Revenue $ 122,363 $ 30,234 $ 152,597 $ 356,398 $ 81,608 $ 438,006 Operating expenses Cost of services and products, exclusive of depreciation and amortization $ 24,065 $ 30,234 $ 54,299 $ 72,900 $ 81,608 $ 154,508 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue | |
Summary of revenue | Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 North America Europe Total North America Europe Total (In thousands) (In thousands) Divisions: Direct $ 38,025 $ 36,383 $ 74,408 $ 113,246 $ 105,248 $ 218,494 Tech-enabled 28,914 10,958 39,872 84,912 28,507 113,419 Traditional 8,083 — 8,083 24,485 — 24,485 $ 75,022 $ 47,341 $ 122,363 $ 222,643 $ 133,755 $ 356,398 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 North America Europe Total North America Europe Total (In thousands) (In thousands) Divisions: Direct $ 40,946 $ 51,385 $ 92,331 $ 117,738 $ 141,733 $ 259,471 Tech-enabled 28,855 13,886 42,741 84,757 39,511 124,268 Traditional 9,686 — 9,686 30,192 — 30,192 $ 79,487 $ 65,271 $ 144,758 $ 232,687 $ 181,244 $ 413,931 |
Settlement Processing Assets _2
Settlement Processing Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Settlement Processing Assets and Liabilities | |
Summary of settlement processing assets and liabilities | September 30, December 31, 2019 2018 (In thousands) Settlement processing assets: Receivable from card networks $ 219,654 $ 195,817 Receivable from merchants 90,552 52,513 Totals $ 310,206 $ 248,330 Settlement processing obligations: Settlement liabilities $ (375,552) $ (320,492) Merchant reserves (92,224) (107,836) Totals $ (467,776) $ (428,328) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share | |
Schedule of computation of basic and diluted net income per share | The following table sets forth the computation of the Company's basic and diluted net loss per Class A common share (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, May 23 - September 30 2019 2018 Numerator: Net loss attributable to EVO Payments, Inc. $ (1,844) $ (6,671) $ (27,389) $ (10,675) Denominator: Weighted average Class A common stock outstanding 34,634,567 30,996,506 18,163,344 17,901,484 Effect of dilutive securities — — — — Total dilutive securities 34,634,567 30,996,506 18,163,344 17,901,484 Earnings per share: Basic $ (0.05) $ (0.22) $ (1.51) $ (0.60) Diluted $ (0.05) $ (0.22) $ (1.51) $ (0.60) Antidilutive securities: Stock options 3,307,082 3,002,231 2,097,054 2,097,054 RSUs 844,616 790,719 499,510 499,510 RSAs 14,672 22,359 58,809 58,809 Convertible Class C common stock 2,327,511 2,399,326 2,560,955 2,560,955 Convertible Class D common stock 10,019,169 12,829,719 17,282,930 17,282,930 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Delego Software | |
Acquisitions | |
Schedule of allocation of purchase price | As of the acquisition date (In thousands ) Estimated Useful Life Finite-lived intangible assets Purchased software $ 7 years Customer relationships 15 years Tradename 2 years Deferred tax liabilities Other assets (liabilities), net Goodwill Total purchase price $ |
Federated | |
Acquisitions | |
Schedule of allocation of purchase price | c As of the acquisition date (in thousands) Tangible assets acquired $ 1,702 Deferred tax liability (1,357) Amortizable intangible assets Trademarks 1,200 Merchant contract portfolios 11,400 Goodwill 33,677 Total net assets acquired $ 46,622 |
Equipment and Improvements (Tab
Equipment and Improvements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equipment and Improvements | |
Schedule of equipment and improvements | Estimated Useful Lives in September 30, December 31, Years 2019 2018 (In thousands) Card processing 3-5 $ 136,384 $ 128,244 Office equipment 3-5 44,311 41,771 Computer software 3 47,266 44,373 Leasehold improvements various 16,594 16,234 Furniture and fixtures 5-7 6,549 5,673 Totals 251,104 236,295 Less accumulated depreciation (158,794) (136,947) Foreign currency translation adjustment (598) 3,698 Totals $ 91,712 $ 103,046 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets | |
Schedule of intangible assets, net | September 30, December 31, 2019 2018 (In thousands) Intangible assets with finite lives: Merchant contract portfolios and customer relationships: Gross carrying value $ 296,033 $ 293,069 Accumulated amortization (157,394) (139,159) Accumulated impairment losses (7,089) (5,658) Foreign currency translation adjustment (29,441) (27,975) Net 102,109 120,277 Marketing alliance agreements: Gross carrying value 191,879 191,879 Accumulated amortization (56,650) (47,777) Accumulated impairment losses (11,920) (7,585) Foreign currency translation adjustment (20,488) (18,634) Net 102,821 117,883 Trademarks, finite-lived: Gross carrying value 29,493 28,657 Accumulated amortization (12,536) (10,748) Foreign currency translation adjustment (4,639) (4,446) Net 12,318 13,463 Internally developed and acquired software: Gross carrying value 80,881 60,876 Accumulated amortization (23,375) (15,794) Accumulated impairment losses (10,190) (9,324) Foreign currency translation adjustment (3,417) (2,260) Net 43,899 33,498 Non-competition agreements: Gross carrying value 6,462 6,462 Accumulated amortization (5,782) (5,316) Foreign currency translation adjustment (2) — Net 678 1,146 Total finite-lived, net 261,825 286,267 Trademarks, indefinite-lived: Gross carrying value 18,499 18,499 Accumulated impairment losses (18,499) (14,627) Net — 3,872 Total intangible assets, net $ 261,825 $ 290,139 |
Schedule of estimated amortization expense | Amount (In thousands) Years ending: 2019 (remainder of the year) $ 12,400 2020 44,833 2021 40,015 2022 34,470 2023 26,951 2024 and thereafter 103,156 Total $ 261,825 |
Schedule of net intangible assets by segment | September 30, December 31, 2019 2018 (In thousands) Intangible assets, net: North America Merchant contract portfolios and customer relationships $ 77,197 $ 88,141 Marketing alliance agreements 71,975 76,590 Trademarks, finite-lived 3,187 2,585 Internally developed software 29,488 20,167 Non-competition agreements 639 1,089 Trademarks, indefinite-lived — 3,872 Total 182,486 192,444 Europe Merchant contract portfolios and customer relationships 24,912 32,136 Marketing alliance agreements 30,846 41,293 Trademarks, finite-lived 9,131 10,878 Internally developed software 14,411 13,331 Non-competition agreements 39 57 Total 79,339 97,695 Total intangible assets, net $ 261,825 $ 290,139 |
Schedule of goodwill activity | Reportable Segment North America Europe Total (In thousands) Goodwill, gross, as of December 31, 2018 $ 240,837 $ 136,465 $ 377,302 Accumulated impairment losses — (24,291) (24,291) Goodwill, net, as of December 31, 2018 240,837 112,174 353,011 Business combinations 25,030 40 25,070 Foreign currency translation adjustment 35 (6,593) (6,558) Goodwill, net as of September 30, 2019 $ 265,902 $ 105,621 $ 371,523 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounts Payable and Accrued Liabilities | |
Schedule of accounts payable and accrued expenses | September 30, December 31, 2019 2018 (In thousands) Compensation and related benefits $ 17,679 $ 22,280 Third-party processing and payment network fees 37,056 37,702 Trade payables 8,336 44,581 Taxes payable 13,344 16,292 Commissions payable to third parties and agents 14,483 13,141 Unearned revenue 4,198 4,579 Other 18,292 22,641 Total accounts payable and accrued expenses $ 113,388 $ 161,216 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions | |
