Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Jul. 25, 2022 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-38504 | |
Entity Registrant Name | EVO Payments, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-1304484 | |
Entity Address, Address Line One | Ten Glenlake Parkway | |
Entity Address, Address Line Two | South Tower, Suite 950 | |
Entity Address, City or Town | Atlanta | |
Entity Address, Country | GE | |
Entity Address, Postal Zip Code | 30328 | |
City Area Code | 770 | |
Local Phone Number | 336-8463 | |
Title of 12(b) Security | Class A common stock, par value $0.0001 per share | |
Trading Symbol | EVOP | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001704596 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A Common Stock | ||
Entity Common Stock, Shares Outstanding | 47,955,470 | |
Class D Common Stock | ||
Entity Common Stock, Shares Outstanding | 3,783,074 | |
Common Units | ||
Entity Common Stock, Shares Outstanding | 32,163,538 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 438,655 | $ 410,368 |
Accounts receivable, net | 16,709 | 16,065 |
Other receivables | 20,148 | 18,087 |
Inventory | 5,666 | 4,210 |
Settlement processing assets | 351,599 | 311,681 |
Other current assets | 26,201 | 20,514 |
Total current assets | 858,978 | 780,925 |
Equipment and improvements, net | 66,577 | 68,506 |
Goodwill, net | 381,186 | 385,651 |
Intangible assets, net | 193,761 | 200,726 |
Deferred tax assets | 242,868 | 238,261 |
Operating lease right-of-use assets | 39,165 | 34,704 |
Investment in equity securities, at fair value | 23,095 | 25,398 |
Other assets | 19,867 | 19,214 |
Total assets | 1,825,497 | 1,753,385 |
Current liabilities: | ||
Settlement lines of credit | 8,255 | 7,887 |
Current portion of long-term debt | 14,092 | 14,058 |
Accounts payable | 10,881 | 6,889 |
Accrued expenses and other current liabilities | 123,785 | 127,060 |
Settlement processing obligations | 480,475 | 422,109 |
Current portion of operating lease liabilities, inclusive of related party liability of $1.3 million at June 30, 2022 and December 31, 2021 | 7,243 | 7,122 |
Total current liabilities | 644,731 | 585,125 |
Long-term debt, net of current portion | 568,497 | 568,632 |
Deferred tax liabilities | 25,207 | 22,207 |
Tax receivable agreement obligations, inclusive of related party liability of $169.4 million at June 30, 2022 and December 31, 2021 | 180,143 | 180,143 |
Operating lease liabilities, net of current portion, inclusive of related party liability of $0.1 million and $1.0 million at June 30, 2022 and December 31, 2021, respectively | 33,609 | 28,948 |
Other long-term liabilities | 11,572 | 7,891 |
Total liabilities | 1,463,759 | 1,392,946 |
Commitments and contingencies | ||
Redeemable non-controlling interests | 958,908 | 1,029,090 |
Redeemable preferred stock (par value, $0.0001 per share), Authorized, Issued and Outstanding - 152,250 shares at June 30, 2022 and December 31, 2021. Liquidation preference: $173,329 and $168,309 at June 30, 2022 and December 31, 2021, respectively | 169,144 | 164,007 |
Shareholders' equity (deficit): | ||
Additional paid-in capital | ||
Accumulated deficit attributable to Class A common stock | (584,534) | (652,871) |
Accumulated other comprehensive loss | (12,747) | (9,154) |
Total EVO Payments, Inc. shareholders' deficit | (597,276) | (662,020) |
Nonredeemable non-controlling interests | (169,038) | (170,638) |
Total deficit | (766,314) | (832,658) |
Total liabilities, redeemable non-controlling interests, redeemable preferred stock, and shareholders' deficit | 1,825,497 | 1,753,385 |
Class A Common Stock | ||
Shareholders' equity (deficit): | ||
Common stock | 5 | 5 |
Class D Common Stock | ||
Shareholders' equity (deficit): | ||
Common stock |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Operating lease liabilities, related party current | $ 1,300 | $ 1,300 |
Tax receivable agreement, related party | 169,400 | 169,400 |
Operating lease liabilities, related party non current | $ 100 | $ 1,000 |
Redeemable preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Redeemable preferred stock shares authorized (in shares) | 152,250 | 152,250 |
Redeemable preferred stock shares issued (in shares) | 152,250 | 152,250 |
Redeemable preferred stock shares outstanding (in shares) | 152,250 | 152,250 |
Redeemable preferred stock liquidation preference | $ 173,329 | $ 168,309 |
Class A Common Stock | ||
Shareholders' 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) | 47,936,987 | 47,446,061 |
Common stock shares outstanding (in shares) | 47,936,987 | 47,446,061 |
Class D Common Stock | ||
Shareholders' 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) | 3,783,074 | 3,783,074 |
Common stock shares outstanding (in shares) | 3,783,074 | 3,783,074 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||
Revenue | $ 137,671 | $ 122,235 | $ 264,597 | $ 228,415 |
Operating expenses: | ||||
Cost of services and products | 22,431 | 18,028 | 44,447 | 35,155 |
Selling, general, and administrative | 70,502 | 65,670 | 143,215 | 126,068 |
Depreciation and amortization | 18,806 | 20,695 | 39,317 | 41,621 |
Total operating expenses | 111,739 | 104,393 | 226,979 | 202,844 |
Income from operations | 25,932 | 17,842 | 37,618 | 25,571 |
Other expense: | ||||
Interest income | 638 | 329 | 1,460 | 570 |
Interest expense | (4,120) | (6,061) | (8,374) | (12,159) |
(Loss) gain on investment in equity securities | (2,918) | 2,506 | (2,303) | 2,266 |
Other expense, net | (532) | (794) | (886) | (719) |
Total other expense | (6,932) | (4,020) | (10,103) | (10,042) |
Income before income taxes | 19,000 | 13,822 | 27,515 | 15,529 |
Income tax expense | (7,742) | (7,045) | (11,101) | (11,575) |
Net income | 11,258 | 6,777 | 16,414 | 3,954 |
Less: Net income attributable to non-controlling interests in consolidated entities | 3,844 | 2,157 | 5,700 | 3,225 |
Less: Net income (loss) attributable to non-controlling interests of EVO Investco, LLC | 3,061 | 1,457 | 3,778 | (1,592) |
Net income attributable to EVO Payments, Inc. | 4,353 | 3,163 | 6,936 | 2,321 |
Less: Accrual of redeemable preferred stock paid-in-kind dividends | 2,603 | 2,445 | 5,137 | 4,827 |
Net income (loss) attributable to Class A common stock | $ 1,750 | $ 718 | $ 1,799 | $ (2,506) |
Earnings per share | ||||
Basic | $ 0.03 | $ 0.01 | $ 0.03 | $ (0.05) |
Diluted | $ 0.03 | $ 0.01 | $ 0.03 | $ (0.05) |
Weighted-average Class A common stock outstanding | ||||
Basic | 47,862,425 | 47,038,194 | 47,702,066 | 46,775,245 |
Diluted | 48,615,132 | 47,038,194 | 47,702,066 | 46,775,245 |
Comprehensive income (loss): | ||||
Net income | $ 11,258 | $ 6,777 | $ 16,414 | $ 3,954 |
Change in fair value of interest rate swap, net of tax | 1,099 | (78) | 4,256 | 311 |
Change in fair value of cross currency swap, net of tax | 568 | 568 | ||
Unrealized gain (loss) on foreign currency translation adjustment, net of tax | (22,782) | 13,722 | (21,837) | (8,049) |
Other comprehensive income (loss) | (21,115) | 13,644 | (17,013) | (7,738) |
Comprehensive income (loss) | (9,857) | 20,421 | (599) | (3,784) |
Less: Comprehensive income attributable to non-controlling interests in consolidated entities | (551) | 4,135 | 20 | 1,387 |
Less: Comprehensive income (loss) attributable to non-controlling interests of EVO Investco, LLC | (6,570) | 6,803 | (3,962) | (3,699) |
Comprehensive income (loss) attributable to EVO Payments, Inc. | $ (2,736) | $ 9,483 | $ 3,343 | $ (1,472) |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||
Change in fair value of interest rate swap, tax (expense) benefit | $ (0.1) | $ (0.1) | $ (0.6) | $ (0.1) |
Change in fair value of cross currency swap, tax | (0.1) | |||
Unrealized (loss) gain on foreign currency translation adjustment, tax (expense) benefit | $ 6 | $ (0.6) | $ 7.5 | $ (1.1) |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Changes in Equity (Deficit) - USD ($) $ in Thousands | Total equity (deficit) | Total EVO Payments, Inc. equity/(deficit) | Common Stock Class A Common Stock | Common Stock Class B Common Stock | Common Stock Class C Common Stock | Common Stock Class D Common Stock | Additional paid-in capital | Accumulated deficit attributable to Class A common stock | Accumulated other comprehensive income (loss) | Noncontrolling interests | Redeemable preferred stock | Total |
Beginning balance at Dec. 31, 2020 | $ 154,118 | |||||||||||
Beginning balance (shares) at Dec. 31, 2020 | 152,000 | |||||||||||
Redeemable Preferred Stock | ||||||||||||
Accrual of redeemable preferred stock paid-in-kind dividends | $ 2,382 | |||||||||||
Ending balance at Mar. 31, 2021 | $ 156,500 | |||||||||||
Ending balance (shares) at Mar. 31, 2021 | 152,000 | |||||||||||
Beginning balance at Dec. 31, 2020 | $ (859,218) | $ (674,156) | $ 5 | $ 3 | $ (675,209) | $ 1,045 | $ (185,062) | |||||
Beginning balance (in shares) at Dec. 31, 2020 | 46,402,000 | 32,164,000 | 1,720,000 | 2,391,000 | ||||||||
Statements of Changes in Equity | ||||||||||||
Net loss | (1,099) | (842) | (842) | (257) | ||||||||
Cumulative translation adjustment | (11,166) | (10,307) | (10,307) | (859) | ||||||||
Distributions | (161) | (161) | ||||||||||
Share-based compensation expense | 5,798 | 5,798 | $ 5,798 | |||||||||
Vesting of equity awards | (2,383) | (2,383) | (2,383) | |||||||||
Vesting of equity awards (in shares) | 149,000 | |||||||||||
Exercise of stock options | 2,813 | 2,813 | 2,813 | |||||||||
Exercise of stock options (in shares) | 136,000 | |||||||||||
Exchanges of Class C and Class D common stock for Class A common stock | (7,193) | (7,193) | 7,193 | |||||||||
Exchanges of Class C and Class D common stock for Class A common stock (in shares) | 157,000 | (82,000) | (75,000) | |||||||||
Deferred taxes in connection with increase in ownership of EVO Investco, LLC | 113 | 113 | 113 | |||||||||
Tax receivable agreement in connection with share exchanges | 173 | 173 | 173 | |||||||||
Accrual of redeemable preferred stock paid-in-kind dividends | (2,382) | (2,382) | (2,382) | |||||||||
Change in fair value of interest rate swap | 216 | 194 | 194 | 22 | ||||||||
eService redeemable non-controlling interest fair value adjustment | 10,028 | 9,247 | 9,247 | 781 | ||||||||
Blueapple redeemable non-controlling interest fair value adjustment | (19,377) | (17,869) | (17,869) | (1,508) | $ 19,377 | |||||||
Reclassification of additional paid-in-capital to accumulated deficit | 3,061 | (3,061) | ||||||||||
Ending balance at Mar. 31, 2021 | (876,645) | (696,794) | $ 5 | $ 3 | (687,734) | (9,068) | (179,851) | |||||
Ending balance (in shares) at Mar. 31, 2021 | 46,844,000 | 32,164,000 | 1,638,000 | 2,316,000 | ||||||||
Beginning balance at Dec. 31, 2020 | 1,055,633 | |||||||||||
Redeemable non-controlling interests | ||||||||||||
Net income | (1,724) | |||||||||||
Cumulative translation adjustment | (10,605) | |||||||||||
Contributions | 488 | |||||||||||
Distributions | (8,500) | |||||||||||
Change in fair value of interest rate swap | 173 | |||||||||||
Blueapple redeemable non-controlling interest fair value adjustment | (10,028) | |||||||||||
Ending balance at Mar. 31, 2021 | 1,044,814 | |||||||||||
Beginning balance at Dec. 31, 2020 | $ 154,118 | |||||||||||
Beginning balance (shares) at Dec. 31, 2020 | 152,000 | |||||||||||
Ending balance at Dec. 31, 2021 | $ 164,007 | $ 164,007 | ||||||||||
Ending balance (shares) at Dec. 31, 2021 | 152,000 | 152,250 | ||||||||||
Beginning balance at Dec. 31, 2020 | (859,218) | (674,156) | $ 5 | $ 3 | (675,209) | 1,045 | (185,062) | |||||
Beginning balance (in shares) at Dec. 31, 2020 | 46,402,000 | 32,164,000 | 1,720,000 | 2,391,000 | ||||||||
Ending balance at Dec. 31, 2021 | (832,658) | (662,020) | $ 5 | (652,871) | (9,154) | (170,638) | $ (832,658) | |||||
Ending balance (in shares) at Dec. 31, 2021 | 47,446,000 | 3,783,000 | ||||||||||
Beginning balance at Dec. 31, 2020 | 1,055,633 | |||||||||||
Redeemable non-controlling interests | ||||||||||||
Net income | 8,781 | |||||||||||
Distributions | (13,655) | |||||||||||
Ending balance at Dec. 31, 2021 | 1,029,090 | |||||||||||
Beginning balance at Mar. 31, 2021 | $ 156,500 | |||||||||||
Beginning balance (shares) at Mar. 31, 2021 | 152,000 | |||||||||||
Redeemable Preferred Stock | ||||||||||||
Accrual of redeemable preferred stock paid-in-kind dividends | $ 2,445 | |||||||||||
Ending balance at Jun. 30, 2021 | $ 158,945 | |||||||||||
Ending balance (shares) at Jun. 30, 2021 | 152,000 | |||||||||||
Beginning balance at Mar. 31, 2021 | (876,645) | (696,794) | $ 5 | $ 3 | (687,734) | (9,068) | (179,851) | |||||
Beginning balance (in shares) at Mar. 31, 2021 | 46,844,000 | 32,164,000 | 1,638,000 | 2,316,000 | ||||||||
Statements of Changes in Equity | ||||||||||||
Net loss | 3,362 | 3,163 | 3,163 | 199 | ||||||||
Cumulative translation adjustment | 6,963 | 6,387 | 6,387 | 576 | ||||||||
Distributions | (25) | (25) | ||||||||||
Share-based compensation expense | 6,489 | 6,489 | 6,489 | |||||||||
Vesting of equity awards | (1,096) | (1,096) | (1,096) | |||||||||
Vesting of equity awards (in shares) | 69,000 | |||||||||||
Exercise of stock options | 4,529 | 4,529 | 4,529 | |||||||||
Exercise of stock options (in shares) | 278,000 | |||||||||||
Exchanges of Class C and Class D common stock for Class A common stock | (6,038) | (6,038) | 6,038 | |||||||||
Exchanges of Class C and Class D common stock for Class A common stock (in shares) | 132,000 | (39,000) | (93,000) | |||||||||
Conversion of Class C common stock to Class D common stock (in shares) | (1,599,000) | 1,599,000 | ||||||||||
Cancellation of Class B common stock | $ (3) | 3 | ||||||||||
Cancellation of Class B common stock (Shares) | (32,164,000) | |||||||||||
Deferred taxes in connection with increase in ownership of EVO Investco, LLC | 112 | 112 | 112 | |||||||||
Tax receivable agreement in connection with share exchanges | 156 | 156 | 156 | |||||||||
Accrual of redeemable preferred stock paid-in-kind dividends | (2,445) | (2,445) | (2,445) | |||||||||
Change in fair value of interest rate swap | (68) | (67) | (67) | (1) | ||||||||
eService redeemable non-controlling interest fair value adjustment | (15,106) | (13,977) | (13,977) | (1,129) | ||||||||
Blueapple redeemable non-controlling interest fair value adjustment | (10,504) | (9,719) | (9,719) | (785) | 10,504 | |||||||
Reclassification of additional paid-in-capital to accumulated deficit | 21,986 | (21,986) | ||||||||||
Ending balance at Jun. 30, 2021 | (884,278) | (709,300) | $ 5 | (706,557) | (2,748) | (174,978) | ||||||
Ending balance (in shares) at Jun. 30, 2021 | 47,323,000 | 3,822,000 | ||||||||||
Beginning balance at Mar. 31, 2021 | 1,044,814 | |||||||||||
Redeemable non-controlling interests | ||||||||||||
Net income | 3,415 | |||||||||||
Cumulative translation adjustment | 6,759 | |||||||||||
Distributions | (790) | |||||||||||
Change in fair value of interest rate swap | (10) | |||||||||||
eService redeemable non-controlling interest fair value adjustment | 15,106 | |||||||||||
Ending balance at Jun. 30, 2021 | 1,079,798 | |||||||||||
Beginning balance at Dec. 31, 2021 | $ 164,007 | $ 164,007 | ||||||||||
Beginning balance (shares) at Dec. 31, 2021 | 152,000 | 152,250 | ||||||||||
Redeemable Preferred Stock | ||||||||||||
Accrual of redeemable preferred stock paid-in-kind dividends | $ 2,534 | |||||||||||
Ending balance at Mar. 31, 2022 | $ 166,541 | |||||||||||
Ending balance (shares) at Mar. 31, 2022 | 152,000 | |||||||||||
Beginning balance at Dec. 31, 2021 | (832,658) | (662,020) | $ 5 | (652,871) | (9,154) | (170,638) | $ (832,658) | |||||
Beginning balance (in shares) at Dec. 31, 2021 | 47,446,000 | 3,783,000 | ||||||||||
Statements of Changes in Equity | ||||||||||||
Net loss | 2,491 | 2,583 | 2,583 | (92) | ||||||||
Cumulative translation adjustment | 1,936 | 1,901 | 1,901 | 35 | ||||||||
Distributions | (344) | (344) | ||||||||||
Share-based compensation expense | 7,003 | 7,003 | 7,003 | |||||||||
Vesting of equity awards | (2,659) | (2,659) | (2,659) | |||||||||
Vesting of equity awards (in shares) | 289,000 | |||||||||||
Exercise of stock options | 603 | 603 | 603 | |||||||||
Exercise of stock options (in shares) | 41,000 | |||||||||||
Deferred taxes in connection with increase in ownership of EVO Investco, LLC | 66 | 66 | 66 | |||||||||
Accrual of redeemable preferred stock paid-in-kind dividends | (2,534) | (2,534) | (2,534) | |||||||||
Change in fair value of interest rate swap | 1,759 | 1,595 | 1,595 | 164 | ||||||||
eService redeemable non-controlling interest fair value adjustment | (6,385) | (5,916) | (5,916) | (469) | ||||||||
Blueapple redeemable non-controlling interest fair value adjustment | 79,080 | 73,278 | 73,278 | 5,802 | ||||||||
Ending balance at Mar. 31, 2022 | (751,642) | (586,100) | $ 5 | 2,479 | (582,926) | (5,658) | (165,542) | |||||
Ending balance (in shares) at Mar. 31, 2022 | 47,776,000 | 3,783,000 | ||||||||||
Beginning balance at Dec. 31, 2021 | 1,029,090 | |||||||||||
Redeemable non-controlling interests | ||||||||||||
Net income | 2,665 | |||||||||||
Cumulative translation adjustment | (991) | |||||||||||
Change in fair value of interest rate swap | 1,398 | |||||||||||
Blueapple redeemable non-controlling interest fair value adjustment | (79,080) | |||||||||||
eService redeemable non-controlling interest fair value adjustment | 6,385 | |||||||||||
Ending balance at Mar. 31, 2022 | 959,467 | |||||||||||
Beginning balance at Dec. 31, 2021 | $ 164,007 | $ 164,007 | ||||||||||
Beginning balance (shares) at Dec. 31, 2021 | 152,000 | 152,250 | ||||||||||
Ending balance at Jun. 30, 2022 | $ 169,144 | $ 169,144 | ||||||||||
Ending balance (shares) at Jun. 30, 2022 | 152,000 | 152,250 | ||||||||||
Beginning balance at Dec. 31, 2021 | (832,658) | (662,020) | $ 5 | (652,871) | (9,154) | (170,638) | $ (832,658) | |||||
Beginning balance (in shares) at Dec. 31, 2021 | 47,446,000 | 3,783,000 | ||||||||||
Ending balance at Jun. 30, 2022 | (766,314) | (597,276) | $ 5 | (584,534) | (12,747) | (169,038) | (766,314) | |||||
Ending balance (in shares) at Jun. 30, 2022 | 47,937,000 | 3,783,000 | ||||||||||
Beginning balance at Dec. 31, 2021 | 1,029,090 | |||||||||||
Redeemable non-controlling interests | ||||||||||||
Net income | 8,391 | |||||||||||
Distributions | (6,989) | |||||||||||
Ending balance at Jun. 30, 2022 | 958,908 | |||||||||||
Beginning balance at Mar. 31, 2022 | $ 166,541 | |||||||||||
Beginning balance (shares) at Mar. 31, 2022 | 152,000 | |||||||||||
Redeemable Preferred Stock | ||||||||||||
Accrual of redeemable preferred stock paid-in-kind dividends | $ 2,603 | |||||||||||
Ending balance at Jun. 30, 2022 | $ 169,144 | $ 169,144 | ||||||||||
Ending balance (shares) at Jun. 30, 2022 | 152,000 | 152,250 | ||||||||||
Beginning balance at Mar. 31, 2022 | (751,642) | (586,100) | $ 5 | 2,479 | (582,926) | (5,658) | (165,542) | |||||
Beginning balance (in shares) at Mar. 31, 2022 | 47,776,000 | 3,783,000 | ||||||||||
Statements of Changes in Equity | ||||||||||||
Net loss | 5,532 | 4,353 | 4,353 | 1,179 | $ 5,726 | |||||||
Cumulative translation adjustment | (9,032) | (7,933) | (7,933) | (1,099) | (13,750) | |||||||
Distributions | (3,646) | (3,384) | (3,384) | (262) | (6,989) | |||||||
Share-based compensation expense | 7,707 | 7,707 | 7,707 | |||||||||
Vesting of equity awards | (423) | (423) | (423) | |||||||||
Vesting of equity awards (in shares) | 126,000 | |||||||||||
Exercise of stock options | 549 | 549 | 549 | |||||||||
Exercise of stock options (in shares) | 35,000 | |||||||||||
Deferred taxes in connection with increase in ownership of EVO Investco, LLC | 31 | 31 | 31 | |||||||||
Change in ownership of nonredeemable non-controlling interest | 2,396 | 2,396 | (2,396) | |||||||||
Accrual of redeemable preferred stock paid-in-kind dividends | (2,603) | (2,603) | (2,603) | |||||||||
Change in fair value of interest rate swap | 613 | 556 | 556 | 57 | 486 | |||||||
Change in fair value of cross currency swap, net of tax | 317 | 288 | 288 | 29 | 251 | |||||||
eService redeemable non-controlling interest fair value adjustment | 3,694 | 3,424 | 3,424 | 270 | (3,694) | |||||||
Blueapple redeemable non-controlling interest fair value adjustment | (17,411) | (16,137) | (16,137) | (1,274) | 17,411 | |||||||
Reclassification of additional paid-in-capital to accumulated deficit | $ 4,973 | (4,973) | ||||||||||
Ending balance at Jun. 30, 2022 | $ (766,314) | $ (597,276) | $ 5 | $ (584,534) | $ (12,747) | $ (169,038) | (766,314) | |||||
Ending balance (in shares) at Jun. 30, 2022 | 47,937,000 | 3,783,000 | ||||||||||
Beginning balance at Mar. 31, 2022 | 959,467 | |||||||||||
Ending balance at Jun. 30, 2022 | $ 958,908 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 16,414 | $ 3,954 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 39,317 | 41,621 |
(Gain) loss on investment in equity securities | 2,303 | (2,266) |
Amortization of deferred financing costs | 593 | 1,337 |
Loss on disposal of equipment and improvements | 371 | 628 |
Share-based compensation expense | 14,710 | 12,287 |
Deferred taxes, net | 6,226 | 10,954 |
Other | (1,866) | 503 |
Changes in operating assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable, net | (1,986) | 2,285 |
Other receivables | (2,739) | 2,653 |
Inventory | (1,786) | (293) |
Other current assets | 1,608 | 568 |
Operating lease right-of-use assets | 3,856 | 3,334 |
Other assets | (1,678) | (957) |
Accounts payable | 2,806 | 1,845 |
Accrued expenses and other current liabilities | (229) | (5,134) |
Settlement processing funds, net | 22,122 | (56,839) |
Operating lease liabilities | (3,729) | (3,680) |
Other | (736) | (1,214) |
Net cash provided by operating activities | 95,577 | 11,586 |
Cash flows from investing activities: | ||
Acquisition of businesses, net of cash acquired | (5,254) | (14,054) |
