Euronet Worldwide, Inc. (“Euronet” or the “Company”) (NASDAQ:
EEFT), a leading global financial technology solutions and payments
provider, reports second quarter 2023 financial
results.
Euronet reports the following
consolidated results for the second
quarter 2023 compared with the same period
of 2022:
- Revenues of $939.1 million,
an 11% increase from $843.3 million (11% increase on
a constant currency1 basis).
- Operating income of $122.6 million, a 21% increase
from $101.1 million (21% increase on a constant currency
basis).
- Adjusted operating income2 of $119.6 million,
an 18% increase from $101.1 million (18%
increase on a constant currency basis).
- Adjusted EBITDA3 of $165.8 million,
a 13% increase from $147.2 million (13% increase on
a constant currency basis).
- Net income attributable to Euronet of $86.1 million, or $1.65
diluted earnings per share, compared with $57.3 million, or
$1.08 diluted earnings per share.
- Adjusted earnings per share4 of $2.03, a 17% increase from
$1.73.
- Euronet's cash and cash equivalents
were $1,139 million and ATM cash was $776 million, totaling
$1,915 million as of June 30, 2023, and availability under its
revolving credit facilities was approximately $1,055 million.
See the reconciliation of non-GAAP items in the
attached financial schedules.
"I am pleased that we delivered record second
quarter revenue, adjusted operating income, adjusted EBITDA, and
adjusted EPS with double-digit increases in operating income from
each segment," stated Michael J. Brown, Euronet's Chairman and
CEO. "Money Transfer produced record second quarter results across
all financial metrics, as well as nice margin expansion from
continued growth in both physical and digital transactions and
effective cost management. In EFT, we experienced a continued
recovery of our most profitable transactions, and another strong
quarter from our recently acquired point-of-sale ("POS") card
acquiring business. In epay, we continued to see strong growth in
content sold through both physical and digital channels, together
with a nice benefit from promotional activity in the quarter. These
growth trends in each segment resulted in our ninth consecutive
quarter of consolidated, constant currency double-digit adjusted
EBITDA growth rates."
Second quarter 2023 adjusted operating income,
adjusted EBITDA and adjusted EPS exclude a non-cash gain in the EFT
segment.
Taking into consideration recent trends in the
business and the global economy, and historical seasonal
patterns, the Company anticipates that its third quarter
2023 adjusted EPS will be $2.70. This outlook does not
include any change that may develop throughout the third
quarter in foreign exchange rates, interest rates,
and/or other unforeseen factors.
Segment and Other Results
The EFT Processing
Segment reports the following results for
the second quarter 2023 compared with the same
period or date in 2022:
- Revenues of $282.4 million,
a 13% increase from $249.0 million
(13% increase on a constant currency1 basis).
- Operating income of
$69.1 million, a 26% increase from $54.8
million (26% increase on a constant currency basis).
- Adjusted operating income of $66.1
million, a 21% increase from $54.8 million (21% increase on a
constant currency basis).
- Adjusted EBITDA of
$89.9 million, a 12% increase
from $80.5 million (12% increase on a constant currency
basis).
- Transactions of 2,035 million,
a 29% increase from 1,573 million.
- Total of 52,327
installed ATMs as of June 30, 2023,
a 2% increase from 51,062. Operated 51,402 active
ATMs as of June 30, 2023, a 2% increase from
50,178 as of June 30, 2022.
Revenue, operating income, adjusted operating income and
adjusted EBITDA growth in the second quarter 2023 were driven
by increased domestic and international cash withdrawal
transactions resulting from a continued recovery in travel and
strong performance from our POS card acquiring business,
together with a continued benefit from a significant volume
increase in low-priced payment processing transactions in Asia
Pacific.
The EFT Segment's total
installed ATMs grew 2%, from the addition of
492 Euronet-owned ATMs, 127 new outsourcing ATMs and the
addition of 646 low-margin ATMs in India. The
difference between installed and active ATMs relates
to ATMs that have been seasonally deactivated.
The epay Segment reports
the following results for the second
quarter 2023 compared with the same period or date
in 2022:
- Revenues
of $263.8 million, a 16% increase from $227.7
million (15% increase on a constant currency basis).
- Operating income of
$26.8 million, a 10% increase from $24.3 million
(11% increase on a constant currency basis).
- Adjusted EBITDA of
$28.5 million, a 10% increase from $25.9 million
(10% increase on a constant currency basis).
- Transactions of 984 million, a
12% decrease from 1,116 million.