Schedule of related party balances | September 30, December 31, 2019 2018 (In thousands) Receivables from sale of POS devices and peripherals $ — $ 303 Receivables from related companies 34 1,568 Due from related parties, current $ 34 $ 1,871 Notes receivable, long term — 915 Due from related parties, long term $ — $ 915 Liabilities to related companies 4,596 4,824 Due to related parties, current $ 4,596 $ 4,824 ISO commission reserve 385 385 Due to related parties, long term $ 385 $ 385 |
Long-Term Debt and Lines of C_2
Long-Term Debt and Lines of Credit (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt and Lines of Credit | |
Summary of long-term debt | September 30, December 31, 2019 2018 (In thousands) First lien term loan $ 649,794 $ 654,775 First lien revolver 68,496 42,266 Less debt issuance costs (10,619) (12,985) Total long-term debt 707,671 684,056 Less current portion of long-term debt (5,618) (7,191) Total long-term debt, net of current portion $ 702,053 $ 676,865 |
Schedule of principal payment requirements | Amounts (In thousands) Years ending December 31: 2019 (remainder of the year) $ 2,630 2020 6,593 2021 6,593 2022 6,593 2023 695,881 2024 and thereafter — $ 718,290 |
Supplemental Cash Flows Infor_2
Supplemental Cash Flows Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Supplemental Cash Flows Information | |
Schedule of supplemental cash flow disclosures and noncash investing and financing activities | 2019 2018 (In thousands) Supplemental disclosure of cash flow data: Interest paid $ 31,289 $ 37,819 Income taxes paid 14,842 5,672 Supplemental disclosure of non-cash investing and financing activities: Contingent consideration and acquisition holdback payable 1,337 6,400 Contingent consideration settled with the issuance of Class A common stock — 771 Exchange of Class C and Class D common stock for Class A common stock (20,985) — |
Redeemable Non-controlling In_2
Redeemable Non-controlling Interests (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Redeemable Non-controlling Interests | |
Schedule of components of redeemable non-controlling interest | Post-IPO Pre-IPO September 30, 2019 December 31 May 23, Blueapple eService Total 2018 2018 (In thousands) Beginning balance $ 885,986 $ 124,107 $ 1,010,093 $ 689,569 $ 148,266 Net income attributable to RNCI - eService — 4,891 4,891 4,914 1,291 Net loss attributable to RNCI - Blueapple (12,368) — (12,368) (39,129) — Gain (loss) on OCI - eService — (3,621) (3,621) (2,368) (2,104) Gain (loss) on OCI - Blueapple (5,999) — (5,999) (3,935) — Gain (loss) on defined benefit plan revaluation - Blueapple 4 — 4 (192) — Legacy accumulated deficit allocation — — — — (150,485) Legacy AOCI allocation — — — — (39,404) Purchase of Blueapple Class B common stock in connection with secondary offerings (34,768) — (34,768) — — Decrease in maximum redemption amount in connection with purchase of Blueapple Class B common stock (2,460) — (2,460) — — Increase (decrease) in the maximum redemption amount of RNCI: eService — 14,749 14,749 (19,741) — Blueapple 150,701 — 150,701 374,616 735,775 Allocation of eService fair value RNCI adjustment to Blueapple (6,369) — (6,369) 8,739 — Distributions - eService — (6,209) (6,209) (2,380) (3,770) Ending balance $ 974,727 $ 133,917 $ 1,108,644 $ 1,010,093 $ 689,569 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value | |
Schedule of information about items which are carried at fair value on a recurring basis | September 30, 2019 (In thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 20,997 $ — $ — $ 20,997 Contingent consideration — — (3,200) (3,200) Blueapple RNCI (974,727) — — (974,727) eService RNCI — — (133,917) (133,917) Total $ (953,730) $ — $ (137,117) $ (1,090,847) December 31, 2018 (In thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 106,164 $ — $ — $ 106,164 Contingent consideration — — (8,189) (8,189) Blueapple RNCI (885,986) — — (885,986) eService RNCI — — (124,107) (124,107) Total $ (779,822) $ — $ (132,296) $ (912,118) |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Information | |
Summary of segment information | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (In thousands) (In thousands) Segment revenue: North America $ 75,022 $ 79,487 $ 222,643 $ 232,687 Europe 47,341 65,271 133,755 181,244 Revenue $ 122,363 $ 144,758 $ 356,398 $ 413,931 Segment profit: North America $ 23,086 $ 30,962 $ 65,616 $ 73,616 Europe 18,542 15,985 41,858 42,657 Total segment profit 41,628 46,947 107,474 116,273 Corporate (9,212) (8,518) (25,095) (31,879) Depreciation and amortization (22,804) (20,488) (68,412) (61,308) Net interest expense (10,227) (10,076) (31,738) (45,831) Provision for income tax (expense) benefit (3,590) (32,155) 618 (7,974) Share-based compensation expense (3,019) (2,021) (7,841) (53,284) Net income (loss) attributable to non-controlling interests of EVO Investco, LLC 5,380 (1,078) 18,323 73,328 Net loss attributable to EVO Payments, Inc. $ (1,844) $ (27,389) $ (6,671) $ (10,675) Capital expenditures: North America $ 5,393 $ 7,010 $ 12,948 $ 19,802 Europe 5,983 19,161 Consolidated total capital expenditures $ $ 12,993 $ 24,639 $ 38,963 |
Schedule of information on segments and reconciliations to total assets | September 30, December 31, 2019 2018 (In thousands) Segment total assets: North America $ 1,094,614 $ 994,952 Europe 505,035 539,435 Total assets $ 1,599,649 $ 1,534,387 |
Shareholder_s Equity (Tables)
Shareholder’s Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Shareholders' Equity | |
Schedule of voting and economic rights of common stockholders | Class of Common Stock Holders Voting rights* Economic rights Class A common stock Public, MDP, Executive Officers, and Current and Former Employees One vote per share Yes Class B common stock Blueapple 15.9% No Class C common stock Executive Officers 3.5 votes per share, subject to aggregate cap No Class D common stock MDP and Current and Former Employees One vote per share No * |
Stock Compensation Plans and _2
Stock Compensation Plans and Share-Based Compensation Awards (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stock Compensation Plans and Share-Based Compensation Awards | |
Summary of share based compensation expense and related income tax benefit recognized for share-based compensation awards | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 (In thousands) Share-based compensation expense $ 3,019 $ 1,758 $ 7,841 $ 53,893 Income tax benefit $ 289 $ 68 $ 688 $ 3,914 |
Summary of stock option activity | A summary of stock option activity is as follows (in thousands, except per share data): Number of Options Weighted average grant date fair value Weighted average exercise price Weighted average remaining contractual term Balance at December 31, 2018 2,086 $ 6.77 $ 16.22 Granted 1,384 9.47 26.19 Exercised (50) 6.80 16.32 Forfeited (128) 8.07 20.78 Balance at September 30, 2019 3,292 $ 7.85 $ 20.24 8.98 Exercisable at September 30, 2019 455 $ 6.70 $ 16.06 8.65 |
Summary of assumptions used in estimating the grant date fair values | Nine Months Ended September 30, 2019 2018 Expected life (in years) Weighted average risk-free interest rate Expected volatility Dividend yield Weighted average fair value at grant date $ $ |
RSAs | |
Stock Compensation Plans and Share-Based Compensation Awards | |