Purchase of equipment and improvements | (18,077) | (19,959) |
Acquisition of intangible assets | (13,621) | (4,600) |
Collections of notes receivable | 32 | |
Net cash used in investing activities | (36,952) | (38,581) |
Cash flows from financing activities: | ||
Net proceeds (repayments) of borrowings from settlement lines of credit | 799 | (2,102) |
Proceeds from long-term debt | 10,700 | |
Repayments of long-term debt | (11,350) | (3,297) |
Deferred and contingent consideration paid | (1,560) | (320) |
Repurchases of shares to satisfy minimum tax withholding | (3,082) | (3,479) |
Proceeds from exercise of common stock options | 1,152 | 7,342 |
Distributions to non-controlling interest holders | (7,595) | (9,476) |
Contribution from non-controlling interest holders | 488 | |
Net cash used in financing activities | (10,936) | (10,844) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (19,404) | (4,285) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 28,285 | (42,124) |
Cash, cash equivalents, and restricted cash, beginning of period | 410,615 | 418,539 |
Cash, cash equivalents, and restricted cash, end of period | $ 438,900 | $ 376,415 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Description of Business and Summary of Significant Accounting Policies | |
Description of Business and Summary of Significant Accounting Policies | (1) Description of Business and Summary of Significant Accounting Policies (a) Description of Business EVO, Inc. is a Delaware corporation whose primary asset is its ownership of approximately 57.1% June 30, 2022 The Company is a leading payment technology and services provider, offering an array of innovative, reliable, and secure payment solutions to merchants across the Americas and Europe and servicing more than 550,000 merchants across more than 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 the Americas 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 also offers value-added solutions such as gateway solutions, online hosted payments page capabilities, mobile-based SMS integrated payment collection services, security tokenization and encryption solutions at the physical and virtual point-of-sale (“POS”), dynamic currency conversion (“DCC”), Automated Clearing House (“ACH”), Level 2 and Level 3 data processing, management reporting solutions, loyalty programs, and Visa Direct, among other ancillary solutions. Other industry-specific processing capabilities are also in our product suite, such as recurring billing, multi-currency authorization, and cross-border processing and settlement. The Company operates two reportable segments: the Americas and Europe. (b) Basis of Presentation and Use of Estimates Certain prior period amounts have been reclassified to conform to the current period presentation where applicable. The accompanying unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, the unaudited condensed consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2022 and 2021, the unaudited condensed consolidated statements of changes in equity (deficit) for the three and six months ended June 30, 2022 and 2021, and the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 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 (the “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, 2021. 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”), evaluation of realizability of deferred tax assets, determination of liabilities under the tax receivable agreement, determination of liabilities and corresponding right-of-use assets arising from lease agreements, determination of assets or liabilities arising from derivative transactions, determination of fair value of share-based compensation, establishment of severance liabilities, establishment of allowance for doubtful accounts, and assessment of impairment of goodwill and intangible assets. (c) Principles of Consolidation 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 (d) Cash and Cash Equivalents, Restricted Cash, Settlement Related Cash and Merchant Reserves Cash and cash equivalents include all cash balances and highly liquid securities with original maturities of three months or less. Cash balances often exceed federally insured limits; however, concentration of credit risk is limited due to the payment of funds on the same day or the day following receipt in satisfaction of the settlement process. Included in cash and cash equivalents are settlement-related cash and merchant reserves. Settlement-related cash represents funds that the Company holds when the incoming amount from the card networks precedes the funding obligation to the merchant. Settlement-related cash balances are not restricted; however, these funds are generally paid out in satisfaction of settlement processing obligations and therefore are not available for general purposes. As of June 30, 2022 and December 31, 2021, settlement-related cash balances were $139.3 million and $133.3 Merchant reserves represent funds collected from the Company’s merchants that serve as collateral to minimize contingent liabilities associated with any losses that may occur under the respective merchant agreements. While this cash is not restricted in its use, the Company believes that maintaining merchant reserves to collateralize merchant losses strengthens its fiduciary standings with its card network sponsors and is in accordance with the guidelines set by the card networks. As of June 30, 2022 and December 31, 2021 $101.6 Restricted cash represents funds held as a liquidity reserve at our Chilean subsidiary, as required by local regulations. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the unaudited condensed consolidated balance sheets to the total amount shown in the unaudited condensed consolidated statements of cash flows: June 30, December 31, 2022 2021 (In thousands) Cash and cash equivalents $ 438,655 $ 410,368 Restricted cash included in other assets 245 247 Total cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows $ 438,900 $ 410,615 (e) Derivatives The Company recognizes derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of a particular derivative, whether the Company has elected to designate or not designate such derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a cash flow hedge. Investments in foreign operations with functional currencies other than the reporting currency are subject to foreign currency risk as foreign instruments are remeasured each period resulting in fluctuations in the cumulative translation adjustment (CTA) section within other comprehensive (loss) income. Net investment hedge accounting offers protection from remeasurement risk as changes in fair value of the derivative are also recorded in CTA. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company uses a forward contract, foreign currency swap, and window forward contracts to mitigate its exposure to fluctuations in foreign currency exchange rates. The Company elected not to designate the instruments as a hedge and they are not subject to hedge accounting. The Company entered into a cross currency swap to hedge the risk of fluctuations in the exchange rate related to a net investment in a foreign subsidiary. The Company designated the cross currency swap as a net investment hedge. Changes in the fair value of a net investment hedge are recorded in accumulated other comprehensive loss and reclassified into earnings when the hedged net investment is sold or substantially liquidated. Components excluded from the assessment of effectiveness will be recognized in earnings using a systematic and rational method over the life of the hedging instrument. Changes in the fair value of a derivative that is designated as, and meets all the required criteria for, a cash flow hedge are recorded in accumulated other comprehensive loss and reclassified into earnings as the underlying hedged item affects earnings. Changes in the fair value of a derivative that is not designated as a cash flow hedge are recorded as a component of other income (expense). Refer to Note 14, “Derivatives,” and Note 18, “Fair Value,” for further information on the derivative instruments. (f) Recent Accounting Pronouncements New accounting pronouncements issued by the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies are adopted as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption. Recently Adopted Accounting Pronouncement Convertible Instruments and Contracts in an Entity’s Own Equity In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Recently Issued Accounting Pronouncements Not Yet Adopted Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform Acquired Contract Assets and Liabilities in Business Combinations In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Revenue from Contracts with Customers (Topic 606). (g) Correction to previously reported consolidated statements of cash flows The Company has revised the financing section of its unaudited condensed consolidated statements of cash flows to separately classify net repayments on its settlement lines of credit of approximately $2.1 million for the six months ended June 30, 2021. As a result, the accompanying unaudited condensed consolidated statements of cash flows have been revised to correct this immaterial classification error by decreasing previously reported proceeds from long-term debt by approximately $4.2 million, and decreasing previously reported repayments of long-term debt by approximately $6.3 million, for the six months ended June 30, 2021. This revision had no effect on our previously reported net cash flows from financing activities, or on any other previously reported amounts in our unaudited condensed consolidated financial statements for the six months ended June 30, 2021. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2022 | |
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. The Company also earns revenue from the sale and rental of electronic POS equipment. The revenue recognized from the sale and rental of POS equipment totaled $9.1 $9.8 $19.6 The Company disaggregates revenue based on reporting segment and division. The Company’s divisions are as follows: ● Direct – Represents the direct solicitation of merchants through referral relationships, including financial institutions and the Company’s direct sales channel. The Company has long-term, exclusive referral relationships with leading international financial institutions that represent thousands of branch locations which actively pursue new merchant relationships on the Company’s behalf. The Company also utilizes a direct sales team, including outbound telesales, to build and maintain relationships with its merchants and referral partners. The Company also has referral arrangements with independent sales organizations (“ISOs”) that refer merchants to the Company. ● Tech-enabled – Represents merchants requiring a technical integration at the point of sale between the Company and a third party software vendor whereby the third party passes information to our systems to enable payment processing. These merchant acquiring arrangements are supported by partnerships with independent software providers, integrated software dealers, and eCommerce gateway providers. In the United States, this division also supports business-to-business (“B2B”) customers via proprietary solutions sold directly to merchants and via enterprise resource planning software dealers and integrators. ● Traditional – Represents the Company’s heritage United States portfolio composed primarily of ISO relationships where the merchant portfolio is not actively managed by the Company. 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 June 30, 2022 Six Months Ended June 30, 2022 Americas Europe Total Americas Europe Total (In thousands) (In thousands) Divisions: Direct $ 36,023 42,751 $ 78,774 $ 68,215 $ 81,190 $ 149,405 Tech-enabled 35,426 13,228 48,654 70,007 24,855 94,862 Traditional 10,243 — 10,243 20,330 — 20,330 Totals $ 81,692 $ 55,979 $ 137,671 $ 158,552 $ 106,045 $ 264,597 Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Americas Europe Total Americas Europe Total (In thousands) (In thousands) Divisions: Direct $ 32,449 35,874 $ 68,323 $ 61,353 $ 64,096 $ 125,449 Tech-enabled 33,623 9,382 43,005 64,782 16,913 81,695 Traditional 10,907 — 10,907 21,271 — 21,271 Totals $ 76,979 $ 45,256 $ 122,235 $ 147,406 $ 81,009 $ 228,415 |
Settlement Processing Assets an
Settlement Processing Assets and Obligations | 6 Months Ended |
Jun. 30, 2022 | |
Settlement Processing Assets and Obligations | |
Settlement Processing Assets and Obligations | (3) Settlement Processing Assets and Obligations Settlement processing assets and obligations represent intermediary balances within the settlement process involving the movement of funds between consumers, card issuers, card networks, the Company, and its merchants. The Company processes funds settlement through two models, the sponsorship model and the direct membership model. In certain markets, the Company operates under the sponsorship model whereby the Company has a sponsorship agreement with a bank that is a member of the various card networks (collectively, the “Member Banks”) providing for the funds settlement by such Member Banks on behalf of the Company related to the transactions processed by the Company through card networks, such as Visa and MasterCard. Under the sponsorship model, it is the responsibility of the Member Bank to ensure that the Company adheres to the standards of the card networks. In other markets, the Company operates under the direct membership model whereby the Company has direct membership with the various card networks for the funds settlement related to the transactions processed by the Company through the card networks. As a direct member under the direct membership model, it is the responsibility of the Company to adhere to the standards of the card networks. The card networks operate as an intermediary between the card issuing banks, on the one hand, and, as applicable, either the Member Banks or the Company (under the sponsorship model or the direct membership model, respectively), on the other hand, whereby funds are received by the card issuing banks and remitted to the Member Bank or the Company, as applicable, via the card networks on a daily basis. The Company then remits these funds to its merchants, either through a Member Bank under the sponsorship model, or directly to merchants under the direct membership model. Incoming funds due from the card networks on behalf of the card issuing bank are classified as receivables from card networks in the table below, whereas the funds due from the Company to its merchants are classified as settlement liabilities due to merchants. The Company enters into agreements with its merchants which outline the fees charged by the Company for processing payment transactions and performing funds settlement. Fees are either settled daily or monthly on a net basis or monthly through an invoice arrangement. Receivables from merchants as presented below represent amounts to be either net settled or invoiced to the Company’s merchants related to the various fees associated with the payment processing and funds settlement services provided by the Company. As described in Note 1, “Description of Business and Summary of Significant Accounting Policies,” the Company collects funds from merchants that serve as collateral to mitigate potential future losses, and recognizes a corresponding liability which is presented as merchant reserves within the settlement processing obligations. Refer to the table below. While receivables from card networks and settlement liabilities due to merchants represent intermediary balances in the transaction settlement process, timing differences, interchange expense, merchant reserves and exception items cause differences between the amount the Company receives through the Member Banks from the card networks and the amount funded to merchants. A summary of settlement processing assets and obligations is as follows: June 30, December 31, 2022 2021 (In thousands) Settlement processing assets: Receivable from card networks $ 252,798 $ 209,734 Receivable from merchants 98,801 101,947 Totals $ 351,599 $ 311,681 Settlement processing obligations: Settlement liabilities due to merchants $ (380,504) $ (320,537) Merchant reserves (99,971) (101,572) Totals $ (480,475) $ (422,109) |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share | |
Earnings Per Share | (4) Earnings Per Share The following table sets forth the computation of the Company's basic and diluted earnings per share of Class A common stock, as well as the anti-dilutive shares excluded (in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 2022 2021 Numerator: Net income attributable to EVO Payments, Inc. $ 4,353 $ 6,936 $ 3,163 $ 2,321 Less: Accrual of redeemable preferred stock paid-in-kind dividends 2,603 5,137 2,445 4,827 Less: Allocation of undistributed earnings to preferred shares 324 332 129 — Undistributed income (loss) attributable to shares of Class A common stock $ 1,426 $ 1,467 $ 589 $ (2,506) Denominator: Weighted-average Class A common stock outstanding 47,862,425 47,702,066 47,038,194 46,775,245 Effect of dilutive securities 752,707 — — — Total dilutive securities 48,615,132 47,702,066 47,038,194 46,775,245 Earnings per share: Basic $ 0.03 $ 0.03 $ 0.01 $ (0.05) Diluted $ 0.03 $ 0.03 $ 0.01 $ (0.05) Weighted-average anti-dilutive securities: Redeemable preferred stock 152,250 152,250 152,250 152,250 Stock options — 5,718,225 6,081,132 5,785,041 RSUs — 1,651,492 1,451,977 1,369,429 RSAs — 145 291 621 PSUs 302,374 212,163 — — Class C common stock — — 965,197 1,328,614 Class D common stock 3,783,074 3,783,074 2,934,418 2,655,306 |
Tax Receivable Agreement
Tax Receivable Agreement | 6 Months Ended |
Jun. 30, 2022 | |
Tax Receivable Agreement | |
Tax Receivable Agreement | (5) Tax Receivable Agreement In connection with the IPO, the Company entered into a Tax Receivable Agreement (“TRA”) that requires the Company to make payments to the Continuing LLC Owners 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 and paired Class C common stock or paired Class D common stock for Class A common stock, purchases or redemptions of LLC Interests, 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 prior years, 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 purchases of LLC Interests and the exchanges of LLC Interests and paired shares of Class C common stock and paired Class D common stock for shares of Class A common stock sold in connection with and following the IPO, through June 30, 2022, the Company’s deferred tax asset and payment liability pursuant to the TRA were approximately $211.9 million ( $178.4 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 or sales 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 EVO, 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 in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. In May 2021, pursuant to the Company’s amended and restated certificate of incorporation, each outstanding share of Class C common stock was automatically converted into one share of Class D common stock. Refer to Note 21, “Shareholders’ Equity,” for further information. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2022 | |
Acquisitions | |
Acquisitions | (6) Acquisitions 2022 Acquisition (a) North49 Business Solutions, Inc. In May 2022, a subsidiary of EVO, Inc. completed the acquisition of 100% of the outstanding shares of North49 Business Solutions, Inc. (“North49”), a certified Sage development partner based in Canada, to provide enhanced B2B integrated payment solutions for Sage customers. North49 is presented in the Company’s Americas segment. This acquisition was not significant, individually or in the aggregate, to the Company’s financial position, results of operations, or cash flows. 2021 Acquisitions (a) Anderson Zaks Limited In July 2021, a subsidiary of EVO, Inc. completed the acquisition of 100% of the outstanding shares of Anderson Zaks Ltd., an omni-channel payment gateway provider based in the United Kingdom. Anderson Zaks Ltd. is presented in the Company’s Europe segment. This acquisition was not significant, individually or in the aggregate, to the Company’s financial position, results of operations, or cash flows. (b) Pago Fácil In June 2021, subsidiaries of EVO, Inc. completed the acquisition of 100% of the outstanding shares of Pago Fácil Tecnologia SpA and PST Pago Fácil SpA (together, “Pago Fácil”), a leading eCommerce payment gateway in Chile, in partnership with its joint venture partner Banco de Crédito e Inversiones (“BCI”). The total consideration paid for the acquisition was $20.9 million, which includes an upfront payment of $18.0 million and deferred considerations of $0.9 million and $2.0 million payable 9 months and 18 months after the closing date, respectively. The deferred consideration of $0.9 million was paid in full in March 2022. No measurement-period adjustment was made and the following purchase price allocation was finalized during the quarter ended June 30, 2022: As of the Estimated acquisition date Useful Life Definite-lived intangible assets (In thousands ) Acquired software $ 9,400 5 years Customer relationships 3,000 7 years Trademarks 440 2 years Non-compete agreement 150 3 years Deferred tax liabilities (3,507) Other assets, net 855 Goodwill 10,562 Total purchase price $ 20,900 Goodwill generated from the Pago Fácil acquisition is not deductible for tax purposes. Pago Fácil is presented in the Company’s Americas segment. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
Leases | |