- POS terminals of approximately
810,000 as of June 30, 2023, a 6% increase from
approximately 762,000.
- Retailer locations of approximately
349,000 as of June 30, 2023, a 3% increase from
approximately 339,000.
Revenue, operating income and adjusted EBITDA growth was driven
by continued expansion of digital branded payments together with
the benefit of promotional activity in the second quarter
2023. The 12% decline in epay transactions was the result of
a decrease in transactions in India where mobile
wallets established direct connections with certain mobile
operators, partially offset by continued growth in digital
branded payments in Europe. The India transactions are
low-value, and as such, have a large impact on transaction count,
but an insignificant impact on gross profit.
The Money Transfer
Segment reports the following
results for the second quarter 2023 compared with
the same period or date in 2022:
- Revenues of $394.8 million, a 7% increase from
$368.5 million (7% increase on a constant currency basis).
- Operating income of $47.2 million,
a 16% increase from $40.6 million (15% increase on a
constant currency basis).
- Adjusted EBITDA of
$55.3 million, a 12% increase from $49.2
million (12% increase on a constant currency basis).
- Total transactions of 41.1 million,
a 10% increase from 37.3 million.
- Network locations of approximately 533,000 as
of June 30, 2023, a 6% increase
from approximately 504,000.
Second quarter constant currency revenue,
operating income and adjusted EBITDA growth was the result of 11%
growth in U.S.-outbound transactions, 13% growth in
international-originated money transfers - which included 11%
growth in transfers initiated largely in Europe and 12% growth in
transfers initiated in the Middle East and Asia - and 30% growth in
xe transactions, partially offset by a 17% decline in the U.S.
domestic business. These transaction growth rates include 28%
growth in direct-to-consumer digital transactions. Transaction
growth outpaced revenue growth largely due to mix shifts,
principally in the segment's xe business, which benefited from a
strong growth in transactions, but at a lower amount sent per
transaction.
Corporate and
Other reports $20.5 million of expense for
the second quarter 2023 compared with $18.6
million for the second quarter 2022. The increase in
primarily due to an increase in long-term compensation expense
based on company performance.
Balance Sheet and Financial
PositionUnrestricted cash and cash equivalents on hand
was $1,139 million as of June 30, 2023,
compared to $1,066 million as of March 31, 2023. The increase in
unrestricted cash and cash equivalents is due to cash
generated from operations and partially offset by cash paid for
capital expenditures.
Total indebtedness was $1,761 million as
of June 30, 2023, compared to $1,646 million as of March 31,
2023. The increase in debt is largely the result of short-term
borrowings to fund ATM cash. Availability under the Company's
revolving credit facilities was approximately $1,055 million as of
June 30, 2023.
Non-GAAP MeasuresIn addition to
the results presented in accordance with U.S. GAAP, the Company
presents non-GAAP financial measures, such as constant currency
financial measures, adjusted EBITDA, adjusted operating income and
adjusted earnings per share. These measures should be used in
addition to, and not a substitute for, revenues, net income,
operating income and earnings per share computed in accordance with
U.S. GAAP. We believe that these non-GAAP measures provide useful
information to investors regarding the Company's performance and
overall results of operations. These non-GAAP measures are also an
integral part of the Company's internal reporting and performance
assessment for executives and senior management. The non-GAAP
measures used by the Company may not be comparable to similarly
titled non-GAAP measures used by other companies. The attached
schedules provide a full reconciliation of these non-GAAP financial
measures to their most directly comparable U.S. GAAP financial
measure.
The Company does not provide a reconciliation of
its forward-looking non-GAAP measures to GAAP due to the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for GAAP and the related GAAP and non-GAAP
reconciliation, including adjustments that would be necessary for
foreign currency exchange rate fluctuations and other charges
reflected in the Company's reconciliation of historic numbers,
the amount of which, based on historical experience, could be
significant.
(1) Constant currency financial measures are
computed as if foreign currency exchange rates did not change from
the prior period. This information is provided to illustrate the
impact of changes in foreign currency exchange rates on the
Company's results when compared to the prior period.
(2) Adjusted operating income is defined as
operating income excluding a non-cash gain. Adjusted operating
income represents a performance measure and is not intended to
represent a liquidity measure.
(3) Adjusted EBITDA is defined as net income
excluding, to the extent incurred in the period, interest expense,
income tax expense, depreciation, amortization, share-based
compensation, non-cash gain and other non-operating or
non-recurring items that are considered expenses or income under
U.S. GAAP. Adjusted EBITDA represents a performance measure and is
not intended to represent a liquidity measure.