Summary of stock activity | A summary of RSA activity is as follows (in thousands, except per share data): Number of RSAs Weighted average grant date fair value Balance at December 31, 2018 42 $ 16.00 Granted — — Vested (25) 16.00 Forfeited (2) 16.00 Balance at September 30, 2019 15 $ 16.00 |
RSUs | |
Stock Compensation Plans and Share-Based Compensation Awards | |
Summary of stock activity | A summary of RSU activity is as follows (in thousands, except per share data): Number of RSUs Weighted average grant date fair value Balance at December 31, 2018 506 $ 16.30 Granted 515 26.21 Vested (139) 16.27 Forfeited (36) 21.79 Balance at September 30, 2019 846 $ 22.11 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Other (Details) $ in Thousands | 9 Months Ended | |||||
Sep. 30, 2019USD ($)segmentitem | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Minimum number of merchants | item | 550,000 | |||||
Number of markets | item | 50 | |||||
Number of reportable segments | segment | 2 | |||||
Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity | ||||||
Shareholders' equity (deficit) | $ (963,206) | $ (862,682) | $ 177,349 | |||
Cash and Cash Equivalents and Merchant Reserves | ||||||
Merchant reserve cash balances | 92,200 | 107,800 | ||||
Additional paid-in capital | ||||||
Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity | ||||||
Shareholders' equity (deficit) | 178,176 | 175,843 | $ 412,845 | |||
Additional paid-in capital | Previously reported | ||||||
Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity | ||||||
Shareholders' equity (deficit) | 178,200 | |||||
Additional paid-in capital | Restatement Adjustment | ||||||
Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity | ||||||
Shareholders' equity (deficit) | 157,500 | |||||
Nonredeemable non-controlling interests | ||||||
Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity | ||||||
Shareholders' equity (deficit) | $ (482,756) | $ (665,891) | (814,074) | $ (837,039) | $ (1,035,973) | $ 3,312 |
Nonredeemable non-controlling interests | Previously reported | ||||||
Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity | ||||||
Shareholders' equity (deficit) | (814,100) | |||||
Nonredeemable non-controlling interests | Restatement Adjustment | ||||||
Presentation of Consolidated Balance Sheet and Consolidated Statement of Changes in Equity | ||||||
Shareholders' equity (deficit) | $ (793,400) | |||||
EVO LLC | ||||||
Ownership interest (as a percent) | 44.70% |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Recent Accounting Pronouncements | |||||
Revenue | $ 122,363 | $ 144,758 | $ 356,398 | $ 413,931 | |
Operating expenses: | |||||
Cost of services and products, exclusive of depreciation and amortization | 24,065 | 46,949 | 72,900 | 141,826 | |
Future minimum lease payments | $ 42,400 | ||||
Presented without adoption of ASC 606 | |||||
Recent Accounting Pronouncements | |||||
Revenue | $ 144,758 | $ 413,931 | |||
ASU 2014-09 | Adjustment | |||||
Recent Accounting Pronouncements | |||||
Revenue | 30,234 | 81,608 | |||
Operating expenses: | |||||
Cost of services and products, exclusive of depreciation and amortization | 30,234 | 81,608 | |||
ASU 2014-09 | Presented without adoption of ASC 606 | |||||
Recent Accounting Pronouncements | |||||
Revenue | 152,597 | 438,006 | |||
Operating expenses: | |||||
Cost of services and products, exclusive of depreciation and amortization | $ 54,299 | $ 154,508 |
Revenue - Other (Details)
Revenue - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue | ||||
Revenue | $ 122,363 | $ 144,758 | $ 356,398 | $ 413,931 |
Sale and Rental of POS Equipment | ||||
Revenue | ||||
Revenue | $ 12,200 | $ 10,800 | $ 32,400 | $ 32,100 |
Revenue - Summary (Details)
Revenue - Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue | ||||
Revenue | $ 122,363 | $ 144,758 | $ 356,398 | $ 413,931 |
Direct | ||||
Revenue | ||||
Revenue | 74,408 | 218,494 | ||
Tech-enabled | ||||
Revenue | ||||
Revenue | 39,872 | 113,419 | ||
Traditional | ||||
Revenue | ||||
Revenue | 8,083 | 24,485 | ||
North America | ||||
Revenue | ||||
Revenue | 75,022 | 79,487 | 222,643 | 232,687 |
North America | Direct | ||||
Revenue | ||||
Revenue | 38,025 | 113,246 | ||
North America | Tech-enabled | ||||
Revenue | ||||
Revenue | 28,914 | 84,912 | ||
North America | Traditional | ||||
Revenue | ||||
Revenue | 8,083 | 24,485 | ||
Europe | ||||
Revenue | ||||
Revenue | 47,341 | 65,271 | 133,755 | 181,244 |
Europe | Direct | ||||
Revenue | ||||
Revenue | 36,383 | 105,248 | ||
Europe | Tech-enabled | ||||
Revenue | ||||
Revenue | $ 10,958 | $ 28,507 | ||
Presented without adoption of ASC 606 | ||||
Revenue | ||||
Revenue | 144,758 | 413,931 | ||
Presented without adoption of ASC 606 | Direct | ||||
Revenue | ||||
Revenue | 92,331 | 259,471 | ||
Presented without adoption of ASC 606 | Tech-enabled | ||||
Revenue | ||||
Revenue | 42,741 | 124,268 | ||
Presented without adoption of ASC 606 | Traditional | ||||
Revenue | ||||
Revenue | 9,686 | 30,192 | ||
Presented without adoption of ASC 606 | North America | ||||
Revenue | ||||
Revenue | 79,487 | 232,687 | ||
Presented without adoption of ASC 606 | North America | Direct | ||||
Revenue | ||||
Revenue | 40,946 | 117,738 | ||
Presented without adoption of ASC 606 | North America | Tech-enabled | ||||
Revenue | ||||
Revenue | 28,855 | 84,757 | ||
Presented without adoption of ASC 606 | North America | Traditional | ||||
Revenue | ||||
Revenue | 9,686 | 30,192 | ||
Presented without adoption of ASC 606 | Europe | ||||
Revenue | ||||
Revenue | 65,271 | 181,244 | ||
Presented without adoption of ASC 606 | Europe | Direct | ||||
Revenue | ||||
Revenue | 51,385 | 141,733 | ||
Presented without adoption of ASC 606 | Europe | Tech-enabled | ||||
Revenue | ||||
Revenue | $ 13,886 | $ 39,511 |
Settlement Processing Assets _3
Settlement Processing Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Settlement processing assets: | ||
Receivable from card networks | $ 219,654 | $ 195,817 |
Receivable from merchants | 90,552 | 52,513 |
Totals | 310,206 | 248,330 |
Settlement processing obligations: | ||
Settlement liabilities | (375,552) | (320,492) |
Merchant reserves | (92,224) | (107,836) |
Totals | $ (467,776) | $ (428,328) |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share | |||||
Net loss attributable to EVO Payments, Inc. | $ (1,844) | $ (27,389) | $ (10,675) | $ (6,671) | $ (10,675) |
Weighted average Class A common stock outstanding | 34,634,567 | 18,163,344 | 17,901,484 | 30,996,506 | 17,901,484 |
Total dilutive securities | 34,634,567 | 18,163,344 | 17,901,484 | 30,996,506 | 17,901,484 |
Basic (in dollars per share) | $ (0.05) | $ (1.51) | $ (0.60) | $ (0.22) | $ (0.60) |
Diluted (in dollars per share) | $ (0.05) | $ (1.51) | $ (0.60) | $ (0.22) | $ (0.60) |
Stock options | |||||
Earnings Per Share | |||||
Antidilutive securities | 3,307,082 | 2,097,054 | 2,097,054 | 3,002,231 | |
RSUs | |||||
Earnings Per Share | |||||
Antidilutive securities | 844,616 | 499,510 | 499,510 | 790,719 | |
Class C Common Stock | |||||
Earnings Per Share | |||||
Antidilutive securities | 2,327,511 | 2,560,955 | 2,560,955 | 2,399,326 | |
Class D Common Stock | |||||
Earnings Per Share | |||||
Antidilutive securities | 10,019,169 | 17,282,930 | 17,282,930 | 12,829,719 | |
Unit Appreciation Rights | |||||
Earnings Per Share | |||||
Antidilutive securities | 14,672 | 58,809 | 58,809 | 22,359 |
Tax Receivable Agreement (Detai
Tax Receivable Agreement (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Tax Receivable Agreement | |