Leases | (7) Leases The Company’s leases consist primarily of real estate and personal property leases throughout the markets in which the Company operates. At contract inception, the Company determines whether an arrangement is or contains a lease, and for each identified lease, evaluates the classification as operating or financing. The Company had no finance leases as of June 30, 2022 and December 31, 2021. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The weighted-average remaining lease term was 6.03 years and 6.36 years at June 30, 2022 and December 31, 2021, respectively. The Company had no significant short-term leases as of June 30, 2022 and December 31, 2021. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rates were determined based on a portfolio approach considering the Company’s current secured borrowing rate adjusted for market conditions and the length of the lease term. The weighted-average discount rates used in the measurement of lease liabilities were 5.46% and 5.81% as of June 30, 2022 and December 31, 2021, respectively. Operating lease cost is recognized on a straight-line basis over the lease term. Operating lease costs for the three months ended June 30, 2022 and 2021 were $3.1 million and $2.8 $5.5 $0.5 June 30, 2022 and 2021, respectively. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities. Cash paid for amounts included in the measurement of operating lease liabilities for the six months ended June 30, 2022 and 2021 was $4.5 million and $4.7 As of June 30, 2022, maturities of lease liabilities are as follows: (In thousands) Years ending: 2022 (remainder of the year) $ 4,212 2023 8,787 2024 8,278 2025 7,730 2026 7,196 2027 and thereafter 12,361 Total future minimum lease payments (undiscounted) 48,564 Less: present value discount (7,712) Present value of lease liability $ 40,852 |
Equipment and Improvements
Equipment and Improvements | 6 Months Ended |
Jun. 30, 2022 | |
Equipment and Improvements | |
Equipment and Improvements | (8) Equipment and Improvements Equipment and improvements consisted of the following: Estimated Useful Lives in June 30, December 31, Years 2022 2021 (In thousands) Card processing equipment 3-5 $ 165,155 $ 155,843 Office equipment 3-5 47,214 44,393 Computer software 3-5 59,645 60,226 Leasehold improvements various 18,325 17,883 Furniture and fixtures 5-7 4,766 4,433 Totals 295,105 282,778 Less accumulated depreciation (224,028) (213,761) Foreign currency translation adjustment (4,500) (511) Totals $ 66,577 $ 68,506 Depreciation expense related to equipment and improvements was $8.1 million and $9.9 million for the three months ended June 30, 2022 and 2021, respectively. Depreciation expense related to equipment and improvements was $16.5 million and $19.9 million for the six months ended June 30, 2022 and 2021, respectively. In the six months ended June 30, 2022, gross equipment and improvements, and accumulated depreciation were each reduced by $6.6 million and $6.2 $4.1 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (9) Goodwill and Intangible Assets Intangible assets, net consist of the following: June 30, 2022 Gross carrying value Accumulated amortization Accumulated impairment charges Translation and other adjustments Net (In thousands) Merchant contract portfolios and customer relationships $ 297,713 $ (203,507) $ (5,685) $ (31,832) $ 56,689 Marketing alliance agreements 197,412 (87,823) (7,557) (23,028) 79,004 Internally developed and acquired software 128,690 (59,411) (9,324) (5,144) 54,811 Trademarks, definite-lived 20,851 (13,863) - (3,807) 3,181 Non-compete agreements 150 (47) - (27) 76 Total $ 644,816 $ (364,651) $ (22,566) $ (63,838) $ 193,761 December 31, 2021 Gross carrying value Accumulated amortization Accumulated impairment charges Translation and other adjustments Net (In thousands) Merchant contract portfolios and customer relationships $ 297,056 $ (197,187) $ (5,685) $ (30,713) $ 63,471 Marketing alliance agreements 197,412 (79,811) (7,557) (20,896) 89,148 Internally developed and acquired software 110,396 (53,110) (10,191) (3,236) 43,859 Trademarks, definite-lived 22,068 (13,427) (901) (3,596) 4,144 Non-compete agreements 6,612 (6,487) - (21) 104 Total $ 633,544 $ (350,022) $ (24,334) $ (58,462) $ 200,726 Amortization expense related to intangible assets was $10.7 $10.8 $21.7 As of June 30, 2022, the gross carrying value of non-compete agreements, internally developed software, and definite-lived trademarks were reduced by $6.5 million, $2.2 million, and $1.2 million, respectively, with an offset to accumulated amortization, accumulated impairment charges, and translation and other adjustments, for fully amortized or previously impaired intangible assets. Estimated amortization expense to be recognized during each of the five years subsequent to June 30, 2022 (In thousands) Years ending: 2022 (remainder of the year) $ 23,477 2023 41,184 2024 30,902 2025 23,112 2026 17,330 2027 and thereafter 57,756 Total $ 193,761 There were no impairments of intangible assets for the three and six months ended June 30, 2022 and 2021. The following represents intangible assets, net by segment: June 30, December 31, 2022 2021 (In thousands) Intangible assets, net: Americas Merchant contract portfolios and customer relationships $ 45,578 $ 49,435 Marketing alliance agreements 53,111 56,996 Internally developed and acquired software 41,624 28,812 Trademarks, definite-lived 1,367 1,497 Non-compete agreements 76 104 Total 141,756 136,844 Europe Merchant contract portfolios and customer relationships 11,111 14,036 Marketing alliance agreements 25,893 32,152 Internally developed and acquired software 13,187 15,047 Trademarks, definite-lived 1,814 2,647 Total 52,005 63,882 Total intangible assets, net $ 193,761 $ 200,726 The change in the carrying amount of goodwill for the six months ended June 30, 2022, in total and by reportable segment, is as follows: Reportable Segment Americas Europe Total (In thousands) Goodwill, gross, as of December 31, 2021 $ 274,930 $ 135,012 $ 409,942 Accumulated impairment losses — (24,291) (24,291) Goodwill, net, as of December 31, 2021 274,930 110,721 385,651 Business combinations 6,790 — 6,790 Foreign currency translation adjustment (872) (10,383) (11,255) Goodwill, net, as of June 30, 2022 $ 280,848 $ 100,338 $ 381,186 |
Accounts Payable, Accrued Expen
Accounts Payable, Accrued Expenses, and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Accounts Payable, Accrued Expenses, and Other Current Liabilities | |
Accounts Payable, Accrued Expenses, and Other Current Liabilities | (10) Accounts Payable, Accrued Expenses, and Other Current Liabilities The Company’s accounts payable, accrued expenses, and other current liabilities consisted of the following: June 30, December 31, 2022 2021 (In thousands) Compensation and related benefits $ 17,199 $ 23,205 Third-party processing and payment network fees 43,147 43,529 Trade payables 10,108 6,089 Taxes payable 14,710 20,399 Commissions payable to third parties 15,662 16,025 Unearned revenue 4,469 4,723 Other 29,371 19,979 Total accounts payable, accrued expenses, and other current liabilities $ 134,666 $ 133,949 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions | |
Related Party Transactions | (11) Related party balances consist of the following: June 30, December 31, 2022 2021 (In thousands) Due from related parties, current $ 569 $ 782 Due to related parties, current (4,208) (4,207) Due to related parties, long-term (185) (185) Due from related parties, current, consists primarily of receivables due from a non-controlling interest holder of a consolidated subsidiary, which are included as a component of other current assets on the unaudited condensed consolidated balance sheets. Due to related parties, current, consists of $3.2 million and $3.0 million as of June 30, 2022 and December 31, 2021, respectively, primarily due to a non-controlling interest holder of a consolidated subsidiary, and $1.0 million and $1.2 million as of June 30, 2022 and December 31, 2021, respectively, representing commissions payable to unconsolidated investees of the Company. The liability is included as a component of accrued expenses and other current liabilities on the unaudited condensed consolidated balance sheets. Due to related parties, long-term, consists of ISO commission reserves in connection with an unconsolidated investee, which are included as a component of other long-term liabilities on the unaudited condensed consolidated balance sheets. The Company leases office space located at 515 Broadhollow Road in Melville, New York from 515 Broadhollow, LLC. 515 Broadhollow, LLC is majority owned, directly and indirectly, by the Company’s founder and chairman. As of June 30, 2022 and December 31, 2021, the liability related to this lease amounted to $1.1 million and $1.9 million, respectively, and is included in the operating lease liabilities on the unaudited condensed consolidated balance sheets. The Company leases vehicles from a non-controlling interest holder of a consolidated subsidiary. As of June 30, 2022 and December 31, 2021, these lease liabilities amounted to $0.3 million and $0.4 million, respectively, and are included in the operating lease liabilities on the unaudited condensed consolidated balance sheets. 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. Related party commission expense incurred with unconsolidated investees of the Company amounted to $3.2 million and $3.5 million for the three months ended June 30, 2022 and 2021, respectively, and is netted against revenue in the unaudited condensed consolidated statements of operations and comprehensive (loss) income. Related party commission expense incurred with unconsolidated investees of the Company amounted to $6.2 million and $6.4 million for the six months ended June 30, 2022 and 2021, respectively. The Company provides certain professional and other services to Blueapple Inc. (“Blueapple”), a member and holder of LLC interests of EVO, LLC. Blueapple is controlled by entities affiliated with the Company’s founder and chairman. The expense related to these services was less than $0.1 million for each of the three months ended June 30, 2022 and 2021. The expense related to these services was $0.1 million for each of the six months ended June 30, 2022 and 2021. The Company, through two wholly owned subsidiaries 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 June 30, 2022 and 2021, the Company paid commissions of less than $0.1 million related to this activity. For the six months ended June 30, 2022 and 2021, the Company paid commissions of less than $0.1 million and $0.1 million related to this activity, respectively. NFP is the Company’s benefit and insurance broker and 401(k) manager. NFP is a portfolio company of MDP and one of the Company’s executive officers owns a minority interest in NFP. For each of the three months ended June 30, 2022 and 2021, the Company paid $0.4 million in brokerage fees and other expenses to NFP. For each of the six months ended June 30, 2022 and 2021, the Company paid $0.5 million in brokerage fees and other expenses to NFP. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Taxes | |
Income Taxes | (12) Income Taxes The Company’s effective tax rate (“ETR”) was 40.7% and 40.3% for the three and six months ended June 30, 2022, respectively. ( $0.3 ) 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 June 30, 2022. Such objective evidence limits the ability to consider other subjective evidence such as the Company’s projections of future growth. As a result, the Company considered both (i) historical core earnings, after adjusting for certain nonrecurring items, and (ii) the projected future profitability of its core operations and the impact of enacted changes in the application of the interest expense limitation rules beginning in 2022. The Company has established a valuation allowances 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 foreign 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. |
Long-Term Debt and Lines of Cre
Long-Term Debt and Lines of Credit | 6 Months Ended |
Jun. 30, 2022 | |
Long-Term Debt and Lines of Credit | |
Long-Term Debt and Lines of Credit | (13) Long-Term Debt and Lines of Credit Credit Facility In November 2021, EVO Payments International, LLC (“EPI”), a wholly-owned subsidiary of EVO, Inc., entered into a Second Restatement Agreement to Amended and Restated Credit Agreement (the “Restatement Agreement”) by and among EPI, as borrower, the subsidiaries of the borrower identified therein, as guarantors, Citibank, N.A., as administrative agent, Truist Bank, as the successor administrative agent and the lenders party thereto, to amend and restate our existing senior secured credit facilities (as amended and restated by the Restatement Agreement, the “Senior Secured Credit Facilities”). As of June 30, 2022, the Senior Secured Credit Facilities include revolver commitments of $200.0 million that mature in November 2026 and a $588.0 million term loan that matures in November 2026. As of June 30, 2022, the term loan and revolving credit facility bear interest rates of 3.42% and 5.50%, respectively. As of June 30, 2022 and December 31, 2021, the Company’s long-term debt consists of the following: June 30, December 31, 2022 2021 (In thousands) Term loan $ 580,650 $ 588,000 Revolver 6,700 — Less debt issuance costs (4,761) (5,310) Total long-term debt 582,589 582,690 Less current portion of long-term debt, net of current portion of debt issuance costs (14,092) (14,058) Total long-term debt, net of current portion $ 568,497 $ 568,632 Principal payment requirements on the above obligations in each of the years remaining subsequent to June 30, 2022 are as follows: Years ending: (In thousands) 2022 (remainder of the year) $ 7,350 2023 14,700 2024 29,400 2025 44,100 2026 491,800 2027 and thereafter — Total $ 587,350 The Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the 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 June 30, 2022, the Company was in compliance with all its financial covenants under the Senior Secured Credit Facilities. 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 June 30, 2022 and December 31, 2021, the Company had $8.3 million and $8.0 million outstanding under these lines of credit, respectively, with additional capacity of $130.7 8.2% Refer to Note 13, “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, 2021, for discussion regarding the Company’s long-term debt and lines of credit. |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2022 | |
Derivatives | |
Derivatives | (14) Derivatives Designated Derivatives Interest Rate Swap In 2020, the Company entered into an interest rate swap with a notional amount of $500.0 million to reduce a portion of the exposure to fluctuations in LIBOR interest rates associated with our variable-rate term loan. The interest rate swap has a fixed rate of 0.2025% and a maturity date of December 31, 2022. The interest rate swap is designated as an effective cash flow hedge involving the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. The Company performed a regression analysis at inception of the hedging relationship in which it compared the historical monthly changes in the termination clean price of the actual designated interest rate swap to the historical monthly changes in the termination clean price of a hypothetically perfect interest rate swap with terms that exactly match the hedged transactions and a fair value of zero at its inception using 37 different forward curves. Based on the regression results, the Company determined that the hedging instrument was highly effective at inception. On an ongoing basis, the Company assesses hedge effectiveness prospectively and retrospectively. The hedge continued to be highly effective for the quarter ended June 30, 2022. The interest rate swap is recognized at fair value in the consolidated balance sheets. The table below presents the fair value of the interest rate swap and its classification on the unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively: June 30, 2022 Balance Sheet Fair Value Location (In thousands) Interest Rate Swap - current portion Other current assets $ 6,192 December 31, 2021 Balance Sheet Fair Value Location (In thousands) Interest Rate Swap - current portion Other current assets $ 1,297 Since the Company designated the swap as an effective cash flow hedge that qualifies for hedge accounting, unrealized gains or losses resulting from adjusting the swap to fair value is recorded as a component of other comprehensive (loss) income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Cash flows resulting from settlements are presented as a component of cash flows from operating activities within the unaudited condensed consolidated statements of cash flows. The table below presents the effect of hedge accounting on accumulated other comprehensive loss for the three and six months ended June 30, 2022 and 2021: Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 2022 2021 (In thousands) Beginning accumulated derivative gain (loss) in accumulated other comprehensive loss $ 4,927 $ 1,297 $ (88) $ (533) Derivative gain (loss) recognized in the current period in accumulated other comprehensive loss 1,995 5,557 (143) 214 Less: Derivative gain (loss) reclassified from accumulated other comprehensive loss to interest expense 730 662 (118) (206) Ending accumulated derivative gain (loss) in accumulated other comprehensive loss $ 6,192 $ 6,192 $ (113) $ (113) The table below presents the effect of hedge accounting on the unaudited condensed consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2022 and 2021: Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 2022 2021 (In thousands) Total interest expense including the effects of cash flow hedges $ (4,120) $ (8,374) $ (6,061) $ (12,159) Derivative gain (loss) reclassified from accumulated other comprehensive loss into interest expense $ 730 $ 662 $ (118) $ (206) The Company estimates that an additional $6.2 Cross Currency Swap In April 2022, the Company entered into a float-to-float cross currency swap to hedge the risk of fluctuations in the exchange rate related to a net investment in a foreign subsidiary. The Company will deliver a notional amount of $26.2 million and receive a notional amount of EUR 25.0 million on the initial exchange date of November 15, 2022 and will deliver EUR 25.0 million and receive $26.2 million on the maturity date of November 15, 2027. The cross currency swap is designated as a net investment hedge involving the receipt of functional currency floating rate amounts from a counterparty in exchange for the Company making foreign currency floating rate payments over the life of the agreement. The loss on the swap prior to designation was recorded in current-period earnings. The cross currency swap is recognized at fair value in the consolidated balance sheets. The table below presents the fair value of the cross currency swap and its classification on the unaudited condensed consolidated balance sheets as of June 30, 2022: June 30, 2022 Balance Sheet Fair Value Location (In thousands) Cross Currency Swap - current portion Other current assets $ 335 Cross Currency Swap - long-term portion Other long-term liabilities $ (8) The Company recognized in earnings the initial value of the component excluded from the assessment of effectiveness using a systematic and rational method over the life of the hedging instrument. Any changes in the fair value of a net investment hedge are recorded in accumulated other comprehensive loss and reclassified into earnings when the hedged net investment is sold or substantially liquidated. The table below presents the effect of the Company’s net investment hedge on accumulated other comprehensive loss for the three and six months ended June 30, 2022 and 2021: Amount of Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income Three and Six Months Ended June 30, 2022 (In thousands) Cross Currency Swap $ 653 Interest expense $ — Non-designated Derivatives In April 2022, the Company entered into a forward contract to mitigate exposure to fluctuations in foreign currency exchange rates related to certain foreign intercompany balances. The terms of the contract provide for an exchange of a notional amount of GBP 34.5 million for MXN 960.1 million, calculated using the contract rate as applicable at the settlement date. In June 2021, the Company entered into a foreign currency swap and window forward contracts with notional amounts of approximately $31.0 million and $67.8 million, respectively, to mitigate exposure to fluctuations in foreign currency exchange rates related to certain foreign intercompany balances. Each of the foreign currency swap and the window forward contracts were settled during the third quarter in 2021. The forward contract is recognized at fair value in the consolidated balance sheets. The table below presents the fair value of the forward contract and its classification on the unaudited condensed consolidated balance sheets as of June 30, 2022: June 30, 2022 Settlement Balance Sheet Fair Value Date Location (In thousands) Forward Contract April 13, 2023 Other current assets $ 2,768 The Company did not designate the forward contract, foreign currency swap, and window forward contracts as an accounting hedge. Any unrealized gains or losses resulting from adjusting the swap and forwards to fair value are recorded as a component of other income (expense), to offset the unrealized gains or losses recorded within other income (expense) from the remeasurement of the intercompany balance being hedged. Cash flows resulting from the settlements will be presented as a component of cash flows from operating activities within the unaudited condensed consolidated statements of cash flows. The table below presents the unrealized gains (losses) on the unaudited condensed consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2022: Location of Unrealized Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Gain or (Loss) 2022 2021 (In thousands) Forward Contract Other income $ 2,768 $ 2,768 $ — $ — Foreign Currency Swap Other expense — — (163) (163) Window Forwards Other income — — 1,804 1,804 |