Payment on applicable cash tax savings (as a percent) | 85.00% |
Realized tax savings | $ 0 |
Payments to TRA obligation | 0 |
Deferred tax asset recorded in connection with a stock offering | 142.2 |
Amount of payment liability pursuant to tax receivable agreements | $ 120.9 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands, € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2019USD ($) | Jul. 31, 2019USD ($) | Mar. 31, 2019EUR (€) | Mar. 31, 2019USD ($) | Oct. 31, 2018EUR (€) | Oct. 31, 2018USD ($) | Sep. 30, 2018USD ($) | May 31, 2018USD ($) | Apr. 30, 2018EUR (€) | Apr. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Feb. 28, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019CAD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Allocation of purchase price | |||||||||||||||||
Goodwill | $ 371,523 | $ 371,523 | $ 353,011 | ||||||||||||||
Other disclosures: | |||||||||||||||||
Book value of the investment | 2,034 | $ 2,034 | $ 1,753 | ||||||||||||||
Gain on acquisition of unconsolidated investee | $ 8,659 | $ 8,659 | |||||||||||||||
Trademarks | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 5 years | 5 years | |||||||||||||||
Card Processing | Minimum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 3 years | 3 years | 3 years | ||||||||||||||
Card Processing | Maximum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 5 years | 5 years | 5 years | ||||||||||||||
Office equipment | Minimum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 3 years | 3 years | 3 years | ||||||||||||||
Office equipment | Maximum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 5 years | 5 years | 5 years | ||||||||||||||
Computer software | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 3 years | 3 years | 3 years | ||||||||||||||
Delego Software | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Deferred tax liability | (3,116) | $ (3,116) | |||||||||||||||
Other assets (liabilities), net | 590 | 590 | |||||||||||||||
Goodwill | 22,628 | 22,628 | |||||||||||||||
Total purchase price | $ 32,415 | $ 32,415 | |||||||||||||||
Percentage of interest acquired | 100.00% | 100.00% | |||||||||||||||
Total consideration transferred | $ 42.6 | $ 32,400 | |||||||||||||||
Delego Software | Purchased software | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Finite-lived intangible assets | $ 8,513 | 8,513 | |||||||||||||||
Useful life of intangible assets | 7 years | ||||||||||||||||
Delego Software | Customer relationships | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Finite-lived intangible assets | $ 2,964 | 2,964 | |||||||||||||||
Useful life of intangible assets | 15 years | ||||||||||||||||
Delego Software | Tradename | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Finite-lived intangible assets | $ 836 | $ 836 | |||||||||||||||
Useful life of intangible assets | 2 years | ||||||||||||||||
SF Systems | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Percentage of interest acquired | 100.00% | ||||||||||||||||
Total consideration transferred | $ 5,000 | ||||||||||||||||
Upfront payment | 4,000 | ||||||||||||||||
Holdback liability | $ 1,000 | ||||||||||||||||
Liability repayment period | 18 months | ||||||||||||||||
Intangible assets acquired | $ 2,600 | ||||||||||||||||
Useful life of intangible assets | 5 years | ||||||||||||||||
Goodwill acquired | $ 2,400 | ||||||||||||||||
Way 2 Pay Ltd | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Percentage of interest acquired | 100.00% | 100.00% | |||||||||||||||
Total consideration transferred | € 3 | $ 3,400 | |||||||||||||||
Upfront payment | € | 2.7 | ||||||||||||||||
Holdback liability | € | € 0.3 | ||||||||||||||||
Liability repayment period | 18 months | 18 months | |||||||||||||||
Intangible assets acquired | $ 4,000 | ||||||||||||||||
Useful life of intangible assets | 5 years | 5 years | |||||||||||||||
EVO Payments International Corp. - Canada | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Percentage of interest acquired | 30.00% | ||||||||||||||||
Contingent consideration | $ 900 | ||||||||||||||||
Reduction to members' deficit | 400 | ||||||||||||||||
Reduction to nonredeemable non-controlling interest | $ 500 | ||||||||||||||||
Nationwide Payment Solutions, LLC | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Percentage of interest acquired | 38.00% | ||||||||||||||||
Contingent consideration | $ 3,800 | ||||||||||||||||
Reduction to members' deficit | 20,100 | ||||||||||||||||
Reduction to nonredeemable non-controlling interest | 600 | ||||||||||||||||
Upfront payment | $ 16,900 | ||||||||||||||||
Liberbank, S.A | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Total consideration transferred | € 7.9 | $ 9,500 | |||||||||||||||
Liberbank, S.A | Trademarks | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 15 years | 15 years | |||||||||||||||
Liberbank, S.A | Merchant contract portfolios | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 5 years | 5 years | |||||||||||||||
Liberbank, S.A | Marketing alliance agreements | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 15 years | 15 years | |||||||||||||||
Liberbank, S.A | Card Processing | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 3 years | 3 years | |||||||||||||||
Nodus Technologies, Inc | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Percentage of interest acquired | 100.00% | ||||||||||||||||
Total consideration transferred | $ 18,000 | ||||||||||||||||
Holdback liability | $ 800 | ||||||||||||||||
Nodus Technologies, Inc | Minimum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 5 years | ||||||||||||||||
Nodus Technologies, Inc | Maximum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 7 years | ||||||||||||||||
Nodus Technologies, Inc | Trademarks | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 20 years | ||||||||||||||||
Nodus Technologies, Inc | Merchant contract portfolios | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 15 years | ||||||||||||||||
Nodus Technologies, Inc | Internally developed software | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 10 years | ||||||||||||||||
Nodus Technologies, Inc | Non-competition agreements | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 3 years | ||||||||||||||||
Nodus Technologies, Inc | Computer software | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 3 years | ||||||||||||||||
Federated | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Tangible assets acquired | $ 1,702 | 1,702 | 1,702 | ||||||||||||||
Finite-lived intangible assets | 12,600 | 12,600 | 12,600 | ||||||||||||||
Deferred tax liability | (1,357) | (1,357) | (1,357) | ||||||||||||||
Goodwill | 33,677 | 33,677 | 33,677 | ||||||||||||||
Total purchase price | 46,622 | 46,622 | 46,622 | ||||||||||||||
Total consideration transferred | 38,200 | ||||||||||||||||
Holdback liability | 500 | ||||||||||||||||
Acquisition related costs | 400 | ||||||||||||||||
Other disclosures: | |||||||||||||||||
Book value of the investment | 0 | 0 | 0 | ||||||||||||||
Gain on acquisition of unconsolidated investee | 8,400 | ||||||||||||||||
Federated | Trademarks | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Finite-lived intangible assets | $ 1,200 | 1,200 | 1,200 | ||||||||||||||
Useful life of intangible assets | 5 years | ||||||||||||||||
Federated | Merchant contract portfolios | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Finite-lived intangible assets | $ 11,400 | $ 11,400 | $ 11,400 | ||||||||||||||
Useful life of intangible assets | 10 years | ||||||||||||||||
Federated US | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Percentage of interest acquired | 67.00% | 67.00% | 67.00% | ||||||||||||||
Federated Canada | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Percentage of interest acquired | 100.00% | 100.00% | 100.00% | ||||||||||||||
ClearONE | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Percentage of interest acquired | 100.00% | 100.00% | |||||||||||||||
Total consideration transferred | € 5.4 | $ 6,300 | |||||||||||||||
Holdback liability | € | € 0.5 | ||||||||||||||||
ClearONE | Internally developed software | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 5 years | 5 years | |||||||||||||||
ClearONE | Non-competition agreements | Minimum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 2 years | 2 years | |||||||||||||||
ClearONE | Non-competition agreements | Maximum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of intangible assets | 3 years | 3 years | |||||||||||||||
ClearONE | Card Processing | Minimum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 3 years | 3 years | |||||||||||||||
ClearONE | Card Processing | Maximum | |||||||||||||||||
Allocation of purchase price | |||||||||||||||||
Useful life of equipment | 5 years | 5 years |
Equipment and Improvements (Det
Equipment and Improvements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | $ 251,104 | $ 251,104 | $ 236,295 | ||
Less accumulated depreciation | (158,794) | (158,794) | (136,947) | ||
Foreign currency translation adjustment | (598) | (598) | 3,698 | ||
Totals | 91,712 | 91,712 | 103,046 | ||
Depreciation | |||||
Depreciation expense | 10,000 | $ 9,100 | 31,500 | $ 27,600 | |
Decrease in equipment and improvements | 10,800 | 8,500 | |||
Decrease in accumulated depreciation | 10,700 | $ 7,600 | |||
Card Processing | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | 136,384 | 136,384 | 128,244 | ||
Office equipment | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | 44,311 | 44,311 | 41,771 | ||
Computer software | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | 47,266 | $ 47,266 | $ 44,373 | ||
Estimated useful lives | 3 years | 3 years | |||
Leasehold improvements | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | 16,594 | $ 16,594 | $ 16,234 | ||
Furniture and fixtures | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | $ 6,549 | $ 6,549 | $ 5,673 | ||
Minimum | Card Processing | |||||
Equipment and Improvements | |||||
Estimated useful lives | 3 years | 3 years | |||
Minimum | Office equipment | |||||
Equipment and Improvements | |||||
Estimated useful lives | 3 years | 3 years | |||
Minimum | Furniture and fixtures | |||||
Equipment and Improvements | |||||
Estimated useful lives | 5 years | 5 years | |||
Maximum | Card Processing | |||||
Equipment and Improvements | |||||
Estimated useful lives | 5 years | 5 years | |||
Maximum | Office equipment | |||||
Equipment and Improvements | |||||
Estimated useful lives | 5 years | 5 years | |||
Maximum | Furniture and fixtures | |||||
Equipment and Improvements | |||||
Estimated useful lives | 7 years | 7 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Intangible assets, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Intangible assets with finite lives: | |||||
Net | $ 261,825 | $ 261,825 | $ 286,267 | ||
Accumulated impairment losses | (3,872) | (10,504) | |||
Total intangible assets, net | 261,825 | 261,825 | 290,139 | ||
Amortization expense related to intangible assets | 12,800 | $ 11,500 | 36,900 | $ 33,700 | |
Trademarks | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 18,499 | 18,499 | 18,499 | ||
Accumulated impairment losses | (18,499) | (14,627) | |||
Net | 3,872 | ||||
Merchant contract portfolios and customer relationships | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 296,033 | 296,033 | 293,069 | ||
Accumulated amortization | (157,394) | (157,394) | (139,159) | ||
Accumulated impairment losses | (7,089) | (7,089) | (5,658) | ||
Foreign currency translation adjustment | (29,441) | (29,441) | (27,975) | ||
Net | 102,109 | 102,109 | 120,277 | ||
Marketing alliance agreements | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 191,879 | 191,879 | 191,879 | ||
Accumulated amortization | (56,650) | (56,650) | (47,777) | ||
Accumulated impairment losses | (11,920) | (11,920) | (7,585) | ||
Foreign currency translation adjustment | (20,488) | (20,488) | (18,634) | ||
Net | 102,821 | 102,821 | 117,883 | ||
Trademarks | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 29,493 | 29,493 | 28,657 | ||
Accumulated amortization | (12,536) | (12,536) | (10,748) | ||
Foreign currency translation adjustment | (4,639) | (4,639) | (4,446) | ||
Net | 12,318 | 12,318 | 13,463 | ||
Internally developed software | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 80,881 | 80,881 | 60,876 | ||
Accumulated amortization | (23,375) | (23,375) | (15,794) | ||
Accumulated impairment losses | (10,190) | (10,190) | (9,324) | ||
Foreign currency translation adjustment | (3,417) | (3,417) | (2,260) | ||
Net | 43,899 | 43,899 | 33,498 | ||
Non-competition agreements | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 6,462 | 6,462 | 6,462 | ||
Accumulated amortization | (5,782) | (5,782) | (5,316) | ||
Foreign currency translation adjustment | (2) | (2) | |||
Net | $ 678 | $ 678 | $ 1,146 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Estimated amortization expense (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Estimated amortization expense | ||
2019 (remainder for the year) | $ 12,400 | |
2020 | 44,833 | |
2021 | 40,015 | |
2022 | 34,470 | |
2023 | 26,951 | |
2024 and thereafter | 103,156 | |
Total | $ 261,825 | $ 286,267 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Net intangible assets by segment (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Intangible assets, net | ||
Total intangible assets, net | $ 261,825 | $ 290,139 |
North America | ||
Intangible assets, net | ||
Total intangible assets, net | 182,486 | 192,444 |
North America | Trademarks | ||
Intangible assets, net | ||
Total intangible assets, net | 3,872 | |
North America | Merchant contract portfolios and customer relationships | ||
Intangible assets, net | ||
Total intangible assets, net | 77,197 | 88,141 |
North America | Marketing alliance agreements | ||
Intangible assets, net | ||
Total intangible assets, net | 71,975 | 76,590 |
North America | Trademarks | ||
Intangible assets, net | ||
Total intangible assets, net | 3,187 | 2,585 |
North America | Internally developed software | ||
Intangible assets, net | ||
Total intangible assets, net | 29,488 | 20,167 |
North America | Non-competition agreements | ||
Intangible assets, net | ||
Total intangible assets, net | 639 | 1,089 |
Europe | ||
Intangible assets, net | ||
Total intangible assets, net | 79,339 | 97,695 |
Europe | Merchant contract portfolios and customer relationships | ||
Intangible assets, net | ||
Total intangible assets, net | 24,912 | 32,136 |
Europe | Marketing alliance agreements | ||
Intangible assets, net | ||
Total intangible assets, net | 30,846 | 41,293 |
Europe | Trademarks | ||
Intangible assets, net | ||
Total intangible assets, net | 9,131 | 10,878 |
Europe | Internally developed software | ||
Intangible assets, net | ||
Total intangible assets, net | 14,411 | 13,331 |