Supplemental Cash Flows Informa
Supplemental Cash Flows Information | 6 Months Ended |
Jun. 30, 2022 | |
Supplemental Cash Flows Information | |
Supplemental Cash Flows Information | (15) Supplemental Cash Flows Information Supplemental cash flow disclosures and non-cash investing and financing activities are as follows: Six Months Ended June 30, 2022 2021 (In thousands) Supplemental disclosure of cash flow data: Interest paid $ 7,981 $ 10,776 Income taxes paid 7,142 5,561 Supplemental disclosure of non-cash investing and financing activities: Operating lease liabilities arising from obtaining new or modified right-of-use assets $ 9,554 $ 2,197 Decrease in operating lease liabilities and corresponding right-of-use assets resulting from lease modifications — (2,559) Software and equipment assets acquired by assuming directly related liabilities 4,653 — Deferred consideration payable 5,321 2,900 Accrual of redeemable preferred stock paid-in-kind-dividends 5,137 4,827 Exchanges of Class C and Class D common stock for Class A common stock — 13,231 |
Redeemable Preferred Stock
Redeemable Preferred Stock | 6 Months Ended |
Jun. 30, 2022 | |
Redeemable Preferred Stock. | |
Redeemable Preferred Stock | (16) Redeemable Preferred Stock On April 21, 2020, the Company issued 152,250 shares of Preferred Stock. The Company received approximately $149.3 million in total net proceeds from the sale of the Preferred Stock and incurred approximately $1.7 million in stock issuance costs as part of the sale. The Preferred Stock ranks senior to the Class A common stock with respect to dividends and distributions on liquidation, winding-up, and dissolution. Each share of Preferred Stock had an initial liquidation preference of $1,000 per share. Holders of shares of Preferred Stock are entitled to cumulative, paid-in-kind (“PIK”) dividends, which are payable semi-annually in arrears by increasing the liquidation preference for each outstanding share of Preferred Stock. These PIK dividends accrue at an annual rate of (i) 6.00% per annum for the first ten years and (ii) 8.00% per annum thereafter. At the 2021 annual meeting of stockholders, the Company’s stockholders voted to approve the elimination of the limitation on conversion of the Preferred Stock in the event the conversion results in Class A Common Stock ownership in excess of 19.99% if the aggregate voting power as required by Nasdaq Listing Rule 5635. Holders of Preferred Stock are also entitled, on an as-converted basis, to participate in and receive any dividends declared or paid on the Class A Common Stock, and no dividends may be paid to holders of Class A Common Stock unless full participating dividends are concurrently paid to holders of Preferred Stock. The Preferred Stock’s initial carrying value is recorded at a discount to its liquidation preference. In accordance with the SEC’s Staff Accounting Bulletin Topic 5.Q, Increasing Rate Preferred Stock Each holder of Preferred Stock has the right, at its option, to convert its Preferred Stock, in whole or in part, into fully paid and non-assessable shares of Class A Common Stock, at any time. The number of shares of Class A Common Stock into which a share of Preferred Stock will convert at any time is equal to the product of (i) the then-effective conversion rate and (ii) the quotient obtained by dividing the sum of the then-effective liquidation preference per share of Preferred Stock and the amount of any accrued and unpaid PIK dividends by the initial liquidation preference of $1,000. The conversion rate of the Preferred Stock was initially set at 63.2911 shares of Class A Common Stock, based on an implied conversion price of $15.80 per share of Class A Common Stock. The conversion rate is subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events. The Company has the right to settle any conversion at the request of a holder of Preferred Stock in cash based on the last reported sale price of the Class A Common Stock. Subject to certain conditions, the Company may, at its option, require conversion of all (but not less than all) of the outstanding shares of Preferred Stock to Class A Common Stock if, for at least 20 trading days during the 30 consecutive trading days immediately preceding notification of the election to convert, the last reported closing price of the Company’s Class A common stock is at least (i) 180% of the conversion price prior to the fourth semi-annual PIK dividend payment date, (ii) 170% of the conversion price on or after the fourth and prior to the sixth semi-annual PIK dividend payment date, (iii) 160% of the conversion price on or after the sixth and prior to the eighth semi-annual PIK dividend payment date, or (iv) 150% of the conversion price on or after the eighth semi-annual PIK dividend payment date. If the Company elects to mandatorily convert all outstanding shares of Preferred Stock prior to the sixth semi-annual PIK dividend payment date, then, for purposes of such conversion, the liquidation preference of each outstanding share of Preferred Stock will be increased by the compounded amount of all remaining scheduled PIK dividend payments on the Preferred Stock through, and including, the sixth semi-annual PIK dividend payment date. The holders of the Preferred Stock are generally entitled to vote with the holders of the shares of Class A common stock on all matters submitted for a vote to the Class A common stockholders (voting together with the holders of shares of Class A common stock as one class) on an as-converted basis, subject to certain limitations. The Preferred Stock may be redeemed by the Company at any time after ten years for a cash purchase price equal to the liquidation preference as of the redemption date plus accumulated and unpaid regular PIK dividends. If the Company undergoes a change of control (as defined in the certificate of designations for the Preferred Stock), each holder of Preferred Stock may require the Company to repurchase all or a portion of its then-outstanding shares of Preferred Stock for cash consideration equal to 150% of the then-current liquidation preference per share of Preferred Stock plus accumulated and unpaid dividends, if any (or, if the repurchase date for such change of control is on or after the sixth semi-annual PIK dividend payment date, 100% of the liquidation preference per share of Series A Preferred Stock plus accumulated and unpaid dividends, if any). Because the occurrence of a change of control may be outside of the Company’s control, the Company has classified the Preferred Stock as mezzanine equity on the unaudited condensed consolidated balance sheets. If a change of control were to occur as of June 30, 2022, the Company might have been required to repurchase the Preferred Stock for $260.0 |
Redeemable Non-controlling Inte
Redeemable Non-controlling Interests | 6 Months Ended |
Jun. 30, 2022 | |
Redeemable Non-controlling Interests | |
Redeemable Non-controlling Interests | (17) Redeemable Non-controlling Interests The Company owns 66% of eService, the Company’s Polish subsidiary. The eService shareholders’ agreement includes a provision whereby PKO Bank Polski, the owner of 34% of eService, has the option to compel the Company to purchase the shares of eService held by PKO Bank Polski, at a price per share based on the fair value of the shares. The option expires on January 1, 2024. 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 within the mezzanine equity section of the unaudited condensed consolidated balance sheets. At each balance sheet date, the RNCI is reported at its redemption value, which represents the estimated fair value, with a corresponding adjustment to additional paid-in capital, or accumulated deficit in absence of additional paid-in capital. In October 2020, the Company, through its Mexican subsidiary, formed a joint venture with BCI, pursuant to which the Company owns 50.1% and BCI owns 49.9% of the equity of the Chilean subsidiary pursuant to the terms of a shareholders agreement between the parties. Under the shareholders agreement, BCI has the option to compel the Company to purchase BCI’s shares in the Chilean subsidiary at a price per share based on the fair value of the shares. The option becomes effective two years after the agreement date. 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 within the mezzanine equity section of the unaudited condensed consolidated balance sheets. At each balance sheet date, the RNCI is reported at its redemption value, which represents the estimated fair value, with a corresponding adjustment to additional paid-in capital, or accumulated deficit in absence of additional paid-in capital. As of June 30, 2022 The following table details the components of RNCI for the six months ended June 30, 2022 and for the year ended December 31, 2021: Blueapple eService Chile Total (In thousands) Beginning balance, January 1, 2022 $ 823,386 $ 198,531 $ 7,173 $ 1,029,090 Distributions — (6,989) — (6,989) Net income (loss) attributable to RNCI 3,380 5,817 (806) 8,391 Unrealized loss on foreign currency translation adjustment (9,061) (5,466) (214) (14,741) Unrealized gain on change in fair value of interest rate swap 1,884 — — 1,884 Unrealized gain on change in fair value of cross currency swap 251 — — 251 (Decrease) increase in the maximum redemption amount of RNCI (61,669) 4,376 — (57,293) Allocation of eService fair value RNCI adjustment to Blueapple (1,685) — — (1,685) Ending balance, June 30, 2022 $ 756,486 $ 196,269 $ 6,153 $ 958,908 Blueapple eService Chile Total (In thousands) Beginning balance, January 1, 2021 $ 868,738 $ 186,436 $ 459 $ 1,055,633 Contributions — — 1,487 1,487 Distributions — (13,655) — (13,655) Net income (loss) attributable to RNCI 47 10,329 (1,595) 8,781 Unrealized loss on foreign currency translation adjustment (10,313) (5,045) (721) (16,079) Unrealized gain on change in fair value of interest rate swap 707 — — 707 (Decrease) increase in the maximum redemption amount of RNCI (25,009) 20,466 7,543 3,000 Allocation of eService fair value RNCI adjustment to Blueapple (7,869) — — (7,869) Allocation of Chile fair value RNCI adjustment to Blueapple (2,915) — — (2,915) Ending balance, December 31, 2021 $ 823,386 $ 198,531 $ 7,173 $ 1,029,090 |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value | |
Fair Value | (18) Fair Value The table below presents information about items, which are carried at fair value on a recurring basis: June 30, 2022 (In thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 36,618 $ — $ — $ 36,618 Contingent consideration — — (421) (421) Blueapple RNCI (756,486) — — (756,486) eService RNCI — — (196,269) (196,269) Chile RNCI — — (6,153) (6,153) Interest rate swap — 6,192 — 6,192 Cross currency swap — 327 — 327 Forward contract — 2,768 — 2,768 Investment in equity securities — 23,095 — 23,095 Total $ (719,868) $ 32,382 $ (202,843) $ (890,329) December 31, 2021 (In thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 95,919 $ — $ — $ 95,919 Contingent consideration — — (611) (611) Blueapple RNCI (823,386) — — (823,386) eService RNCI — — (198,531) (198,531) Chile RNCI — — (7,173) (7,173) Interest rate swap — 1,297 — 1,297 Investment in equity securities — 25,398 — 25,398 Total $ (727,467) $ 26,695 $ (206,315) $ (907,087) 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. The fair values are based on the present value of expected payments made to the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. These estimates are based on inputs not observable in the market and thus represent a Level 3 measurement. The estimated fair value of Blueapple’s RNCI 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 eService’s RNCI is determined utilizing an income approach, weighted at 50%, based on the forecasts of expected future cash flows, and the market approach, weighted at 50%, based on the guideline public company data. In applying the income approach, significant unobservable inputs included (i) the weighted-average cost of capital (“WACC”) used to discount the future cash flows, which was 12.0%, based on the markets in which the business operates and (ii) growth rates used within the future cash flows, which were up to 8.0%, 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. Conversely, a decrease in the WACC would result in an increase in the fair value of RNCI in eService. In applying the market approach, the ranges of the valuation multiples as of June 30, 2022 were 4.50 x 5.00 x 9.00 x The estimated fair value of Chile’s RNCI is determined utilizing an income approach, weighted at 50%, based on the forecasts of expected future cash flows, and the market approach, weighted at 50%, based on the guideline public company data. In applying the income approach, significant unobservable inputs included (i) the WACC used to discount the future cash flows, which was 17.0%, based on the markets in which the business operates and (ii) growth rates used within the future cash flows, which were up to 17.9%, 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 Chile. Conversely, a decrease in the WACC would result in an increase in the fair value of RNCI in Chile. In applying the market approach, the valuation multiples as of June 30, 2022 were 1.75x and 6.00x for revenue and EBITDA, respectively. In May 2020, the Company entered into an interest rate swap to reduce a portion of the exposure to fluctuations in LIBOR interest rates associated with its variable-rate debt. The fair value of the interest rate swap was determined based on the present value of the estimated future net cash flows using the LIBOR forward rate curve as of June 30, 2022. The future interest rates are derived from observable market interest rate curves and thus fall within Level 2 of the valuation hierarchy. The credit valuation adjustment associated with the derivative, related to the likelihood of default by the Company and the counterparty, was not significant to the overall valuation. As a result, the fair value of the interest rate swap is classified as Level 2 of the fair value hierarchy. As described in Note 14, “Derivatives,” the fair value of the interest rate swap was a $6.2 million asset and $1.3 million asset at June 30, 2022 and December 31, 2021, respectively. In April 2022, the Company entered into a cross currency swap to hedge the risk of fluctuations in the exchange rate related to a net investment in a foreign subsidiary. The fair value of the cross currency swap was determined based on the cash flows of the swap contract, forward foreign exchange points and interest rate market data, which are derived from readily observable market inputs. The credit valuation adjustment associated with the derivative, related to the likelihood of default by the Company and the counterparty, was significant to the overall valuation. As a result, the fair value of the cross currency swap is classified as Level 2 of the fair value hierarchy. As described in Note 14, “Derivatives,” the fair value of the cross currency swap was a $0.3 million asset at June 30, 2022. In April 2022, the Company entered into a forward contract to mitigate exposure to fluctuations in foreign currency exchange rates related to certain foreign intercompany balances. The fair value of the forward contract was determined based on an estimate of the expected cash flows using the mark-to-market rate as of June 30, 2022. The Company also considers counterparty credit risk in the determination of fair value. The mark-to-market rates are derived from observable inputs and thus fall within Level 2 of the valuation hierarchy. As described in Note 14, “Derivatives,” the fair value of the forward contract was a $2.8 million asset at June 30, 2022. The Company was a member of Visa Europe Limited (“Visa Europe”) through certain of the Company’s subsidiaries in Europe. In 2016, Visa Inc. (“Visa”) acquired all of the membership interests in Visa Europe. As part of the proceeds from the sale of its membership interests, one of the Company’s subsidiaries received shares of Visa Series C preferred stock and another subsidiary received economic rights relating to shares of Visa Series C preferred stock under a contractual arrangement with a former member of Visa Europe. The Visa Series C preferred stock is convertible into Visa Series A preferred stock at periodic intervals over the 12 year period following the acquisition date at Visa’s discretion. In September 2020, Visa issued a partial conversion and conversion adjustment with respect to its Series C preferred stock. Pursuant to the partial conversion and conversion adjustment, holders of Series C preferred stock received shares of Series A preferred stock and the conversion ratio for such holder’s shares of Series C preferred stock was reduced. The Series A preferred stock is convertible into shares of Visa Class A common stock upon a transfer to any holder that is eligible to hold Visa Class A common stock. Holders of Series A preferred stock are able to effectuate a transfer to an eligible holder through a sales facility established by Visa’s transfer agent or through a third party broker. The Visa Series A preferred stock, which is presented in investments in equity securities on the unaudited condensed consolidated balance sheets, is reported at fair value. In connection with the measurement of the investment in Visa Series A preferred stock at fair value, the Company recognized a loss of $2.9 million and $2.3 million for the three and six months ended June 30, 2022, respectively, and a gain of $2.5 million and $2.3 million for the three and six months ended June 30, 2021, respectively. The fair value of Visa Series A preferred stock is determined using a market approach based on the quoted market price of Visa Class A common stock, and as a result is classified as Level 2 of the fair value hierarchy. The remaining Visa Series C preferred stock is carried at cost in the amount of €6.5 million ($7.4 million based on the foreign exchange rate at the time of the acquisition) as of each of June 30, 2022 and December 31, 2021, and is presented in other assets on the unaudited condensed consolidated balance sheets. The estimated fair value of the remaining Visa Series C preferred stock of $18.5 million and $20.3 million as of June 30, 2022 and December 31, 2021, respectively, 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 June 30, 2022, the conversion factor of Visa Series C preferred stock to Visa Class A common stock, and a discount due to the lack of liquidity, which represents a measure of fair value that is unobservable or requires management’s judgment. The estimated fair value of receivables, settlement processing assets and obligations, due to and from related parties and settlement lines of credit approximate their respective carrying values due to their short term nature. The estimated fair value of long-term debt as of June 30, 2022 and December 31, 2021 was $587.4 $588.0 There were no transfers in or out of Level 3 from other levels in the fair value hierarchy as of June 30, 2022 and December 31, 2021. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies. | |
Commitments and Contingencies | (19) Commitments and Contingencies Litigation One of the Company’s financial institution referral partners, Grupo Banco Popular, was acquired by Santander in June 2017, which has adversely impacted the Company’s business in Spain. Revenues from this channel have declined significantly due primarily to reduced merchant referrals following Santander’s consolidation of Grupo Banco Popular branches and the bank’s lack of performance of certain of its obligations under our agreements. The Company believes that its agreements with Santander, including the bank’s referral obligations, remain in full force and effect and the Company is pursuing the contractual and legal remedies available to the Company as it works to resolve these and other matters. In December 2020, the Company filed a claim in the Court of First Instance in Madrid, Spain seeking recovery in connection with Santander’s breach of certain of its exclusivity, non-compete and merchant referral obligations under the commercial agreements between the parties. The litigation is at a preliminary stage and the Company cannot at this time determine the likelihood of any outcome or any damages that may be awarded to it. There can be no assurance as to when or if the Company will recover the amounts to which the Company believes it is entitled. The Company is also 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 | 6 Months Ended |
Jun. 30, 2022 | |
Segment Information | |