Europe | Non-competition agreements | ||
Intangible assets, net | ||
Total intangible assets, net | $ 39 | $ 57 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Goodwill activity (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Goodwill, Roll forward | ||
Goodwill, gross, at the beginning of the year | $ 377,302 | |
Accumulated impairment losses | (24,291) | |
Goodwill, net, at the beginning of the year | $ 353,011 | |
Business combinations | 25,070 | |
Foreign currency translation adjustment | (6,558) | |
Goodwill, net, at the end of the year | 371,523 | |
North America | ||
Goodwill, Roll forward | ||
Goodwill, gross, at the beginning of the year | 240,837 | |
Goodwill, net, at the beginning of the year | 240,837 | |
Business combinations | 25,030 | |
Foreign currency translation adjustment | 35 | |
Goodwill, net, at the end of the year | 265,902 | |
Europe | ||
Goodwill, Roll forward | ||
Goodwill, gross, at the beginning of the year | 136,465 | |
Accumulated impairment losses | $ (24,291) | |
Goodwill, net, at the beginning of the year | 112,174 | |
Business combinations | 40 | |
Foreign currency translation adjustment | (6,593) | |
Goodwill, net, at the end of the year | $ 105,621 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets | ||
Loss on agreement termination | $ 4,400 | |
Goodwill impairment | $ 0 | |
Merchant contract portfolios | ||
Goodwill and Intangible Assets | ||
Additional impairments | 1,400 | |
Marketing alliance agreements | ||
Goodwill and Intangible Assets | ||
Long-lived asset impairment | 4,400 | |
Trademarks | ||
Goodwill and Intangible Assets | ||
Long-lived asset impairment | 3,900 | |
Internally developed software | ||
Goodwill and Intangible Assets | ||
Additional impairments | $ 800 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accounts Payable and Accrued Liabilities | ||
Compensation and related benefits | $ 17,679 | $ 22,280 |
Third-party processing and payment network fees | 37,056 | 37,702 |
Trade payables | 8,336 | 44,581 |
Taxes payable | 13,344 | 16,292 |
Commissions payable to third parties and agents | 14,483 | 13,141 |
Unearned revenue | 4,198 | 4,579 |
Other | 18,292 | 22,641 |
Total accounts payable and accrued expenses | $ 113,388 | $ 161,216 |
Related Party Transactions - Re
Related Party Transactions - Related party balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Related party balances: | |||||
Receivables from sale of POS devices and peripherals | $ 303 | ||||
Receivables from related companies | $ 34 | $ 34 | 1,568 | ||
Due from related parties, current | 34 | 34 | 1,871 | ||
Note receivable, long term | 915 | ||||
Due from related parties, long term | 915 | ||||
Liabilities to related companies | 4,596 | 4,596 | 4,824 | ||
Due to related parties, current | 4,596 | 4,596 | 4,824 | ||
ISO commission reserve | 385 | 385 | 385 | ||
Due to related parties, long term | 385 | 385 | $ 385 | ||
Commission Expense | |||||
Related Party Transactions | |||||
Expenses with related parties | 5,200 | $ 4,300 | 15,000 | $ 13,800 | |
Sale of Equipment and Services | |||||
Related Party Transactions | |||||
Revenue from related parties | $ 100 | $ 300 | $ 200 | ||
Sale of Equipment and Services | Maximum | |||||
Related Party Transactions | |||||
Revenue from related parties | $ 100 |
Related Party Transactions - Tr
Related Party Transactions - Transactions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)subsidiary | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Aug. 31, 2018 | |
Related Party Transactions | |||||||
Receivables from related companies | $ 34 | $ 34 | $ 1,568 | ||||
Liabilities to related companies | 4,596 | 4,596 | 4,824 | ||||
Board Chairman | |||||||
Related Party Transactions | |||||||
Ownership interest (as a percent) | 33.33% | ||||||
Board Chairman and relatives | |||||||
Related Party Transactions | |||||||
Proceeds from sale of business | $ 15,500 | ||||||
Federated US | |||||||
Related Party Transactions | |||||||
Percentage of interest acquired | 67.00% | ||||||
Federated US | Board Chairman | |||||||
Related Party Transactions | |||||||
Ownership interest (as a percent) | 33.33% | ||||||
Federated Canada | |||||||
Related Party Transactions | |||||||
Percentage of interest acquired | 100.00% | ||||||
Members of EVO, LLC | |||||||
Related Party Transactions | |||||||
Receivables from related companies | 700 | ||||||
Members of EVO, LLC | Maximum | |||||||
Related Party Transactions | |||||||
Receivables from related companies | 100 | 100 | |||||
Minority held affiliates | |||||||
Related Party Transactions | |||||||
Liabilities to related companies | 4,000 | 4,000 | 3,000 | ||||
NFP | |||||||
Related Party Transactions | |||||||
Payment of fees | 100 | 200 | $ 100 | ||||
NFP | Maximum | |||||||
Related Party Transactions | |||||||
Payment of fees | $ 100 | ||||||
Consulting services | MDP | |||||||
Related Party Transactions | |||||||
Expenses with related parties | 0 | 0 | |||||
Consulting services | MDP | Maximum | |||||||
Related Party Transactions | |||||||
Expenses with related parties | 100 | 100 | |||||
Treasury, Payroll, Tax Preparation and Other Services | Blueapple, a majority member | |||||||
Related Party Transactions | |||||||
Expenses with related parties | 200 | 100 | |||||
Treasury, Payroll, Tax Preparation and Other Services | Maximum | Blueapple, a majority member | |||||||
Related Party Transactions | |||||||
Expenses with related parties | 100 | 100 | |||||
Satisfaction of Obligation to Pay Commissions | Blueapple | |||||||
Related Party Transactions | |||||||
Expenses with related parties | $ 2,400 | ||||||
Card-based processing services | Federated US | |||||||
Related Party Transactions | |||||||
Revenue from related parties | 100 | ||||||
Card-based processing services | Federated Canada | |||||||
Related Party Transactions | |||||||
Revenue from related parties | 400 | ||||||
Marketing services | Federated Canada | |||||||
Related Party Transactions | |||||||
Payment of fees | 1,900 | 5,800 | |||||
515 Broadhollow, LLC | |||||||
Related Party Transactions | |||||||
Monthly lease payment for office space in a related party transaction | 100 | ||||||
Marketing services and equipment in exchange | Relative of Chairman | |||||||
Related Party Transactions | |||||||
Payment of fees | $ 100 | $ 100 | $ 400 | $ 400 | |||
Number of wholly owned subsidiaries | subsidiary | 1 | ||||||
Number of minority owned subsidiaries | subsidiary | 1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Taxes | ||||
Effective income tax rate (as a percent) | (231.60%) | 388.50% | 2.80% | (11.10%) |
Tax benefit as a result of internal restructuring | $ (8.2) | $ (8.2) |
Long-Term Debt and Lines of C_3
Long-Term Debt and Lines of Credit - Summary (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Long-term debt | ||
Long term debt gross | $ 718,290 | |
Less debt issuance costs | (10,619) | $ (12,985) |
Total long-term debt | 707,671 | 684,056 |
Less current portion of long-term debt | (5,618) | (7,191) |
Total long-term debt, long-term portion | 702,053 | 676,865 |
Senior Secured Credit Facilities | Term loan | ||
Long-term debt | ||
Face amount of debt | 665,000 | |
Senior Secured Credit Facilities | Credit Facility | ||
Long-term debt | ||
Commitments | 200,000 | |
First lien senior secured credit facility | Term loan | ||
Long-term debt | ||
Long term debt gross | 649,794 | 654,775 |