Segment Information | (20) Segment Information Information on segments and reconciliations to revenue and net income attributable to the shareholders of EVO, Inc. and members of EVO, LLC are set forth below. Segment profit, which is the measure used by our chief operating decision maker to evaluate the performance of and allocate resources to our segments, is calculated as 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. Certain corporate-wide governance functions, as well as depreciation and amortization, are not allocated to our segments. The Company does not evaluate performance or allocate resources based on segment assets, and therefore, such information is not presented. Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (In thousands) (In thousands) Segment revenue: Americas $ 81,692 $ 76,979 $ 158,552 $ 147,406 Europe 55,979 45,256 106,045 81,009 Revenue $ 137,671 $ 122,235 $ 264,597 $ 228,415 Segment profit: Americas $ 36,285 $ 37,781 $ 68,609 $ 67,757 Europe 16,290 17,055 32,120 26,181 Total segment profit 52,575 54,836 100,729 93,938 Corporate (7,424) (10,255) (17,973) (16,137) Depreciation and amortization (18,806) (20,695) (39,317) (41,621) Net interest expense (3,482) (5,732) (6,914) (11,589) Provision for income tax expense (7,742) (7,045) (11,101) (11,575) Share-based compensation expense (7,707) (6,489) (14,710) (12,287) Less: Net income (loss) attributable to non-controlling interests of EVO Investco, LLC 3,061 1,457 3,778 (1,592) Net income attributable to EVO Payments, Inc. $ 4,353 $ 3,163 $ 6,936 $ 2,321 Capital expenditures: Americas $ 4,257 $ 4,025 $ 8,303 $ 6,688 Europe 5,663 5,073 9,774 13,271 Consolidated total capital expenditures $ 9,920 $ 9,098 $ 18,077 $ 19,959 The Company’s long-lived assets, which consist of equipment and improvements, net, and operating lease right-of-use assets, by geographic location are as follows: June 30, December 31, 2022 2021 (In thousands) Long-lived assets: Poland $ 31,564 $ 31,534 United States 30,540 30,228 Mexico 18,424 18,554 Other 25,214 22,894 Totals $ 105,742 $ 103,210 Revenue is attributed to individual countries based on the location where the relationship is managed. For the three months ended June 30, 2022, revenue in the United States, Mexico, and Poland, as a percentage of total consolidated revenue, was 34.9%, 21.0%, and 18.0%, respectively. For the three months ended June 30, 2021, revenue in the United States, Mexico, and Poland, as a percentage of total consolidated revenue, was 39.5%, 20.3%, and 17.2%, respectively. For the six months ended June 30, 2022, revenue in the United States, Mexico, and Poland, as a percentage of total consolidated revenue, was 36.1%, 20.4%, and 18.0%, respectively. For the six months ended June 30, 2021, revenue in the United States, Mexico, and Poland, as a percentage of total consolidated revenue, was 40.6%, 20.8%, and 16.6%, respectively. For the three and six months ended June 30, 2022 and 2021, no individual customer represented more than 10% of total revenue. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2022 | |
Shareholders' Equity | |
Shareholders' Equity | (21) Shareholders’ Equity EVO, Inc. was incorporated under the laws of the State of Delaware on April 20, 2017. On May 25, 2018, we completed the IPO and shares of our Class A common stock began trading on the Nasdaq stock exchange on May 23, 2018 under the symbol “EVOP.” In connection with the IPO, we completed the Reorganization Transactions to implement an “Up-C” capital structure. As a result of the Reorganization Transactions and the IPO, EVO, Inc. is the sole managing member of EVO, LLC and a holding company whose principal assets are the LLC Interests and the preferred membership interests (“Preferred LLC Interests”) in EVO, LLC. 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. 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. From the date of the Reorganization Transactions and the IPO until May 24, 2021, the Company had four classes of common stock: Class A common stock, Class B common stock (classified as redeemable non-controlling interest), Class C common stock (classified as non-redeemable non-controlling interest) and Class D common stock (classified as non-redeemable non-controlling interest). On May 25, 2021, pursuant to the Company’s amended and restated certificate of incorporation, all 32,163,538 outstanding shares of Class B common stock were automatically cancelled for no consideration, and each outstanding share of Class C common stock was automatically converted into one share of Class D common stock. Following the cancellation of Class B common stock, Blueapple continues to hold 32,163,538 LLC Interests and maintains all of its rights under the EVO LLC Agreement. Following these changes in the Company’s equity capital structure, the Company has two classes of common stock outstanding: Class A common stock and Class D common stock. The Company has one class of preferred stock outstanding, which is convertible into shares of Class A common stock. The Preferred Stock was issued on April 21, 2020 in connection with an investment by MDP. Refer to Note 16, “Redeemable Preferred Stock,” for additional details regarding the transaction. The voting and economic rights associated with our classes of common and preferred 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 D common stock MDP and Current and Former Employees, and Executive Officers One vote per share No Series A Preferred Stock MDP On an as-converted basis Yes Following the cancellation of Class B common stock on May 25, 2021, Blueapple continues to hold 32,163,538 LLC Interests and maintains all of its rights under the EVO LLC Agreement, including the sale right that provides 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 for cash 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, or upon conversion of any shares of Preferred Stock held by MDP. 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 uses 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 | 6 Months Ended |
Jun. 30, 2022 | |
Stock Compensation Plans and Share-Based Compensation Awards | |
Stock Compensation Plans and Share-Based Compensation Awards | (22) Stock Compensation Plans and Share-Based Compensation Awards The Company provides share-based compensation awards to its employees under the Amended and Restated 2018 Omnibus Incentive Stock Plan (the “Amended and Restated 2018 Plan”). The original Omnibus Equity Incentive Plan (the “2018 Plan”) was adopted in conjunction with the Company’s IPO and became effective on May 22, 2018. In February 2020, the Company adopted the Amended and Restated 2018 Plan, which was approved by the Company’s stockholders at the Company’s 2020 annual meeting of stockholders held in June 2020. The Amended and Restated 2018 Plan amended and restated the 2018 Plan in its entirety and increased the number of shares of the Company’s Class A common stock available for grant and issuance under the 2018 Plan from 7,792,162 shares to 15,142,162 shares. The Amended and Restated 2018 Plan was further amended in November 2021 solely to clarify certain provisions in anticipation of the implementation of the Company’s performance-based equity awards. The Amended and Restated 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 and comprehensive (loss) income: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (In thousands) Share-based compensation expense $ 7,707 $ 6,489 $ 14,710 $ 12,287 Income tax benefit $ (1,237) $ (963) $ (2,365) $ (1,921) Restricted stock units Service-Based Restricted Stock Units The Company recognized share-based compensation expense for RSUs granted of $4.5 $3.2 $8.3 $5.7 A summary of RSUs activity is as follows (in thousands, except per share data): Number of RSUs Weighted-average grant date fair value Balance at December 31, 2021 1,339 $ 24.35 Granted 956 23.60 Vested (547) 22.37 Forfeited (38) 24.24 Balance at June 30, 2022 1,710 $ 24.55 As of June 30, 2022 and 2021, total unrecognized share-based compensation expense related to outstanding RSUs was $35.7 $28.9 three $12.2 $7.8 Stock options Service-Based Stock Options The Company recognized share-based compensation expense for the service-based stock options granted of $2.3 $2.9 $4.9 $6.0 A summary of service-based stock option activity is as follows (in thousands, except per share and term data): Number of Options Weighted-average grant date fair value Weighted-average exercise price Weighted-average remaining contractual term Total intrinsic value Balance at December 31, 2021 5,491 $ 8.11 $ 22.19 7.67 $ 19,802 Granted — — — — — Exercised (76) 5.77 15.07 — 635 Forfeited (87) 9.17 25.22 — — Balance at June 30, 2022 5,328 $ 8.12 22.23 7.16 $ 14,536 Exercisable at June 30, 2022 3,695 $ 7.70 $ 20.72 6.82 $ 14,502 As of June 30, 2022 and 2021, total unrecognized share-based compensation expense related to unvested service-based stock options was $12.2 million and $24.9 the Chief Executive Officer (“CEO”)) Market and Service-Based Stock Options During the quarter ended March 31, 2021, 287,395 stock options with a fair value of approximately $2.9 million were granted to the Company’s CEO. These options vest only upon the satisfaction of certain market-based and service-based vesting conditions. The market-based vesting condition, which was met in the second quarter of 2021, required that the twenty trading day trailing average price for the Company’s Class A common stock must equal or exceed 110% of the closing price of the Company’s Class A common stock on the grant date for a period of twenty e For the purpose of calculating share-based compensation expense, the fair value of this grant was determined through the application of the Monte-Carlo simulation model with the following assumptions: Six Months Ended June 30, 2021 Expected life (in years) 7.00 Weighted-average risk-free interest rate 1.15% Expected volatility 34.65% Dividend yield 0.00% Exercise price $ 25.46 The Company recognizes share-based compensation expense related to this award with market-based and service-based conditions over the derived service period of 3.0 years $0.2 $0.6 $0.9 1.3 Performance-stock units Performance and service based stock units During the quarter ended March 31, 2022, the Compensation Committee of the Board of Directors granted 151,187 Performance Stock Units (“PSUs”) with a grant date fair value of approximately $3.6 million to the Company’s executive officers under the Company’s long-term incentive plan. The PSUs will cliff vest three years from the grant date at a range between 0% and 200% based upon annual performance cycles and settle in Class A common stock. The vesting criteria is based on financial performance measures including revenue and EPS growth targets. The Company recognized share-based compensation expense for PSUs granted of $0.4 million and $0.5 million for the three and six months ended June 30, 2022 , respectively. , Market and service-based performance stock units During the quarter ended March 31, 2022, the Compensation Committee of the Board of Directors granted 151,187 market and service-based performance stock units (“MPSUs”) with a grant date fair value of approximately $ 3.9 twenty twenty For the purpose of calculating share-based compensation expense, the fair value of this grant was determined through the application of the Monte-Carlo simulation model with the following assumptions: Six Months Ended June 30, 2022 Expected life (in years) 3.10 Weighted-average risk-free interest rate 1.74% Expected volatility 47.62% Dividend yield 0.00% Estimated grant date fair value (per share) $ 23.69 The Company recognized share-based compensation expense for these MPSUs of $0.3 million and $0.4 million for the three and six months ended June 30, 2022, respectively. As of June 30, 2022, total unrecognized share-based compensation expense related to these MPSUs was $3.5 million. The weighted-average remaining vesting period over which expense will be recognized for these MPSUs is 2.8 years as of June 30, 2022. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events | |
Subsequent Events | (23) Subsequent Events Merger with Global Payments Inc. On August 1, 2022, EVO, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Global Payments Inc. (“Global Payments”) and Falcon Merger Sub, Inc., a wholly-owned subsidiary of Global Payments (“Merger Sub”). Subject to the terms and conditions of the Merger Agreement, Global Payments has agreed to acquire EVO, Inc. in an all-cash transaction for $34.00 per share of Class A common stock. Tax Receivable Agreement Amendment In connection with the execution and delivery of the Merger Agreement, EVO, Inc., EVO, LLC and certain other parties to the TRA entered into Amendment No. 1 to the Tax Receivable Agreement (the “TRA Amendment”), pursuant to which such parties agreed to certain terms with respect to the treatment of the TRA upon the consummation of the Merger. In the event the Merger Agreement is terminated, the TRA Amendment will no longer be of any force and effect. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Description of Business and Summary of Significant Accounting Policies | |
Basis of Presentation and Use of Estimates | (b) Basis of Presentation and Use of Estimates Certain prior period amounts have been reclassified to conform to the current period presentation where applicable. The accompanying unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, the unaudited condensed consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2022 and 2021, the unaudited condensed consolidated statements of changes in equity (deficit) for the three and six months ended June 30, 2022 and 2021, and the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 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 (the “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, 2021. 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”), evaluation of realizability of deferred tax assets, determination of liabilities under the tax receivable agreement, determination of liabilities and corresponding right-of-use assets arising from lease agreements, determination of assets or liabilities arising from derivative transactions, determination of fair value of share-based compensation, establishment of severance liabilities, establishment of allowance for doubtful accounts, and assessment of impairment of goodwill and intangible assets. |
Principles of Consolidation | (c) Principles of Consolidation 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 |
Cash and Cash Equivalents, Restricted Cash, Settlement Related Cash and Merchant Reserves | (d) Cash and Cash Equivalents, Restricted Cash, Settlement Related Cash and Merchant Reserves Cash and cash equivalents include all cash balances and highly liquid securities with original maturities of three months or less. Cash balances often exceed federally insured limits; however, concentration of credit risk is limited due to the payment of funds on the same day or the day following receipt in satisfaction of the settlement process. Included in cash and cash equivalents are settlement-related cash and merchant reserves. Settlement-related cash represents funds that the Company holds when the incoming amount from the card networks precedes the funding obligation to the merchant. Settlement-related cash balances are not restricted; however, these funds are generally paid out in satisfaction of settlement processing obligations and therefore are not available for general purposes. As of June 30, 2022 and December 31, 2021, settlement-related cash balances were $139.3 million and $133.3 Merchant reserves represent funds collected from the Company’s merchants that serve as collateral to minimize contingent liabilities associated with any losses that may occur under the respective merchant agreements. While this cash is not restricted in its use, the Company believes that maintaining merchant reserves to collateralize merchant losses strengthens its fiduciary standings with its card network sponsors and is in accordance with the guidelines set by the card networks. As of June 30, 2022 and December 31, 2021 $101.6 Restricted cash represents funds held as a liquidity reserve at our Chilean subsidiary, as required by local regulations. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the unaudited condensed consolidated balance sheets to the total amount shown in the unaudited condensed consolidated statements of cash flows: June 30, December 31, 2022 2021 (In thousands) Cash and cash equivalents $ 438,655 $ 410,368 Restricted cash included in other assets 245 247 Total cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows $ 438,900 $ 410,615 |
Derivatives | (e) Derivatives The Company recognizes derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of a particular derivative, whether the Company has elected to designate or not designate such derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a cash flow hedge. Investments in foreign operations with functional currencies other than the reporting currency are subject to foreign currency risk as foreign instruments are remeasured each period resulting in fluctuations in the cumulative translation adjustment (CTA) section within other comprehensive (loss) income. Net investment hedge accounting offers protection from remeasurement risk as changes in fair value of the derivative are also recorded in CTA. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company uses a forward contract, foreign currency swap, and window forward contracts to mitigate its exposure to fluctuations in foreign currency exchange rates. The Company elected not to designate the instruments as a hedge and they are not subject to hedge accounting. The Company entered into a cross currency swap to hedge the risk of fluctuations in the exchange rate related to a net investment in a foreign subsidiary. The Company designated the cross currency swap as a net investment hedge. Changes in the fair value of a net investment hedge are recorded in accumulated other comprehensive loss and reclassified into earnings when the hedged net investment is sold or substantially liquidated. Components excluded from the assessment of effectiveness will be recognized in earnings using a systematic and rational method over the life of the hedging instrument. Changes in the fair value of a derivative that is designated as, and meets all the required criteria for, a cash flow hedge are recorded in accumulated other comprehensive loss and reclassified into earnings as the underlying hedged item affects earnings. Changes in the fair value of a derivative that is not designated as a cash flow hedge are recorded as a component of other income (expense). Refer to Note 14, “Derivatives,” and Note 18, “Fair Value,” for further information on the derivative instruments. |
Recent Accounting Pronouncements | (f) Recent Accounting Pronouncements New accounting pronouncements issued by the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies are adopted as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption. Recently Adopted Accounting Pronouncement Convertible Instruments and Contracts in an Entity’s Own Equity In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Recently Issued Accounting Pronouncements Not Yet Adopted Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform Acquired Contract Assets and Liabilities in Business Combinations In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Revenue from Contracts with Customers (Topic 606). |
Correction to previously reported consolidated statements of cash flows | (g) Correction to previously reported consolidated statements of cash flows The Company has revised the financing section of its unaudited condensed consolidated statements of cash flows to separately classify net repayments on its settlement lines of credit of approximately $2.1 million for the six months ended June 30, 2021. As a result, the accompanying unaudited condensed consolidated statements of cash flows have been revised to correct this immaterial classification error by decreasing previously reported proceeds from long-term debt by approximately $4.2 million, and decreasing previously reported repayments of long-term debt by approximately $6.3 million, for the six months ended June 30, 2021. This revision had no effect on our previously reported net cash flows from financing activities, or on any other previously reported amounts in our unaudited condensed consolidated financial statements for the six months ended June 30, 2021. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Description of Business and Summary of Significant Accounting Policies | |
Schedule of cash, cash equivalents and restricted cash | June 30, December 31, 2022 2021 (In thousands) Cash and cash equivalents $ 438,655 $ 410,368 Restricted cash included in other assets 245 247 Total cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows $ 438,900 $ 410,615 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue | |
Summary of revenue | Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Americas Europe Total Americas Europe Total (In thousands) (In thousands) Divisions: Direct $ 36,023 42,751 $ 78,774 $ 68,215 $ 81,190 $ 149,405 Tech-enabled 35,426 13,228 48,654 70,007 24,855 94,862 Traditional 10,243 — 10,243 20,330 — 20,330 Totals $ 81,692 $ 55,979 $ 137,671 $ 158,552 $ 106,045 $ 264,597 Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Americas Europe Total Americas Europe Total (In thousands) (In thousands) Divisions: Direct $ 32,449 35,874 $ 68,323 $ 61,353 $ 64,096 $ 125,449 Tech-enabled 33,623 9,382 43,005 64,782 16,913 81,695 Traditional 10,907 — 10,907 21,271 — 21,271 Totals $ 76,979 $ 45,256 $ 122,235 $ 147,406 $ 81,009 $ 228,415 |
Settlement Processing Assets _2
Settlement Processing Assets and Obligations (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Settlement Processing Assets and Obligations | |
Summary of settlement processing assets and obligations | June 30, December 31, 2022 2021 (In thousands) Settlement processing assets: Receivable from card networks $ 252,798 $ 209,734 Receivable from merchants 98,801 101,947 Totals $ 351,599 $ 311,681 Settlement processing obligations: Settlement liabilities due to merchants $ (380,504) $ (320,537) Merchant reserves (99,971) (101,572) Totals $ (480,475) $ (422,109) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share | |