First lien senior secured credit facility | Credit Facility | ||
Long-term debt | ||
Long term debt gross | $ 68,496 | $ 42,266 |
Long-Term Debt and Lines of C_4
Long-Term Debt and Lines of Credit - Settlement Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Settlement obligations | ||
Amount outstanding | $ 17,610 | $ 41,819 |
Settlement facilities | ||
Settlement obligations | ||
Amount outstanding | 17,600 | 41,800 |
Additional capacity | $ 175,600 | $ 57,900 |
Weighted-average interest rate | 3.02% | 4.52% |
Long-Term Debt and Lines of C_5
Long-Term Debt and Lines of Credit - Principal payment requirements (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Principal payment requirements: | |
2019 (remainder of the year) | $ 2,630 |
2020 | 6,593 |
2021 | 6,593 |
2022 | 6,593 |
2023 | 695,881 |
Total | $ 718,290 |
Supplemental Cash Flows Infor_3
Supplemental Cash Flows Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Supplemental disclosure of cash flow data: | ||
Interest paid | $ 31,289 | $ 37,819 |
Income taxes paid | 14,842 | 5,672 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Contingent consideration and acquisition holdback payable | 1,337 | 6,400 |
Contingent consideration settled with the issuance of Class A common stock | $ 771 | |
Exchange of Class C and Class D common stock for Class A common stock | $ (20,985) |
Redeemable Non-controlling In_3
Redeemable Non-controlling Interests (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 7 Months Ended | 9 Months Ended | |
May 23, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Sep. 30, 2019 | |
Redeemable Non-controlling Interests | |||||
Beginning balance | $ 1,248,448 | $ 838,789 | $ 689,569 | $ 1,010,093 | |
Net income attributable to redeemable non-controlling interest | (1,124) | 2,928 | (7,477) | ||
Legacy accumulated deficit allocation | $ (150,485) | ||||
Legacy AOCI allocation | (39,404) | ||||
Decrease in maximum redemption amount in connection with redemption of Blueapple Class B shares | (2,460) | ||||
Distributions | (6,209) | ||||
Ending balance | 689,569 | $ 1,108,644 | $ 969,276 | 1,010,093 | $ 1,108,644 |
eService | |||||
Redeemable Non-controlling Interests | |||||
Ownership interest (as a percent) | 66.00% | 66.00% | |||
Beginning balance | $ 124,107 | ||||
Net income attributable to redeemable non-controlling interest | 1,291 | 4,914 | 4,891 | ||
Gain (loss) on OCI | (2,104) | (2,368) | (3,621) | ||
Increase (decrease) in the maximum redemption amount | (19,741) | 14,749 | |||
Distributions | (3,770) | (2,380) | (6,209) | ||
Ending balance | $ 133,917 | 124,107 | $ 133,917 | ||
eService | PKO Bank Polski | |||||
Redeemable Non-controlling Interests | |||||
Ownership interest of noncontrolling owners (as a percent) | 14.00% | 14.00% | |||
Blueapple | |||||
Redeemable Non-controlling Interests | |||||
Beginning balance | 1,010,093 | $ 885,986 | |||
Net income attributable to redeemable non-controlling interest | (39,129) | (12,368) | |||
Gain (loss) on OCI | (3,935) | (5,999) | |||
Gain (loss) on defined benefit plan revaluation | (192) | 4 | |||
Redemption of Blueapple Class B shares | (34,768) | ||||
Decrease in maximum redemption amount in connection with redemption of Blueapple Class B shares | (2,460) | ||||
Increase (decrease) in the maximum redemption amount | 735,775 | 374,616 | 150,701 | ||
Allocation of fair value adjustment | 8,739 | (6,369) | |||
Ending balance | $ 1,010,093 | $ 974,727 | $ 885,986 | $ 974,727 | |
EVO LLC | |||||
Redeemable Non-controlling Interests | |||||
Ownership interest (as a percent) | 44.70% | 44.70% | |||
Ownership interest (as a percent) | 44.70% |
Fair Value - Summary (Details)
Fair Value - Summary (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value | ||
Cash equivalents | $ 20,997 | $ 106,164 |
Contingent consideration | (3,200) | (8,189) |
Total | (1,090,847) | (912,118) |
Blueapple | ||
Fair Value | ||
Redeemable non-controlling interest | (974,727) | (885,986) |
eService | ||
Fair Value | ||
Redeemable non-controlling interest | (133,917) | (124,107) |
Level 1 | ||
Fair Value | ||
Cash equivalents | 20,997 | 106,164 |
Total | (953,730) | (779,822) |
Level 1 | Blueapple | ||
Fair Value | ||
Redeemable non-controlling interest | (974,727) | (885,986) |
Level 3 | ||
Fair Value | ||
Contingent consideration | (3,200) | (8,189) |
Total | (137,117) | (132,296) |
Level 3 | eService | ||
Fair Value | ||
Redeemable non-controlling interest | $ (133,917) | $ (124,107) |
Fair Value - Other (Details)
Fair Value - Other (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Series C preferred stock | ||
Fair Value | ||
Carrying amount of Visa preferred shares | $ 14.7 | $ 14.7 |
Estimated fair value of Visa preferred shares | $ 32.5 | |
eService | Weighted Average Cost of Capital | ||
Fair Value | ||
Redeemable non-controlling interest, measurement input (as a percent) | 15.00% | |
eService | Minimum | Growth Rate | ||
Fair Value | ||
Redeemable non-controlling interest, measurement input (as a percent) | 3.00% | |
eService | Maximum | Growth Rate | ||
Fair Value | ||
Redeemable non-controlling interest, measurement input (as a percent) | 10.70% |
Segment Information - Informati
Segment Information - Information on segments & reconciliations (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Segment Information | ||||||
Revenue | $ 122,363 | $ 144,758 | $ 356,398 | $ 413,931 | ||
Segment profit | (1,414) | 8,277 | (20,814) | (71,595) | ||
Depreciation and amortization | (22,804) | (20,488) | (68,412) | (61,308) | ||
Net interest expense | (10,227) | (10,076) | (31,738) | (45,831) | ||
Provision for income tax expense | (3,590) | (32,155) | 618 | (7,974) | ||
Share-based compensation expense | (3,019) | (2,021) | (7,841) | (53,284) | ||
Net income (loss) attributable to non-controlling interests of EVO Investco, LLC | 5,380 | (1,078) | 18,323 | 73,328 | ||
Net loss attributable to EVO Payments, Inc. | (1,844) | (27,389) | $ (10,675) | (6,671) | (10,675) | |
Capital expenditures | 11,336 | 12,993 | 24,639 | 38,963 | ||
Total assets | 1,599,649 | 1,599,649 | $ 1,534,387 | |||
Operating | ||||||
Segment Information | ||||||
Segment profit | 41,628 | 46,947 | 107,474 | 116,273 | ||
Corporate | ||||||
Segment Information | ||||||
Segment profit | (9,212) | (8,518) | (25,095) | (31,879) | ||
North America | ||||||
Segment Information | ||||||
Revenue | 75,022 | 79,487 | 222,643 | 232,687 | ||
Capital expenditures | 5,393 | 7,010 | 12,948 | 19,802 | ||
Total assets | 1,094,614 | 1,094,614 | 994,952 | |||
North America | Operating | ||||||
Segment Information | ||||||
Segment profit | 23,086 | 30,962 | 65,616 | 73,616 | ||
Europe | ||||||
Segment Information | ||||||
Revenue | 47,341 | 65,271 | 133,755 | 181,244 | ||
Capital expenditures | 5,943 | 5,983 | 11,691 | 19,161 | ||
Total assets | 505,035 | 505,035 | $ 539,435 | |||
Europe | Operating | ||||||
Segment Information | ||||||
Segment profit | $ 18,542 | $ 15,985 | $ 41,858 | $ 42,657 |
Segment Information - Revenue f
Segment Information - Revenue from external customers (Detail) - Sales Revenue - Geographic Concentration Risk | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
United States | ||||
Revenue from external customers | ||||
Revenue from external customers as a percentage of total revenue | 40.20% | 37.10% | 41.00% | 35.70% |
Poland | ||||
Revenue from external customers | ||||