Schedule of computation of basic and diluted net loss per share | The following table sets forth the computation of the Company's basic and diluted earnings per share of Class A common stock, as well as the anti-dilutive shares excluded (in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 2022 2021 Numerator: Net income attributable to EVO Payments, Inc. $ 4,353 $ 6,936 $ 3,163 $ 2,321 Less: Accrual of redeemable preferred stock paid-in-kind dividends 2,603 5,137 2,445 4,827 Less: Allocation of undistributed earnings to preferred shares 324 332 129 — Undistributed income (loss) attributable to shares of Class A common stock $ 1,426 $ 1,467 $ 589 $ (2,506) Denominator: Weighted-average Class A common stock outstanding 47,862,425 47,702,066 47,038,194 46,775,245 Effect of dilutive securities 752,707 — — — Total dilutive securities 48,615,132 47,702,066 47,038,194 46,775,245 Earnings per share: Basic $ 0.03 $ 0.03 $ 0.01 $ (0.05) Diluted $ 0.03 $ 0.03 $ 0.01 $ (0.05) Weighted-average anti-dilutive securities: Redeemable preferred stock 152,250 152,250 152,250 152,250 Stock options — 5,718,225 6,081,132 5,785,041 RSUs — 1,651,492 1,451,977 1,369,429 RSAs — 145 291 621 PSUs 302,374 212,163 — — Class C common stock — — 965,197 1,328,614 Class D common stock 3,783,074 3,783,074 2,934,418 2,655,306 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Pago Facil | |
Acquisitions | |
Schedule of assets acquired and liabilities assumed | As of the Estimated acquisition date Useful Life Definite-lived intangible assets (In thousands ) Acquired software $ 9,400 5 years Customer relationships 3,000 7 years Trademarks 440 2 years Non-compete agreement 150 3 years Deferred tax liabilities (3,507) Other assets, net 855 Goodwill 10,562 Total purchase price $ 20,900 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases | |
Schedule of maturities of lease liabilities | (In thousands) Years ending: 2022 (remainder of the year) $ 4,212 2023 8,787 2024 8,278 2025 7,730 2026 7,196 2027 and thereafter 12,361 Total future minimum lease payments (undiscounted) 48,564 Less: present value discount (7,712) Present value of lease liability $ 40,852 |
Equipment and Improvements (Tab
Equipment and Improvements (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Equipment and Improvements | |
Schedule of equipment and improvements | Estimated Useful Lives in June 30, December 31, Years 2022 2021 (In thousands) Card processing equipment 3-5 $ 165,155 $ 155,843 Office equipment 3-5 47,214 44,393 Computer software 3-5 59,645 60,226 Leasehold improvements various 18,325 17,883 Furniture and fixtures 5-7 4,766 4,433 Totals 295,105 282,778 Less accumulated depreciation (224,028) (213,761) Foreign currency translation adjustment (4,500) (511) Totals $ 66,577 $ 68,506 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets | |
Schedule of intangible assets, net | June 30, 2022 Gross carrying value Accumulated amortization Accumulated impairment charges Translation and other adjustments Net (In thousands) Merchant contract portfolios and customer relationships $ 297,713 $ (203,507) $ (5,685) $ (31,832) $ 56,689 Marketing alliance agreements 197,412 (87,823) (7,557) (23,028) 79,004 Internally developed and acquired software 128,690 (59,411) (9,324) (5,144) 54,811 Trademarks, definite-lived 20,851 (13,863) - (3,807) 3,181 Non-compete agreements 150 (47) - (27) 76 Total $ 644,816 $ (364,651) $ (22,566) $ (63,838) $ 193,761 December 31, 2021 Gross carrying value Accumulated amortization Accumulated impairment charges Translation and other adjustments Net (In thousands) Merchant contract portfolios and customer relationships $ 297,056 $ (197,187) $ (5,685) $ (30,713) $ 63,471 Marketing alliance agreements 197,412 (79,811) (7,557) (20,896) 89,148 Internally developed and acquired software 110,396 (53,110) (10,191) (3,236) 43,859 Trademarks, definite-lived 22,068 (13,427) (901) (3,596) 4,144 Non-compete agreements 6,612 (6,487) - (21) 104 Total $ 633,544 $ (350,022) $ (24,334) $ (58,462) $ 200,726 |
Schedule of estimated amortization expense | (In thousands) Years ending: 2022 (remainder of the year) $ 23,477 2023 41,184 2024 30,902 2025 23,112 2026 17,330 2027 and thereafter 57,756 Total $ 193,761 |
Schedule of intangible assets, net by segment | June 30, December 31, 2022 2021 (In thousands) Intangible assets, net: Americas Merchant contract portfolios and customer relationships $ 45,578 $ 49,435 Marketing alliance agreements 53,111 56,996 Internally developed and acquired software 41,624 28,812 Trademarks, definite-lived 1,367 1,497 Non-compete agreements 76 104 Total 141,756 136,844 Europe Merchant contract portfolios and customer relationships 11,111 14,036 Marketing alliance agreements 25,893 32,152 Internally developed and acquired software 13,187 15,047 Trademarks, definite-lived 1,814 2,647 Total 52,005 63,882 Total intangible assets, net $ 193,761 $ 200,726 |
Schedule of goodwill activity | Reportable Segment Americas Europe Total (In thousands) Goodwill, gross, as of December 31, 2021 $ 274,930 $ 135,012 $ 409,942 Accumulated impairment losses — (24,291) (24,291) Goodwill, net, as of December 31, 2021 274,930 110,721 385,651 Business combinations 6,790 — 6,790 Foreign currency translation adjustment (872) (10,383) (11,255) Goodwill, net, as of June 30, 2022 $ 280,848 $ 100,338 $ 381,186 |
Accounts Payable, Accrued Exp_2
Accounts Payable, Accrued Expenses, and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounts Payable, Accrued Expenses, and Other Current Liabilities | |
Schedule of accounts payable, accrued expenses, and other current liabilities | June 30, December 31, 2022 2021 (In thousands) Compensation and related benefits $ 17,199 $ 23,205 Third-party processing and payment network fees 43,147 43,529 Trade payables 10,108 6,089 Taxes payable 14,710 20,399 Commissions payable to third parties 15,662 16,025 Unearned revenue 4,469 4,723 Other 29,371 19,979 Total accounts payable, accrued expenses, and other current liabilities $ 134,666 $ 133,949 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions | |
Schedule of related party balances | June 30, December 31, 2022 2021 (In thousands) Due from related parties, current $ 569 $ 782 Due to related parties, current (4,208) (4,207) Due to related parties, long-term (185) (185) |
Long-Term Debt and Lines of C_2
Long-Term Debt and Lines of Credit (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Long-Term Debt and Lines of Credit | |
Summary of long-term debt | June 30, December 31, 2022 2021 (In thousands) Term loan $ 580,650 $ 588,000 Revolver 6,700 — Less debt issuance costs (4,761) (5,310) Total long-term debt 582,589 582,690 Less current portion of long-term debt, net of current portion of debt issuance costs (14,092) (14,058) Total long-term debt, net of current portion $ 568,497 $ 568,632 |
Schedule of principal payment requirements | Years ending: (In thousands) 2022 (remainder of the year) $ 7,350 2023 14,700 2024 29,400 2025 44,100 2026 491,800 2027 and thereafter — Total $ 587,350 |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Derivatives | |
Summary of fair value of the interest rate swap | June 30, 2022 Balance Sheet Fair Value Location (In thousands) Interest Rate Swap - current portion Other current assets $ 6,192 December 31, 2021 Balance Sheet Fair Value Location (In thousands) Interest Rate Swap - current portion Other current assets $ 1,297 |
Schedule of effect of hedge accounting on accumulated other comprehensive (loss) income | Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 2022 2021 (In thousands) Beginning accumulated derivative gain (loss) in accumulated other comprehensive loss $ 4,927 $ 1,297 $ (88) $ (533) Derivative gain (loss) recognized in the current period in accumulated other comprehensive loss 1,995 5,557 (143) 214 Less: Derivative gain (loss) reclassified from accumulated other comprehensive loss to interest expense 730 662 (118) (206) Ending accumulated derivative gain (loss) in accumulated other comprehensive loss $ 6,192 $ 6,192 $ (113) $ (113) Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, 2022 2021 (In thousands) Total interest expense including the effects of cash flow hedges $ (4,120) $ (8,374) $ (6,061) $ (12,159) Derivative gain (loss) reclassified from accumulated other comprehensive loss into interest expense $ 730 $ 662 $ (118) $ (206) |
Schedule of net investment hedge on accumulated other comprehensive (loss) income | Amount of Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income Three and Six Months Ended June 30, 2022 (In thousands) Cross Currency Swap $ 653 Interest expense $ — |
Summary of fair value of the foreign currency swap | June 30, 2022 Settlement Balance Sheet Fair Value Date Location (In thousands) Forward Contract April 13, 2023 Other current assets $ 2,768 |
Schedule of effect of foreign currency contract on accumulated other comprehensive (loss) income | Location of Unrealized Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Gain or (Loss) 2022 2021 (In thousands) Forward Contract Other income $ 2,768 $ 2,768 $ — $ — Foreign Currency Swap Other expense — — (163) (163) Window Forwards Other income — — 1,804 1,804 |
Cross Currency Swap | |
Derivatives | |
Schedule of fair value of the cross currency swap | June 30, 2022 Balance Sheet Fair Value Location (In thousands) Cross Currency Swap - current portion Other current assets $ 335 Cross Currency Swap - long-term portion Other long-term liabilities $ (8) |
Supplemental Cash Flows Infor_2
Supplemental Cash Flows Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Supplemental Cash Flows Information | |
Schedule of supplemental cash flow disclosures and non-cash investing and financing activities | Six Months Ended June 30, 2022 2021 (In thousands) Supplemental disclosure of cash flow data: Interest paid $ 7,981 $ 10,776 Income taxes paid 7,142 5,561 Supplemental disclosure of non-cash investing and financing activities: Operating lease liabilities arising from obtaining new or modified right-of-use assets $ 9,554 $ 2,197 Decrease in operating lease liabilities and corresponding right-of-use assets resulting from lease modifications — (2,559) Software and equipment assets acquired by assuming directly related liabilities 4,653 — Deferred consideration payable 5,321 2,900 Accrual of redeemable preferred stock paid-in-kind-dividends 5,137 4,827 Exchanges of Class C and Class D common stock for Class A common stock — 13,231 |
Redeemable Non-controlling In_2
Redeemable Non-controlling Interests (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Redeemable Non-controlling Interests | |
Schedule of components of redeemable non-controlling interest | Blueapple eService Chile Total (In thousands) Beginning balance, January 1, 2022 $ 823,386 $ 198,531 $ 7,173 $ 1,029,090 Distributions — (6,989) — (6,989) Net income (loss) attributable to RNCI 3,380 5,817 (806) 8,391 Unrealized loss on foreign currency translation adjustment (9,061) (5,466) (214) (14,741) Unrealized gain on change in fair value of interest rate swap 1,884 — — 1,884 Unrealized gain on change in fair value of cross currency swap 251 — — 251 (Decrease) increase in the maximum redemption amount of RNCI (61,669) 4,376 — (57,293) Allocation of eService fair value RNCI adjustment to Blueapple (1,685) — — (1,685) Ending balance, June 30, 2022 $ 756,486 $ 196,269 $ 6,153 $ 958,908 Blueapple eService Chile Total (In thousands) Beginning balance, January 1, 2021 $ 868,738 $ 186,436 $ 459 $ 1,055,633 Contributions — — 1,487 1,487 Distributions — (13,655) — (13,655) Net income (loss) attributable to RNCI 47 10,329 (1,595) 8,781 Unrealized loss on foreign currency translation adjustment (10,313) (5,045) (721) (16,079) Unrealized gain on change in fair value of interest rate swap 707 — — 707 (Decrease) increase in the maximum redemption amount of RNCI (25,009) 20,466 7,543 3,000 Allocation of eService fair value RNCI adjustment to Blueapple (7,869) — — (7,869) Allocation of Chile fair value RNCI adjustment to Blueapple (2,915) — — (2,915) Ending balance, December 31, 2021 $ 823,386 $ 198,531 $ 7,173 $ 1,029,090 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value | |
Schedule of information about items which are carried at fair value on a recurring basis | June 30, 2022 (In thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 36,618 $ — $ — $ 36,618 Contingent consideration — — (421) (421) Blueapple RNCI (756,486) — — (756,486) eService RNCI — — (196,269) (196,269) Chile RNCI — — (6,153) (6,153) Interest rate swap — 6,192 — 6,192 Cross currency swap — 327 — 327 Forward contract — 2,768 — 2,768 Investment in equity securities — 23,095 — 23,095 Total $ (719,868) $ 32,382 $ (202,843) $ (890,329) December 31, 2021 (In thousands) Level 1 Level 2 Level 3 Total Cash equivalents $ 95,919 $ — $ — $ 95,919 Contingent consideration — — (611) (611) Blueapple RNCI (823,386) — — (823,386) eService RNCI — — (198,531) (198,531) Chile RNCI — — (7,173) (7,173) Interest rate swap — 1,297 — 1,297 Investment in equity securities — 25,398 — 25,398 Total $ (727,467) $ 26,695 $ (206,315) $ (907,087) |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Segment Information | |
Summary of segment information | Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (In thousands) (In thousands) Segment revenue: Americas $ 81,692 $ 76,979 $ 158,552 $ 147,406 Europe 55,979 45,256 106,045 81,009 Revenue $ 137,671 $ 122,235 $ 264,597 $ 228,415 Segment profit: Americas $ 36,285 $ 37,781 $ 68,609 $ 67,757 Europe 16,290 17,055 32,120 26,181 Total segment profit 52,575 54,836 100,729 93,938 Corporate (7,424) (10,255) (17,973) (16,137) Depreciation and amortization (18,806) (20,695) (39,317) (41,621) Net interest expense (3,482) (5,732) (6,914) (11,589) Provision for income tax expense (7,742) (7,045) (11,101) (11,575) Share-based compensation expense (7,707) (6,489) (14,710) (12,287) Less: Net income (loss) attributable to non-controlling interests of EVO Investco, LLC 3,061 1,457 3,778 (1,592) Net income attributable to EVO Payments, Inc. $ 4,353 $ 3,163 $ 6,936 $ 2,321 Capital expenditures: Americas $ 4,257 $ 4,025 $ 8,303 $ 6,688 Europe 5,663 5,073 9,774 13,271 Consolidated total capital expenditures $ 9,920 $ 9,098 $ 18,077 $ 19,959 |
Schedule of long lived assets by geographic location | June 30, December 31, 2022 2021 (In thousands) Long-lived assets: Poland $ 31,564 $ 31,534 United States 30,540 30,228 Mexico 18,424 18,554 Other 25,214 22,894 Totals $ 105,742 $ 103,210 |
Shareholder's Equity (Tables)
Shareholder's Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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 D common stock MDP and Current and Former Employees, and Executive Officers One vote per share No Series A Preferred Stock MDP On an as-converted basis Yes |
Stock Compensation Plans and _2
Stock Compensation Plans and Share-Based Compensation Awards (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 (In thousands) Share-based compensation expense $ 7,707 $ 6,489 $ 14,710 $ 12,287 Income tax benefit $ (1,237) $ (963) $ (2,365) $ (1,921) |
Summary of stock option activity | A summary of service-based stock option activity is as follows (in thousands, except per share and term data): Number of Options Weighted-average grant date fair value Weighted-average exercise price Weighted-average remaining contractual term Total intrinsic value Balance at December 31, 2021 5,491 $ 8.11 $ 22.19 7.67 $ 19,802 Granted — — — — — Exercised (76) 5.77 15.07 — 635 Forfeited (87) 9.17 25.22 — — Balance at June 30, 2022 5,328 $ 8.12 22.23 7.16 $ 14,536 Exercisable at June 30, 2022 3,695 $ 7.70 $ 20.72 6.82 $ 14,502 |
Service-Based Restricted Stock Units | |
Stock Compensation Plans and Share-Based Compensation Awards | |
Summary of stock activity | Number of RSUs Weighted-average grant date fair value Balance at December 31, 2021 1,339 $ 24.35 Granted 956 23.60 Vested (547) 22.37 Forfeited (38) 24.24 Balance at June 30, 2022 1,710 $ 24.55 |
Market and Service-Based Stock Options | |
Stock Compensation Plans and Share-Based Compensation Awards | |
Summary of assumptions used in estimating the grant date fair values | Six Months Ended June 30, 2021 Expected life (in years) 7.00 Weighted-average risk-free interest rate 1.15% Expected volatility 34.65% Dividend yield 0.00% Exercise price $ 25.46 |
Market and service-based performance stock units | |
Stock Compensation Plans and Share-Based Compensation Awards | |
Summary of assumptions used in estimating the grant date fair values | Six Months Ended June 30, 2022 Expected life (in years) 3.10 Weighted-average risk-free interest rate 1.74% Expected volatility 47.62% Dividend yield 0.00% Estimated grant date fair value (per share) $ 23.69 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Other (Details) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2022 USD ($) item segment | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Minimum number of merchants | item | 550,000 | |||
Number of reportable segments | segment | 2 | |||
Cash and Cash Equivalents, Restricted Cash, Settlement Related Cash and Merchant Reserves | ||||
Settlement related cash balances | $ 139,300 | $ 133,300 | ||
Merchant reserve cash balances | 100,000 | 101,600 | ||
Reconciliation of cash, cash equivalents and restricted cash | ||||
Cash and cash equivalents | 438,655 | 410,368 | ||
Restricted cash included in other assets | 245 | 247 | ||
Total cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows | 438,900 | $ 376,415 | $ 410,615 | $ 418,539 |
Correction | ||||
Net repayments of settlement lines of credit | (799) | 2,102 | ||
Proceeds from long-term debt | (10,700) | |||
Repayments of long-term debt | $ (11,350) | (3,297) | ||
Revision of Prior Period, Adjustment | ||||
Correction | ||||
Proceeds from long-term debt | 4,200 | |||
Repayments of long-term debt | $ 6,300 | |||
EVO LLC | ||||
Ownership interest (as a percent) | 57.10% | |||
Minimum | ||||
Number of markets | item | 50 |
Revenue - Other (Details)
Revenue - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue | ||||
Revenue | $ 137,671 | $ 122,235 | $ 264,597 | $ 228,415 |
Sale and Rental of POS Equipment | ||||
Revenue | ||||
Revenue | $ 9,100 | $ 9,800 | $ 19,100 | $ 19,600 |
Revenue - Summary (Details)
Revenue - Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue | ||||
Revenue | $ 137,671 | $ 122,235 | $ 264,597 | $ 228,415 |
Direct | ||||
Revenue | ||||
Revenue | 78,774 | 68,323 | 149,405 | 125,449 |
Tech-enabled | ||||
Revenue | ||||
Revenue | 48,654 | 43,005 | 94,862 | 81,695 |
Traditional | ||||
Revenue | ||||
Revenue | 10,243 | 10,907 | 20,330 | 21,271 |
Americas | ||||
Revenue | ||||
Revenue | 81,692 | 76,979 | 158,552 | 147,406 |
Americas | Direct | ||||
Revenue | ||||
Revenue | 36,023 | 32,449 | 68,215 | 61,353 |
Americas | Tech-enabled | ||||
Revenue | ||||
Revenue | 35,426 | 33,623 | 70,007 | 64,782 |
Americas | Traditional | ||||
Revenue | ||||
Revenue | 10,243 | 10,907 | 20,330 | 21,271 |
Europe | ||||
Revenue | ||||
Revenue | 55,979 | 45,256 | 106,045 | 81,009 |
Europe | Direct | ||||
Revenue | ||||
Revenue | 42,751 | 35,874 | 81,190 | 64,096 |
Europe | Tech-enabled | ||||
Revenue | ||||
Revenue | $ 13,228 | $ 9,382 | $ 24,855 | $ 16,913 |
Settlement Processing Assets _3
Settlement Processing Assets and Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Settlement processing assets: | ||
Receivable from card networks | $ 252,798 | $ 209,734 |
Receivable from merchants | 98,801 | 101,947 |
Totals | 351,599 | 311,681 |
Settlement processing obligations: | ||
Settlement liabilities due to merchants | (380,504) | (320,537) |
Merchant reserves | (99,971) | (101,572) |
Totals | $ (480,475) | $ (422,109) |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Numerator: | ||||
Net income attributable to EVO Payments, Inc. | $ 4,353 | $ 3,163 | $ 6,936 | $ 2,321 |
Less: Accrual of redeemable preferred stock paid-in-kind dividends | 2,603 | 2,445 | 5,137 | 4,827 |
Less: Allocation of undistributed earnings to preferred shares | 324 | 129 | 332 | |
Undistributed income (loss) attributable to shares of Class A common stock | $ 1,426 | $ 589 | $ 1,467 | $ (2,506) |
Denominator: | ||||
Weighted-average Class A common stock outstanding | 47,862,425 | 47,038,194 | 47,702,066 | 46,775,245 |
Effect of dilutive securities | 752,707 | |||
Total dilutive securities | 48,615,132 | 47,038,194 | 47,702,066 | 46,775,245 |
Earnings per share: | ||||
Basic | $ 0.03 | $ 0.01 | $ 0.03 | $ (0.05) |
Diluted | $ 0.03 | $ 0.01 | $ 0.03 | $ (0.05) |
Redeemable preferred stock | ||||
Earnings per share: | ||||
Weighted-average anti-dilutive securities | 152,250 | 152,250 | 152,250 | 152,250 |
Stock options | ||||
Earnings per share: | ||||
Weighted-average anti-dilutive securities | 6,081,132 | 5,718,225 | 5,785,041 | |
RSUs | ||||
Earnings per share: | ||||
Weighted-average anti-dilutive securities | 1,451,977 | 1,651,492 | 1,369,429 | |
RSAs | ||||
Earnings per share: | ||||
Weighted-average anti-dilutive securities | 291 | 145 | 621 | |
Performance Stock Units | ||||
Earnings per share: | ||||
Weighted-average anti-dilutive securities | 302,374 | 212,163 | ||
Class C Common Stock | ||||
Earnings per share: | ||||
Weighted-average anti-dilutive securities | 965,197 | 1,328,614 | ||
Class D Common Stock | ||||
Earnings per share: | ||||
Weighted-average anti-dilutive securities | 3,783,074 | 2,934,418 | 3,783,074 | 2,655,306 |
Tax Receivable Agreement (Detai
Tax Receivable Agreement (Details) - USD ($) $ in Millions | 6 Months Ended | ||
May 25, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | |
Tax Receivable Agreement | |||
Payment on applicable cash tax savings (as a percent) | 85% | ||
Payments to TRA obligation | $ 0 | ||
Deferred tax asset pursuant to TRA | 211.9 | $ 211.9 | |
Deferred tax asset pursuant to TRA, net of amortization | 178.4 | 184.1 | |
Deferred tax liability pursuant to TRA | $ 180.1 | $ 180.1 | |
Class D Common Stock | |||
Tax Receivable Agreement | |||
Exchange basis for newly issued shares | 1 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | ||||
Mar. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | May 31, 2022 | Dec. 31, 2021 | Jul. 31, 2021 | |
Allocation of purchase price | ||||||
Goodwill | $ 381,186 | $ 385,651 | ||||
North49 Business Solutions, Inc. | ||||||
Acquisitions | ||||||
Percentage of interest acquired | 100% | |||||
Anderson Zaks Ltd | ||||||
Acquisitions | ||||||
Percentage of interest acquired | 100% | |||||
Pago Facil | ||||||
Acquisitions | ||||||
Percentage of interest acquired | 100% | |||||
Total consideration transferred | $ 20,900 | |||||
Upfront payment | 18,000 | |||||
Deferred consideration, payable 9 months after closing | 900 | |||||
Deferred consideration, payable 18 months after closing | $ 2,000 | |||||
Repayment period 9 months | 9 months | |||||
Repayment period 18 months | 18 months | |||||
Deferred consideration, amount paid | $ 900 | |||||
Measurement-period adjustment | $ 0 | |||||
Allocation of purchase price | ||||||
Deferred tax liabilities | $ (3,507) | |||||
Other assets, net | 855 | |||||
Goodwill | 10,562 | |||||
Total purchase price | 20,900 | |||||
Pago Facil | Acquired software | ||||||
Allocation of purchase price | ||||||
Finite-lived intangible assets | $ 9,400 | |||||
Useful life of intangible assets | 5 years | |||||
Pago Facil | Customer relationships | ||||||
Allocation of purchase price | ||||||
Finite-lived intangible assets | $ 3,000 | |||||
Useful life of intangible assets | 7 years | |||||
Pago Facil | Trademarks, definite-lived | ||||||
Allocation of purchase price | ||||||
Finite-lived intangible assets | $ 440 | |||||
Useful life of intangible assets | 2 years | |||||
Pago Facil | Non-compete agreements | ||||||
Allocation of purchase price | ||||||
Finite-lived intangible assets | $ 150 | |||||
Useful life of intangible assets | 3 years |
Leases - Other (Details)
Leases - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Operating Leases: | |||||
Finance Lease, Right-of-Use Asset, after Accumulated Amortization | $ 0 | $ 0 | $ 0 | ||
Weighted-average remaining lease term | 6 years 10 days | 6 years 10 days | 6 years 4 months 9 days | ||
Weighted-average discount rate used in the measurement of our lease liabilities | 5.46% | 5.46% | 5.81% | ||
Operating lease costs | $ 3,100 | $ 2,800 | $ 6,200 | $ 5,500 | |
Variable lease costs | $ 600 | $ 500 | 1,300 | 1,000 | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 4,500 | $ 4,700 |
Leases - Maturities of lease li
Leases - Maturities of lease liabilities (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Maturities of lease liabilities | |
2022 (remainder of the year) | $ 4,212 |
2023 | 8,787 |
2024 | 8,278 |
2025 | 7,730 |
2026 | 7,196 |
2027 and thereafter | 12,361 |
Total future minimum lease payments (undiscounted) | 48,564 |
Less: present value discount | (7,712) |
Present value of lease liability | $ 40,852 |
Equipment and Improvements (Det
Equipment and Improvements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | $ 295,105 | $ 295,105 | $ 282,778 | ||
Less accumulated depreciation | (224,028) | (224,028) | (213,761) | ||
Foreign currency translation adjustment | (4,500) | (4,500) | (511) | ||
Totals | 66,577 | 66,577 | 68,506 | ||
Depreciation | |||||
Depreciation expense | 8,100 | $ 9,900 | 16,500 | $ 19,900 | |
Decrease in equipment and improvements | 6,600 | 4,100 | |||
Decrease in accumulated depreciation | 6,200 | $ 3,500 | |||
Card processing equipment | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | 165,155 | 165,155 | 155,843 | ||
Office equipment | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | 47,214 | 47,214 | 44,393 | ||
Computer software | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | 59,645 | 59,645 | 60,226 | ||
Leasehold improvements | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | 18,325 | 18,325 | 17,883 | ||
Furniture and fixtures | |||||
Equipment and Improvements | |||||
Equipment and improvements, Gross Totals | $ 4,766 | $ 4,766 | $ 4,433 | ||
Minimum | Card processing equipment | |||||
Equipment and Improvements | |||||
Estimated useful lives | 3 years | ||||
Minimum | Office equipment | |||||
Equipment and Improvements | |||||
Estimated useful lives | 3 years | ||||
Minimum | Computer software | |||||
Equipment and Improvements | |||||
Estimated useful lives | 3 years | ||||
Minimum | Furniture and fixtures | |||||
Equipment and Improvements | |||||
Estimated useful lives | 5 years | ||||
Maximum | Card processing equipment | |||||
Equipment and Improvements | |||||
Estimated useful lives | 5 years | ||||
Maximum | Office equipment | |||||
Equipment and Improvements | |||||
Estimated useful lives | 5 years | ||||
Maximum | Computer software | |||||
Equipment and Improvements | |||||
Estimated useful lives | 5 years | ||||
Maximum | Furniture and fixtures | |||||
Equipment and Improvements | |||||
Estimated useful lives | 7 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Intangible assets, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Intangible assets with finite lives: | |||||
Gross carrying value | $ 644,816 | $ 644,816 | $ 633,544 | ||
Accumulated amortization | (364,651) | (364,651) | (350,022) | ||
Accumulated impairment charges | (22,566) | (22,566) | (24,334) | ||
Translation and other adjustments | (63,838) | (63,838) | (58,462) | ||
Net | 193,761 | 193,761 | 200,726 | ||
Other disclosures | |||||
Amortization expense related to intangible assets | 10,700 | $ 10,800 | 22,800 | $ 21,700 | |
Impairment of intangible assets | 0 | $ 0 | 0 | $ 0 | |
Trademarks, definite-lived | |||||
Other disclosures | |||||
Reduction in gross carrying value | 1,200 | ||||
Merchant contract portfolios and customer relationships | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 297,713 | 297,713 | 297,056 | ||
Accumulated amortization | (203,507) | (203,507) | (197,187) | ||
Accumulated impairment charges | (5,685) | (5,685) | (5,685) | ||
Translation and other adjustments | (31,832) | (31,832) | (30,713) | ||
Net | 56,689 | 56,689 | 63,471 | ||
Marketing alliance agreements | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 197,412 | 197,412 | 197,412 | ||
Accumulated amortization | (87,823) | (87,823) | (79,811) | ||
Accumulated impairment charges | (7,557) | (7,557) | (7,557) | ||
Translation and other adjustments | (23,028) | (23,028) | (20,896) | ||
Net | 79,004 | 79,004 | 89,148 | ||
Internally developed and acquired software | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 128,690 | 128,690 | 110,396 | ||
Accumulated amortization | (59,411) | (59,411) | (53,110) | ||
Accumulated impairment charges | (9,324) | (9,324) | (10,191) | ||
Translation and other adjustments | (5,144) | (5,144) | (3,236) | ||
Net | 54,811 | 54,811 | 43,859 | ||
Other disclosures | |||||
Reduction in gross carrying value | 2,200 | ||||
Trademarks, definite-lived | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 20,851 | 20,851 | 22,068 | ||
Accumulated amortization | (13,863) | (13,863) | (13,427) | ||
Accumulated impairment charges | (901) | ||||
Translation and other adjustments | (3,807) | (3,807) | (3,596) | ||
Net | 3,181 | 3,181 | 4,144 | ||
Non-compete agreements | |||||
Intangible assets with finite lives: | |||||
Gross carrying value | 150 | 150 | |||
Accumulated amortization | (47) | (47) | (6,487) | ||
Translation and other adjustments | (27) | (27) | (21) | ||
Net | $ 76 | 76 | 104 | ||
Gross carrying value | $ 6,612 | ||||
Other disclosures | |||||
Reduction in gross carrying value | $ 6,500 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Estimated amortization expense (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Estimated amortization expense | ||
2022 (remainder of the year) | $ 23,477 | |
2023 | 41,184 | |
2024 | 30,902 | |
2025 | 23,112 | |
2026 | 17,330 | |
2027 and thereafter | 57,756 | |
Total | $ 193,761 | $ 200,726 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Intangible assets, net by segment (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Intangible assets, net | ||
Total intangible assets, net | $ 193,761 | $ 200,726 |
Americas | ||
Intangible assets, net | ||
Total intangible assets, net | 141,756 | 136,844 |
Americas | Merchant contract portfolios and customer relationships | ||
Intangible assets, net | ||
Total intangible assets, net | 45,578 | 49,435 |
Americas | Marketing alliance agreements | ||
Intangible assets, net | ||
Total intangible assets, net | 53,111 | 56,996 |
Americas | Internally developed and acquired software | ||
Intangible assets, net | ||
Total intangible assets, net | 41,624 | 28,812 |
Americas | Trademarks, definite-lived | ||
Intangible assets, net | ||
Total intangible assets, net | 1,367 | 1,497 |
Americas | Non-compete agreements | ||
Intangible assets, net | ||
Total intangible assets, net | 76 | 104 |
Europe | ||
Intangible assets, net | ||
Total intangible assets, net | 52,005 | 63,882 |
Europe | Merchant contract portfolios and customer relationships | ||
Intangible assets, net | ||
Total intangible assets, net | 11,111 | 14,036 |
Europe | Marketing alliance agreements | ||
Intangible assets, net | ||
Total intangible assets, net | 25,893 | 32,152 |
Europe | Internally developed and acquired software | ||
Intangible assets, net | ||
Total intangible assets, net | 13,187 | 15,047 |
Europe | Trademarks, definite-lived | ||
Intangible assets, net | ||
Total intangible assets, net | $ 1,814 | $ 2,647 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Goodwill activity (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill, Roll forward | ||
Goodwill, gross, at the beginning of the year | $ 409,942 | |
Accumulated impairment losses | (24,291) | |
Goodwill, net, at the beginning of the year | $ 385,651 | |
Business combinatinos | 6,790 | |
Foreign currency translation adjustment | (11,255) | |
Goodwill, net, at the end of the year | 381,186 | |
Americas | ||
Goodwill, Roll forward | ||
Goodwill, gross, at the beginning of the year | 274,930 | |
Goodwill, net, at the beginning of the year | 274,930 | |
Business combinatinos | 6,790 | |
Foreign currency translation adjustment | (872) | |
Goodwill, net, at the end of the year | 280,848 | |
Europe | ||
Goodwill, Roll forward | ||
Goodwill, gross, at the beginning of the year | 135,012 | |
Accumulated impairment losses | $ (24,291) | |
Goodwill, net, at the beginning of the year | 110,721 | |
Foreign currency translation adjustment | (10,383) | |
Goodwill, net, at the end of the year | $ 100,338 |
Accounts Payable, Accrued Exp_3
Accounts Payable, Accrued Expenses, and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Accounts Payable, Accrued Expenses, and Other Current Liabilities | ||
Compensation and related benefits | $ 17,199 | $ 23,205 |
Third-party processing and payment network fees | 43,147 | 43,529 |
Trade payables | 10,108 | 6,089 |
Taxes payable | 14,710 | 20,399 |
Commissions payable to third parties | 15,662 | 16,025 |
Unearned revenue | 4,469 | 4,723 |
Other | 29,371 | 19,979 |
Total accounts payable, accrued expenses, and other current liabilities | $ 134,666 | $ 133,949 |
Related Party Transactions - Re
Related Party Transactions - Related party balances (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Related party balances: | ||
Due from related parties, current | $ 569 | $ 782 |
Due to related parties, current | (4,208) | (4,207) |
Due to related parties, long-term | $ (185) | $ (185) |
Related Party Transactions - Tr
Related Party Transactions - Transactions (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Apr. 21, 2020 shares | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) subsidiary item | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Related Party Transactions | ||||||
Lease liabilities | $ 40,852 | $ 40,852 | ||||
Redeemable preferred stock | ||||||
Related Party Transactions | ||||||
Number of shares issued | shares | 152,250 | |||||
515 Broadhollow, LLC | ||||||
Related Party Transactions | ||||||
Lease liabilities | 1,100 | 1,100 | $ 1,900 | |||
Commission Expense | ||||||
Related Party Transactions | ||||||
Expenses with related parties | 3,200 | $ 3,500 | 6,200 | $ 6,400 | ||
Minority held affiliates | ||||||
Related Party Transactions | ||||||
Liabilities to related companies | 3,200 | 3,200 | 3,000 | |||
Lease liabilities | 300 | 300 | 400 | |||
Unconsolidated investees | ||||||
Related Party Transactions | ||||||
Liabilities to related companies | 1,000 | 1,000 | $ 1,200 | |||
Blueapple | Treasury, Payroll, Tax Preparation and Other Services | ||||||
Related Party Transactions | ||||||
Expenses with related parties | $ 100 | 100 | ||||
Blueapple | Treasury, Payroll, Tax Preparation and Other Services | Maximum | ||||||
Related Party Transactions | ||||||
Expenses with related parties | 100 | 100 | ||||
Relative of Chairman | ||||||
Related Party Transactions | ||||||
Expenses with related parties | $ 100 | |||||
Number of owned subsidiaries | subsidiary | 2 | |||||
Number of unconsolidated investee | item | 1 | |||||
Relative of Chairman | Maximum | ||||||
Related Party Transactions | ||||||
Expenses with related parties | 100 | 100 | $ 100 | |||
NFP | ||||||
Related Party Transactions | ||||||
Expenses with related parties | $ 400 | $ 400 | $ 500 | |||
NFP | MDP | ||||||
Related Party Transactions | ||||||
Number of executive officers | subsidiary | 1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Taxes | ||||
Effective income tax rate (as a percent) | 40.70% | 51% | 40.30% | 74.50% |
Tax (benefit) expense related to a valuation allowance recorded to reduce the deferred tax assets not expected to be realized in Spain | $ (0.3) | $ 3.3 |
Long-Term Debt and Lines of C_3
Long-Term Debt and Lines of Credit - Credit Facility (Details) - Senior Secured Credit Facilities $ in Millions | Jun. 30, 2022 USD ($) |
Revolving Credit Facility | |
Long-term debt | |
Commitments | $ 200 |
Effective interest rate (as a percent) | 5.50% |
Term loan | |
Long-term debt | |
Face amount of debt | $ 588 |
Effective interest rate (as a percent) | 3.42% |
Long-Term Debt and Lines of C_4
Long-Term Debt and Lines of Credit - Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Long-term debt | ||
Long term debt gross | $ 587,350 | |
Less debt issuance costs | (4,761) | $ (5,310) |
Total long-term debt | 582,589 | 582,690 |
Less current portion of long-term debt, net of current portion of debt issuance costs | (14,092) | (14,058) |
Total long-term debt, long-term portion | 568,497 | 568,632 |
Term loan | ||
Long-term debt | ||
Long term debt gross | 580,650 | $ 588,000 |
Revolving Credit Facility | ||
Long-term debt | ||
Long term debt gross | $ 6,700 |
Long-Term Debt and Lines of C_5
Long-Term Debt and Lines of Credit - Principal payment requirements (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Principal payment requirements: | |
2022 (remainder of the year) | $ 7,350 |
2023 | 14,700 |
2024 | 29,400 |
2025 | 44,100 |
2026 | 491,800 |
Total | $ 587,350 |
Long-Term Debt and Lines of C_6
Long-Term Debt and Lines of Credit - Settlement Lines of Credit (Details) - Settlement facilities - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Settlement obligations | ||
Amount outstanding | $ 8.3 | $ 8 |
Additional capacity | $ 130.7 | $ 142.6 |
Weighted-average interest rate | 8.20% | 5.20% |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - Interest Rate Swap - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Derivatives | |||
Notional amount | $ 500,000 | ||
Interest rate | 0.2025% | ||
Reclassification of interest expense over the next 12 months | $ 6,200 | ||
Other current assets | Designated as Hedging Instrument | |||
Derivatives | |||
Fair value of interest rate swap assets | $ 6,192 | $ 1,297 |
Derivatives - AOCI (Details)
Derivatives - AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Effect of hedge accounting on accumulated other comprehensive loss | ||||
Beginning balance | $ (832,658) | |||
Less: Derivative gain (loss) reclassified from accumulated other comprehensive loss to interest expense | $ 730 | $ (118) | 662 | $ (206) |
Ending balance | (766,314) | (766,314) | ||
Accumulated Gain (Loss), Cash Flow Hedge | ||||
Effect of hedge accounting on accumulated other comprehensive loss | ||||
Beginning balance | 4,927 | (88) | 1,297 | (533) |
Derivative gain (loss) recognized in the current period in accumulated other comprehensive loss | 1,995 | (143) | 5,557 | 214 |
Less: Derivative gain (loss) reclassified from accumulated other comprehensive loss to interest expense | 730 | (118) | 662 | (206) |
Ending balance | $ 6,192 | $ (113) | $ 6,192 | $ (113) |
Derivatives - Income Statement
Derivatives - Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Effect of hedge accounting on the unaudited condensed consolidated statements of operations and comprehensive income (loss) | ||||
Total interest expense including the effects of cash flow hedges | $ (4,120) | $ (6,061) | $ (8,374) | $ (12,159) |
Derivative gain (loss) reclassified from accumulated other comprehensive loss into interest expense | 730 | (118) | 662 | (206) |
Interest Rate Swap | ||||
Effect of hedge accounting on the unaudited condensed consolidated statements of operations and comprehensive income (loss) | ||||
Total interest expense including the effects of cash flow hedges | $ (4,120) | $ (6,061) | $ (8,374) | $ (12,159) |
Derivatives - Cross Currency Sw
Derivatives - Cross Currency Swap (Details) - Cross Currency Swap $ in Thousands, € in Millions | 6 Months Ended | ||||
Jun. 30, 2022 USD ($) | Nov. 15, 2027 USD ($) | Nov. 15, 2027 EUR (€) | Nov. 15, 2022 USD ($) | Nov. 15, 2022 EUR (€) | |
Derivatives | |||||
Amount of Gain (Loss) Recognized in OCI | $ 653 | ||||
Forecast | |||||
Derivatives | |||||
Notional liability amount | € 25 | $ 26,200 | |||
Notional asset amount | $ 26,200 | € 25 | |||
Other current assets | |||||
Derivatives | |||||
Fair value of cross currency swap, current portion | 335 | ||||
Other long-term liabilities | |||||
Derivatives | |||||
Fair value of cross currency swap, long term portion | $ (8) |
Derivatives - Non-designated De
Derivatives - Non-designated Derivatives (Details) - Non-designated Derivatives $ in Thousands, £ in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Apr. 30, 2022 GBP (£) | Apr. 30, 2022 MXN ($) | |
Forward swap | ||||||
Derivatives | ||||||
Notional asset amount | £ 34.5 | $ 960.1 | ||||
Forward swap | Other income (expense) | ||||||
Derivatives | ||||||
Unrealized gain (loss) | $ 2,768 | $ 2,768 | ||||
Forward swap | Other current assets | ||||||
Derivatives | ||||||
Foreign currency derivative asset, Fair value | $ 2,768 | $ 2,768 | ||||
Foreign Currency Swap | ||||||
Derivatives | ||||||
Notional amount | $ 31,000 | $ 31,000 | ||||
Foreign Currency Swap | Other income (expense) | ||||||
Derivatives | ||||||
Unrealized gain (loss) | (163) | (163) | ||||
Window Forwards | ||||||
Derivatives | ||||||
Notional amount | 67,800 | 67,800 | ||||
Window Forwards | Other income (expense) | ||||||
Derivatives | ||||||
Unrealized gain (loss) | $ 1,804 | $ 1,804 |
Supplemental Cash Flows Infor_3
Supplemental Cash Flows Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Supplemental disclosure of cash flow data: | ||
Interest paid | $ 7,981 | $ 10,776 |
Income taxes paid | 7,142 | 5,561 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Operating lease liabilities arising from obtaining new or modified right-of-use assets | 9,554 | 2,197 |
Decrease in operating lease liabilities and corresponding right-of-use assets resulting from lease modifications | (2,559) | |
Software and equipment assets acquired by assuming directly related liabilities | 4,653 | |
Deferred consideration payable | 5,321 | 2,900 |
Accrual of redeemable preferred stock paid-in-kind-dividends | $ 5,137 | 4,827 |
Exchanges of Class C and Class D common stock for Class A common stock | $ 13,231 |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Apr. 21, 2020 USD ($) D $ / shares shares | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | |
Redeemable preferred stock | |||||
Redeemable Preferred Stock | |||||
Number of shares issued | shares | 152,250 | ||||
Proceeds from issuance of preferred stock | $ 149.3 | ||||
Redeemable preferred stock issuance costs | $ 1.7 | ||||
Liquidation preference per share (in dollars per share) | $ / shares | $ 1,000 | ||||
Amortization period of discount | 10 years | ||||
Carrying value of the preferred stock increased for accretion of the PIK dividend | $ 2.6 | $ 2.4 | $ 5.1 | $ 4.8 | |
PIK dividend rate | 6.22% | ||||
Threshold percentage of Class A Common Stock ownership of the aggregate voting power as required by Nasdaq, in the event of conversion, used to determine the elimination of the limitation on the conversion of the Preferred Stock | 19.99% | ||||
Threshold trading days | D | 20 | ||||
Threshold consecutive trading days | D | 30 | ||||
Percentage of then current liquidation preference per share plus accumulated and unpaid dividends as cash consideration | 150% | ||||
Convertible preferred stock redemption period | 10 years | ||||
Estimated amount for repurchase of redeemable preferred stock | $ 260 | ||||
Redeemable preferred stock | Convertible Preferred Stock, Dividend Rate For First Ten Years | |||||
Redeemable Preferred Stock | |||||
PIK dividend rate | 6% | ||||
Redeemable preferred stock | Convertible Preferred Stock, Dividend Rate Thereafter | |||||
Redeemable Preferred Stock | |||||
PIK dividend rate | 8% | ||||
Redeemable preferred stock | Prior to the fourth semi-annual PIK dividend payment date | |||||