Revenue from external customers as a percentage of total revenue | 18.20% | 19.00% | 19.40% | 24.20% |
Mexico | ||||
Revenue from external customers | ||||
Revenue from external customers as a percentage of total revenue | 18.90% | 24.10% | 18.00% | 19.90% |
Shareholder's Equity - Prior to
Shareholder's Equity - Prior to Reorganization (Details) | May 22, 2018$ / sharesshares |
Shareholder's Equity | |
Price per share | $ / shares | $ 16 |
EVO LLC | Current and Former Management and Employees | Vested Unit Appreciation Awards | |
Shareholder's Equity | |
Number of awards owned | 297,121 |
EVO LLC | Current and Former Management and Employees | Class C and Class D | |
Shareholder's Equity | |
Economic interest in held in LLC prior to reorganization (as a percent) | 6.90% |
EVO LLC | Current and Former Management and Employees | Class C Units | |
Shareholder's Equity | |
Number of units held in LLC prior to reorganization | 374,559 |
EVO LLC | Current and Former Management and Employees | Class D Units | |
Shareholder's Equity | |
Number of units held in LLC prior to reorganization | 1,106,528 |
EVO LLC | Blueapple | Class A Units | |
Shareholder's Equity | |
Number of units held in LLC prior to reorganization | 6,374,245 |
Economic interest in held in LLC prior to reorganization (as a percent) | 54.00% |
EVO LLC | MDP | Class B Units | |
Shareholder's Equity | |
Number of units held in LLC prior to reorganization | 3,506,087 |
Economic interest in held in LLC prior to reorganization (as a percent) | 29.70% |
EVO LLC | Blueapple and MDP | Current and Former Management and Employees | Class E Units | |
Shareholder's Equity | |
Number of units held in LLC prior to reorganization | 1,011,931 |
Economic interest in held in LLC prior to reorganization (as a percent) | 8.60% |
Shareholder's Equity - Organiza
Shareholder's Equity - Organization structure (Details) | May 23, 2018Vote |
Class A Common Stock | |
Shareholders' Equity | |
Number of votes per share | 1 |
Executive Officers | Class C Common Stock | |
Shareholders' Equity | |
Number of votes per share | 3.5 |
Blueapple | Class B Common Stock | |
Shareholders' Equity | |
Percentage of combined voting power | 15.90% |
MDP | Current and Former Employees | Class D Common Stock | |
Shareholders' Equity | |
Number of votes per share | 1 |
Stock Compensation Plans and _3
Stock Compensation Plans and Share-Based Compensation Awards - Share based compensation expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Share-based compensation expense | $ 3,019 | $ 1,758 | $ 7,841 | $ 53,893 |
Income tax benefit | $ 289 | $ 68 | $ 688 | $ 3,914 |
2018 Plan | Class A Common Stock | ||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Shares reserved for issuance | 7,792,162 | 7,792,162 |
Stock Compensation Plans and _4
Stock Compensation Plans and Share-Based Compensation Awards - Awards, UAR, RSA (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($)employee$ / sharesshares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)employee$ / sharesshares | Sep. 30, 2018USD ($) | |
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Share-based compensation expense | $ | $ 3,019 | $ 1,758 | $ 7,841 | $ 53,893 |
UAR awards | ||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Fair value (in dollars per share) | $ 16 | |||
Share-based compensation expense | $ | $ 100 | $ 300 | $ 200 | $ 9,000 |
Number of employees or former employees who held awards | employee | 35 | 35 | ||
RSAs | ||||
Number outstanding | ||||
Balance at beginning of period (in shares) | shares | 42 | |||
Vested (in shares) | shares | (25) | |||
Forfeited (in shares) | shares | (2) | |||
Balance at end of period (in shares) | shares | 15 | 15 | ||
Weighted average grant date fair value | ||||
Balance at beginning of period (in dollars per share) | $ 16 | |||
Vested (in dollars per share) | 16 | |||
Forfeited (in dollars per share) | 16 | |||
Balance at end of period (in dollars per share) | $ 16 | $ 16 |
Stock Compensation Plans and _5
Stock Compensation Plans and Share-Based Compensation Awards - RSU (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Share-based compensation expense | $ 3,019 | $ 1,758 | $ 7,841 | $ 53,893 |
RSUs | ||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Share-based compensation expense | 1,300 | $ 600 | 3,400 | $ 800 |
Unrecognized compensation expense | $ 16,100 | $ 16,100 | ||
Vesting period | 4 years | |||
Weighted average period outstanding for unvested RSUs | 3 years | |||
Number outstanding | ||||
Balance at beginning of period (in shares) | 506 | |||
Granted (in shares) | 515 | |||
Vested (in shares) | (139) | |||
Forfeited (in shares) | (36) | |||
Balance at end of period (in shares) | 846 | 846 | ||
Weighted average grant date fair value | ||||
Balance at beginning of period (in dollars per share) | $ 16.30 | |||
Granted (in dollars per share) | 26.21 | |||
Vested (in dollars per share) | 16.27 | |||
Forfeited (in dollars per share) | 21.79 | |||
Balance at end of period (in dollars per share) | $ 22.11 | $ 22.11 |
Stock Compensation Plans and _6
Stock Compensation Plans and Share-Based Compensation Awards - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Share-based compensation expense | $ 3,019 | $ 1,758 | $ 7,841 | $ 53,893 |
Stock options | ||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Share-based compensation expense | $ 1,700 | $ 900 | $ 4,200 | $ 1,300 |
Number outstanding | ||||
Balance at beginning of period (in shares) | 2,086 | |||
Granted (in shares) | 1,384 | |||
Exercised (in shares) | (50) | |||
Forfeited (in shares) | (128) | |||
Balance at end of period (in shares) | 3,292 | 3,292 | ||
Exercisable at end of period (in shares) | 455 | 455 | ||
Weighted average grant date fair value | ||||
Balance at beginning of period (in dollars per share) | $ 6.77 | |||
Granted (in dollars per share) | 9.47 | |||
Exercised (in dollars per share) | 6.80 | |||
Forfeited (in dollars per share) | 8.07 | |||
Balance at end of period (in dollars per share) | $ 7.85 | 7.85 | ||
Exercisable at end of period (in dollars per share) | 6.70 | 6.70 | ||
Weighted average exercise price | ||||
Balance at beginning of period (in dollars per share) | 16.22 | |||
Granted (in dollars per share) | 26.19 | |||
Exercised (in dollars per share) | 16.32 | |||
Forfeited (in dollars per share) | 20.78 | |||
Balance at end of period (in dollars per share) | 20.24 | 20.24 | ||
Exercisable at end of period (in dollars per share) | $ 16.06 | $ 16.06 | ||
Weighted average remaining contractual term (in years) | 8 years 11 months 23 days | |||
Exercisable at Weighted average remaining contractual term (in years) | 8 years 7 months 24 days | |||
Other disclosures | ||||
Weighted average period outstanding for unvested stock options | 3 years 3 months 18 days | |||
Unrecognized compensation expense | $ 19,900 | $ 19,900 | ||
Vesting period | 4 years | |||
Expiration period | 10 years |
Stock Compensation Plans and _7
Stock Compensation Plans and Share-Based Compensation Awards - Fair Value Assumptions (Details) - Stock options - $ / shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Assumptions used in estimating grant date fair values | ||
Expected life (in years) | 7 years | 7 years |
Weighted average risk free interest rate (as a percent) | 2.59% | 3.04% |
Expected volatility (as a percent) | 33.35% | 34.28% |
Dividend yield (as a percent) | 0.00% | 0.00% |
Weighted average fair value at grant date | 9.46 | 6.84 |