Redeemable Preferred Stock | |||||
Threshold stock price trigger percentage | 180% | ||||
Redeemable preferred stock | After fourth and prior to the sixth semi-annual PIK dividend payment date | |||||
Redeemable Preferred Stock | |||||
Threshold stock price trigger percentage | 170% | ||||
Redeemable preferred stock | On or after the sixth and prior to the eighth semi-annual PIK dividend payment date | |||||
Redeemable Preferred Stock | |||||
Threshold stock price trigger percentage | 160% | ||||
Redeemable preferred stock | On or after the eighth semi-annual PIK dividend payment date | |||||
Redeemable Preferred Stock | |||||
Threshold stock price trigger percentage | 150% | ||||
Redeemable preferred stock | Change of Control is on or after the sixth semi-annual PIK dividend payment date | |||||
Redeemable Preferred Stock | |||||
Percentage of then current liquidation preference per share plus accumulated and unpaid dividends as cash consideration | 100% | ||||
Class A Common Stock | |||||
Redeemable Preferred Stock | |||||
Conversion rate | shares | 63.2911 | ||||
Conversion price | $ / shares | $ 15.80 |
Redeemable Non-controlling In_3
Redeemable Non-controlling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Oct. 31, 2020 | |
Redeemable Non-controlling Interests | ||||||
Beginning balance | $ 1,029,090 | $ 1,044,814 | $ 1,055,633 | $ 1,029,090 | $ 1,055,633 | |
Contributions | 1,487 | |||||
Distributions | (790) | (8,500) | (6,989) | (13,655) | ||
Net (loss) income attributable to RNCI | 2,665 | 3,415 | (1,724) | 8,391 | 8,781 | |
Unrealized gain (loss) on foreign currency translation adjustment | (14,741) | (16,079) | ||||
(Decrease) increase in the maximum redemption amount of RNCI | (57,293) | 3,000 | ||||
Allocation of eService fair value RNCI adjustment to Blueapple | (1,685) | (7,869) | ||||
Allocation of Chile fair value RNCI adjustment to Blueapple | (2,915) | |||||
Ending balance | 959,467 | $ 1,079,798 | 1,044,814 | 958,908 | 1,029,090 | |
Interest Rate Swap | ||||||
Redeemable Non-controlling Interests | ||||||
Unrealized gain on change in fair value of interest rate swap | 1,884 | 707 | ||||
Cross Currency Swap | ||||||
Redeemable Non-controlling Interests | ||||||
Unrealized gain on change in fair value of interest rate swap | 251 | |||||
Blueapple | ||||||
Redeemable Non-controlling Interests | ||||||
Beginning balance | 823,386 | 868,738 | 823,386 | 868,738 | ||
Net (loss) income attributable to RNCI | 3,380 | 47 | ||||
Unrealized gain (loss) on foreign currency translation adjustment | (9,061) | (10,313) | ||||
(Decrease) increase in the maximum redemption amount of RNCI | (61,669) | (25,009) | ||||
Allocation of eService fair value RNCI adjustment to Blueapple | (1,685) | (7,869) | ||||
Allocation of Chile fair value RNCI adjustment to Blueapple | (2,915) | |||||
Ending balance | 756,486 | 823,386 | ||||
Blueapple | Interest Rate Swap | ||||||
Redeemable Non-controlling Interests | ||||||
Unrealized gain on change in fair value of interest rate swap | 1,884 | 707 | ||||
Blueapple | Cross Currency Swap | ||||||
Redeemable Non-controlling Interests | ||||||
Unrealized gain on change in fair value of interest rate swap | $ 251 | |||||
eService | ||||||
Redeemable Non-controlling Interests | ||||||
Ownership interest (as a percent) | 66% | |||||
Beginning balance | 198,531 | 186,436 | $ 198,531 | 186,436 | ||
Distributions | (6,989) | (13,655) | ||||
Net (loss) income attributable to RNCI | 5,817 | 10,329 | ||||
Unrealized gain (loss) on foreign currency translation adjustment | (5,466) | (5,045) | ||||
(Decrease) increase in the maximum redemption amount of RNCI | 4,376 | 20,466 | ||||
Ending balance | $ 196,269 | 198,531 | ||||
eService | PKO Bank Polski | ||||||
Redeemable Non-controlling Interests | ||||||
Ownership interest of noncontrolling owners (as a percent) | 34% | |||||
EVO LLC | ||||||
Redeemable Non-controlling Interests | ||||||
Ownership interest (as a percent) | 57.10% | |||||
Chilean subsidiary | ||||||
Redeemable Non-controlling Interests | ||||||
Joint venture ownership interest (as a percent) | 50.10% | |||||
Beginning balance | $ 7,173 | $ 459 | $ 7,173 | 459 | ||
Contributions | 1,487 | |||||
Net (loss) income attributable to RNCI | (806) | (1,595) | ||||
Unrealized gain (loss) on foreign currency translation adjustment | (214) | (721) | ||||
(Decrease) increase in the maximum redemption amount of RNCI | 7,543 | |||||
Ending balance | $ 6,153 | $ 7,173 | ||||
Chilean subsidiary | BCI | ||||||
Redeemable Non-controlling Interests | ||||||
Joint venture ownership interest (as a percent) | 49.90% |
Fair Value - Summary (Details)
Fair Value - Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Fair Value | ||
Investment in equity securities | $ 23,095 | $ 25,398 |
Interest Rate Swap | ||
Fair Value | ||
Interest rate swap | (6,200) | (1,300) |
Cross Currency Swap | ||
Fair Value | ||
Derivative asset | 300 | |
Forward swap | ||
Fair Value | ||
Derivative asset | 2,800 | |
Recurring | ||
Fair Value | ||
Cash equivalents | 36,618 | 95,919 |
Contingent consideration | (421) | (611) |
Investment in equity securities | 23,095 | 25,398 |
Total | (890,329) | (907,087) |
Recurring | Interest Rate Swap | ||
Fair Value | ||
Derivative asset | (6,192) | 1,297 |
Recurring | Cross Currency Swap | ||
Fair Value | ||
Derivative asset | 327 | |
Recurring | Forward swap | ||
Fair Value | ||
Derivative asset | 2,768 | |
Recurring | Blueapple | ||
Fair Value | ||
Redeemable non-controlling interest | (756,486) | (823,386) |
Recurring | eService | ||
Fair Value | ||
Redeemable non-controlling interest | (196,269) | (198,531) |
Recurring | Chilean subsidiary | ||
Fair Value | ||
Redeemable non-controlling interest | (6,153) | (7,173) |
Level 1 | Recurring | ||
Fair Value | ||
Cash equivalents | 36,618 | 95,919 |
Total | (719,868) | (727,467) |
Level 1 | Recurring | Blueapple | ||
Fair Value | ||
Redeemable non-controlling interest | (756,486) | (823,386) |
Level 2 | Recurring | ||
Fair Value | ||
Investment in equity securities | 23,095 | 25,398 |
Total | 32,382 | 26,695 |
Level 2 | Recurring | Interest Rate Swap | ||
Fair Value | ||
Derivative asset | (6,192) | 1,297 |
Level 2 | Recurring | Cross Currency Swap | ||
Fair Value | ||
Derivative asset | 327 | |
Level 2 | Recurring | Forward swap | ||
Fair Value | ||
Derivative asset | 2,768 | |
Level 3 | Recurring | ||
Fair Value | ||
Contingent consideration | (421) | (611) |
Total | (202,843) | (206,315) |
Level 3 | Recurring | eService | ||
Fair Value | ||
Redeemable non-controlling interest | (196,269) | (198,531) |
Level 3 | Recurring | Chilean subsidiary | ||
Fair Value | ||
Redeemable non-controlling interest | $ (6,153) | $ (7,173) |
Fair Value - Other (Details)
Fair Value - Other (Details) $ in Thousands, € in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2022 EUR (€) | Dec. 31, 2021 EUR (€) | |
Fair Value | |||||||
Long-term debt, fair value | $ 587,400 | $ 587,400 | $ 588,000 | ||||
(Loss) gain on investment in equity securities | (2,918) | $ 2,506 | (2,303) | $ 2,266 | |||
Assets, transfers into Level 3 | 0 | 0 | |||||
Assets, transfers out of Level 3 | 0 | 0 | |||||
Liability, transfers into Level 3 | 0 | 0 | |||||
Liability, transfers out of Level 3 | 0 | 0 | |||||
Visa Series A preferred stock | |||||||
Fair Value | |||||||
(Loss) gain on investment in equity securities | (2,900) | $ 2,500 | (2,300) | $ 2,300 | |||
Visa Series C preferred stock | |||||||
Fair Value | |||||||
Carrying amount of Visa preferred shares | 7,400 | 7,400 | 7,400 | € 6.5 | € 6.5 | ||
Estimated fair value of Visa preferred shares | 18,500 | $ 18,500 | 20,300 | ||||
Series C preferred stock | |||||||
Fair Value | |||||||
Convertible preferred stock, conversion period (in years) | 12 years | ||||||
Interest Rate Swap | |||||||
Fair Value | |||||||
Fair value of the interest rate swap of liability | $ 6,200 | $ 6,200 | $ 1,300 | ||||
Minimum | Market Approach | |||||||
Fair Value | |||||||
Valuation multiples for revenue | 4.50 | ||||||
Valuation multiples for EBITDA | 9 | ||||||
Maximum | Market Approach | |||||||
Fair Value | |||||||
Valuation multiples for revenue | 5 | ||||||
Valuation multiples for EBITDA | 9.75 | ||||||
eService | Income Approach | |||||||
Fair Value | |||||||
Redeemable non-controlling interest, measurement input (as a percent) | 50% | ||||||
eService | Market Approach | |||||||
Fair Value | |||||||
Redeemable non-controlling interest, measurement input (as a percent) | 50% | ||||||
eService | Weighted Average Cost of Capital | |||||||
Fair Value | |||||||
Redeemable non-controlling interest, measurement input (as a percent) | 12% | ||||||
eService | Maximum | Growth Rate | |||||||
Fair Value | |||||||
Redeemable non-controlling interest, measurement input (as a percent) | 8% | ||||||
Chilean subsidiary | Income Approach | |||||||
Fair Value | |||||||
Redeemable non-controlling interest, measurement input (as a percent) | 50% | ||||||
Chilean subsidiary | Discount for lack of marketability | |||||||
Fair Value | |||||||
Redeemable non-controlling interest, measurement input (as a percent) | 17% | ||||||
Chilean subsidiary | Minimum | Market Approach | |||||||
Fair Value | |||||||
Valuation multiples for revenue | 1.75 | ||||||
Chilean subsidiary | Maximum | Market Approach | |||||||
Fair Value | |||||||
Valuation multiples for revenue | 6 | ||||||
Chilean subsidiary | Maximum | Growth Rate | |||||||
Fair Value | |||||||
Redeemable non-controlling interest, measurement input (as a percent) | 17.90% |
Segment Information - Informati
Segment Information - Information on segments & reconciliations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Segment Information | ||||
Revenue | $ 137,671 | $ 122,235 | $ 264,597 | $ 228,415 |
Segment profit | 19,000 | 13,822 | 27,515 | 15,529 |
Depreciation and amortization | (18,806) | (20,695) | (39,317) | (41,621) |
Net interest expense | (3,482) | (5,732) | (6,914) | (11,589) |
Provision for income tax expense | (7,742) | (7,045) | (11,101) | (11,575) |
Share-based compensation expense | (7,707) | (6,489) | (14,710) | (12,287) |
Less: Net income (loss) attributable to non-controlling interests of EVO Investco, LLC | 3,061 | 1,457 | 3,778 | (1,592) |
Net income attributable to EVO Payments, Inc. | 4,353 | 3,163 | 6,936 | 2,321 |
Capital expenditures | 9,920 | 9,098 | 18,077 | 19,959 |
Operating | ||||
Segment Information | ||||
Segment profit | 52,575 | 54,836 | 100,729 | 93,938 |
Corporate | ||||
Segment Information | ||||
Segment profit | (7,424) | (10,255) | (17,973) | (16,137) |
Americas | ||||
Segment Information | ||||
Revenue | 81,692 | 76,979 | 158,552 | 147,406 |
Segment profit | 36,285 | 37,781 | 68,609 | 67,757 |
Capital expenditures | 4,257 | 4,025 | 8,303 | 6,688 |
Europe | ||||
Segment Information | ||||
Revenue | 55,979 | 45,256 | 106,045 | 81,009 |
Segment profit | 16,290 | 17,055 | 32,120 | 26,181 |
Capital expenditures | $ 5,663 | $ 5,073 | $ 9,774 | $ 13,271 |
Segment Information - Long live
Segment Information - Long lived assets by geographic location (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Segment Information | ||
Long-lived assets | $ 105,742 | $ 103,210 |
Poland | ||
Segment Information | ||
Long-lived assets | 31,564 | 31,534 |
United States | ||
Segment Information | ||
Long-lived assets | 30,540 | 30,228 |
Mexico | ||
Segment Information | ||
Long-lived assets | 18,424 | 18,554 |
Other | ||
Segment Information | ||
Long-lived assets | $ 25,214 | $ 22,894 |
Segment Information - Revenue f
Segment Information - Revenue from external customers (Details) - Revenue from external customers - Geographic Concentration Risk | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
United States | ||||
Revenue from external customers | ||||
Revenue from external customers as a percentage of total revenue | 34.90% | 39.50% | 36.10% | 40.60% |
Mexico | ||||
Revenue from external customers | ||||
Revenue from external customers as a percentage of total revenue | 21% | 20.30% | 20.40% | 20.80% |
Poland | ||||
Revenue from external customers | ||||
Revenue from external customers as a percentage of total revenue | 18% | 17.20% | 18% | 16.60% |
Shareholder's Equity - Organiza
Shareholder's Equity - Organization structure (Details) | 6 Months Ended | |
May 25, 2021 shares | Jun. 30, 2022 Vote shares | |
Class A Common Stock | ||
Shareholders' Equity | ||
Number of votes per share | Vote | 1 | |
Exchange basis for newly issued shares | 1 | |
Class B Common Stock | ||
Shareholders' Equity | ||
Cancellation of Class B common stock (in shares) | 32,163,538 | |
Class D Common Stock | ||
Shareholders' Equity | ||
Number of votes per share | Vote | 1 | |
Exchange basis for newly issued shares | 1 | |
Blueapple | ||
Shareholders' Equity | ||
Number of LLC interests received in connection with the reclassification of units outstanding in EVO, LLC as a result of the reorganization | 32,163,538 | |
Blueapple and MDP | ||
Shareholders' Equity | ||
Number of LLC interests received in connection with the reclassification of units outstanding in EVO, LLC as a result of the reorganization | 32,163,538 |
Stock Compensation Plans and _3
Stock Compensation Plans and Share-Based Compensation Awards - Share based compensation expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Feb. 25, 2020 | May 22, 2018 | |
Stock Compensation Plans and Share-Based Compensation Awards | ||||||
Share-based compensation expense | $ 7,707 | $ 6,489 | $ 14,710 | $ 12,287 | ||
Income tax benefit | $ (1,237) | $ (963) | $ (2,365) | $ (1,921) | ||
2018 Plan | Class A Common Stock | ||||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||||
Shares reserved for issuance | 7,792,162 | |||||
Amended and Restated 2018 Plan | Class A Common Stock | ||||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||||
Shares reserved for issuance | 15,142,162 |
Stock Compensation Plans and _4
Stock Compensation Plans and Share-Based Compensation Awards - RSUs (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Share-based compensation expense | $ 7,707 | $ 6,489 | $ 14,710 | $ 12,287 |
Service-Based Restricted Stock Units | ||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Share-based compensation expense | 4,500 | 3,200 | 8,300 | 5,700 |
Unrecognized compensation expense | $ 35,700 | $ 28,900 | $ 35,700 | $ 28,900 |
Weighted average period outstanding for unvested RSUs | 2 years 3 months 18 days | 2 years 4 months 24 days | ||
Fair value of share based awards vested | $ 12,200 | $ 7,800 | ||
Number outstanding | ||||
Balance at beginning of period (in shares) | 1,339 | |||
Granted (in shares) | 956 | |||
Vested (in shares) | (547) | |||
Forfeited (in shares) | (38) | |||
Balance at end of period (in shares) | 1,710 | 1,710 | ||
Weighted average grant date fair value | ||||
Balance at beginning of period (in dollars per share) | $ 24.35 | |||
Granted (in dollars per share) | 23.60 | |||
Vested (in dollars per share) | 22.37 | |||
Forfeited (in dollars per share) | 24.24 | |||
Balance at end of period (in dollars per share) | $ 24.55 | $ 24.55 | ||
Service-Based Restricted Stock Units | Executive Officers | ||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Vesting period | 3 years | |||
Service-Based Restricted Stock Units | Maximum | ||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Vesting period | 4 years | |||
Service-Based Restricted Stock Units | Minimum | ||||
Stock Compensation Plans and Share-Based Compensation Awards | ||||
Vesting period | 3 years |
Stock Compensation Plans and _5
Stock Compensation Plans and Share-Based Compensation Awards - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Stock Compensation Plans and Share-Based Compensation Awards | |||||
Share-based compensation expense | $ 7,707 | $ 6,489 | $ 14,710 | $ 12,287 | |
Service-Based Stock Options | |||||
Stock Compensation Plans and Share-Based Compensation Awards | |||||
Share-based compensation expense | $ 2,300 | 2,900 | $ 4,900 | $ 6,000 | |
Number outstanding | |||||
Balance at beginning of period (in shares) | 5,491 | ||||
Exercised (in shares) | (76) | ||||
Forfeited (in shares) | (87) | ||||
Balance at end of period (in shares) | 5,328 | 5,328 | 5,491 | ||
Exercisable at end of period (in shares) | 3,695 | 3,695 | |||
Weighted average grant date fair value | |||||
Balance at beginning of period (in dollars per share) | $ 8.11 | ||||
Exercised (in dollars per share) | 5.77 | ||||
Forfeited (in dollars per share) | 9.17 | ||||
Balance at end of period (in dollars per share) | $ 8.12 | 8.12 | $ 8.11 | ||
Exercisable at end of period (in dollars per share) | 7.70 | 7.70 | |||
Weighted average exercise price | |||||
Balance at beginning of period (in dollars per share) | 22.19 | ||||
Exercised (in dollars per share) | 15.07 | ||||
Forfeited (in dollars per share) | 25.22 | ||||
Balance at end of period (in dollars per share) | 22.23 | 22.23 | $ 22.19 | ||
Exercisable at end of period (in dollars per share) | $ 20.72 | $ 20.72 | |||
Weighted average remaining contractual term | |||||
Weighted average remaining contractual term (in years) | 7 years 1 month 28 days | 7 years 8 months 1 day | |||
Exercisable at Weighted average remaining contractual term (in years) | 6 years 9 months 25 days | ||||
Total Intrinsic Value | |||||
Aggregate Intrinsic Value at beginning of period | $ 19,802 | ||||
Aggregate Intrinsic Value, Exercised | 635 | ||||
Aggregate Intrinsic Value at end of period | $ 14,536 | 14,536 | $ 19,802 | ||
Aggregate Intrinsic Value, Exercisable Options | 14,502 | $ 14,502 | |||
Other disclosures | |||||
Weighted average period outstanding for unvested stock options | 1 year 9 months 18 days | 2 years 6 months | |||
Unrecognized compensation expense | $ 12,200 | $ 24,900 | $ 12,200 | $ 24,900 | |
Vesting period | 4 years | ||||
Expiration period | 10 years | ||||
Service-Based Stock Options | Executive Officers | |||||
Other disclosures | |||||
Vesting period | 3 years |
Stock Compensation Plans and _6
Stock Compensation Plans and Share-Based Compensation Awards - Market and Service-Based Stock Options (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 USD ($) shares | Jun. 30, 2021 USD ($) D $ / shares | Mar. 31, 2021 USD ($) shares | Jun. 30, 2022 USD ($) installment shares | Jun. 30, 2021 USD ($) $ / shares | |
Other disclosures | |||||
Share-based compensation expense | $ 7,707 | $ 6,489 | $ 14,710 | $ 12,287 | |
Market and Service-Based Stock Options | Chief Executive Officer | |||||
Stock Compensation Plans and Share-Based Compensation Awards | |||||
Options Granted (in shares) | shares | 287,395 | ||||
Fair value of options granted | $ 2,900 | ||||
Trailing period | D | 20 | ||||
Percentage of closing price | 110% | ||||
Trading days | D | 20 | ||||
Number of installments | installment | 3 | ||||
Exercisable at end of period (in shares) | shares | 95,798 | 95,798 | |||
Assumptions used in estimating grant date fair values | |||||
Expected life (in years) | 7 years | ||||
Weighted-average risk-free interest rate (as a percent) | 1.15% | ||||
Expected volatility (as a percent) | 34.65% | ||||
Dividend yield (as a percent) | 0% | ||||
Exercise price | $ / shares | $ 25.46 | $ 25.46 | |||
Other disclosures | |||||
Vesting period | 3 years | ||||
Share-based compensation expense | $ 200 | $ 400 | $ 600 | $ 600 | |
Unrecognized compensation expense | $ 900 | $ 2,300 | $ 900 | $ 2,300 | |
Weighted average period for unrecognized compensation expense (in years) | 1 year 3 months 18 days | 1 year 9 months 18 days |
Stock Compensation Plans and _7
Stock Compensation Plans and Share-Based Compensation Awards - Performance Stock Units (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) shares | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) $ / shares | Jun. 30, 2021 USD ($) | |
Stock Compensation Plans and Share-Based Compensation Awards | |||||
Share-based compensation expense | $ 7,707 | $ 6,489 | $ 14,710 | $ 12,287 | |
Performance Stock Units | |||||
Stock Compensation Plans and Share-Based Compensation Awards | |||||
Granted (in shares) | shares | 151,187 | ||||
Fair value of units granted | $ 3,600 | ||||
Vesting period | 3 years | ||||
Share-based compensation expense | 400 | 500 | |||
Unrecognized compensation expense | 3,600 | $ 3,600 | |||
Weighted average period for unrecognized compensation expense (in years) | 2 years 8 months 12 days | ||||
Performance Stock Units | Maximum | |||||
Stock Compensation Plans and Share-Based Compensation Awards | |||||
Percentage of units vested | 200% | ||||
Performance Stock Units | Minimum | |||||
Stock Compensation Plans and Share-Based Compensation Awards | |||||
Percentage of units vested | 0% | ||||
Market and service-based performance stock units | |||||
Stock Compensation Plans and Share-Based Compensation Awards | |||||
Granted (in shares) | shares | 151,187 | ||||
Fair value of units granted | $ 3,900 | ||||
Threshold trading days for which the closing price of the common stock to be met to vest the awards | 20 days | ||||
Share-based compensation expense | 300 | $ 400 | |||
Unrecognized compensation expense | $ 3,500 | $ 3,500 | |||
Weighted average period for unrecognized compensation expense (in years) | 2 years 9 months 18 days | ||||
Assumptions used in estimating grant date fair values | |||||
Expected life (in years) | 3 years 1 month 6 days | ||||
Weighted-average risk-free interest rate (as a percent) | 1.74% | ||||
Expected volatility (as a percent) | 47.62% | ||||
Dividend yield (as a percent) | 0% | ||||
Weighted-average fair value at grant date | $ / shares | 23.69 |
Subsequent Events (Details)
Subsequent Events (Details) | Aug. 01, 2022 $ / shares |
Subsequent Event | Global Payments | Merger Agreement | |
Subsequent Events | |
Merger, cash consideration (in dollars per share) | $ 34 |