(4) Adjusted earnings per share is defined as
diluted U.S. GAAP earnings per share excluding, to the extent
incurred in the period, the tax-effected impacts of: a) foreign
currency exchange gains or losses, b) share-based compensation, c)
acquired intangible asset amortization, d) non-cash income tax
expense, e) non-cash gain, f) other non-operating or non-recurring
items and g) dilutive shares relate to the Company's convertible
bonds. Adjusted earnings per share represents a performance measure
and is not intended to represent a liquidity measure.
Conference Call and Slide
PresentationEuronet Worldwide will host an analyst
conference call on July 26, 2023, at 9:00 a.m. Eastern Time to
discuss these results. The call may also include discussion of
Company developments on the Company's operations, forward-looking
information and other material information about business and
financial matters. To listen to the call via telephone please
register at Euronet Worldwide Second Quarter Earnings Call. The
conference call will also be available via webcast at
http://ir.euronetworldwide.com. Participants should register at
least five minutes prior to the scheduled start time of the event.
A slideshow will be included in the webcast.
A webcast replay will be available beginning
approximately one hour after the event at
http://ir.euronetworldwide.com and will remain available for one
year.
About Euronet Worldwide,
Inc.Starting in Central Europe in 1994 and growing to a
global real-time digital and cash payments network with millions of
touchpoints today, Euronet now moves money in all the ways
consumers and businesses depend upon. This includes money
transfers, credit/debit card processing, ATMs, POS services,
branded payments, foreign currency exchange and more. With products
and services in more than 200 countries and territories provided
through its own brand and branded business segments,
Euronet and its financial technologies and networks make
participation in the global economy easier, faster and more secure
for everyone.
A leading global financial technology solutions
and payments provider, Euronet has developed an extensive global
payments network that includes 52,327 installed ATMs, approximately
626,000 EFT POS terminals and a growing portfolio of outsourced
debit and credit card services which are under management in 66
countries; card software solutions; a prepaid processing network of
approximately 810,000 POS terminals at approximately 349,000
retailer locations in 63 countries; and a global money transfer
network of approximately 533,000 locations serving 191 countries
and territories. Euronet serves clients from its corporate
headquarters in Leawood, Kansas, USA, and 67 worldwide offices, For
more information, please visit the Company's website at
www.euronetworldwide.com.
Statements contained in this news release that
concern Euronet's or its management's intentions, expectations, or
predictions of future performance, are forward-looking statements.
Euronet's actual results may vary materially from those anticipated
in such forward-looking statements as a result of a number of
factors, including: conditions in world financial markets and
general economic conditions, including impacts from the
COVID-19 or other pandemics; inflation; the war in the Ukraine
and the related economic sanctions; our ability to successfully
integrate any acquired operations; economic conditions in specific
countries and regions; technological developments affecting the
market for our products and services; our ability to successfully
introduce new products and services; foreign currency exchange rate
fluctuations; the effects of any breach of our computer systems or
those of our customers or vendors, including our financial
processing networks or those of other third parties; interruptions
in any of our systems or those of our vendors or other third
parties; our ability to renew existing contracts at profitable
rates; changes in fees payable for transactions performed for cards
bearing international logos or over switching networks such as card
transactions on ATMs; our ability to comply with increasingly
stringent regulatory requirements, including anti-money laundering,
anti-terrorism, anti-bribery, consumer and data protection and
privacy; changes in laws and regulations affecting our business,
including tax and immigration laws and any laws regulating
payments, including dynamic currency conversion transactions;
changes in our relationships with, or in fees charged by, our
business partners; competition; the outcome of claims and other
loss contingencies affecting Euronet; the cost of borrowing
(including fluctuations in interest rates), availability of credit
and terms of and compliance with debt covenants; and renewal of
sources of funding as they expire and the availability of
replacement funding. These risks and other risks are described in
the Company's filings with the Securities and Exchange Commission,
including our Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K. Copies of these filings may
be obtained via the SEC's Edgar website or by contacting the
Company. Any forward-looking statements made in this release speak
only as of the date of this release. Except as may be required
by law, Euronet does not intend to update these
forward-looking statements and undertakes no duty to any person to
provide any such update under any circumstances. The Company
regularly posts important information to the investor relations
section of its website.
Contact:Euronet Worldwide,
Inc.Stephanie Taylor+1-913-327-4200
Condensed Consolidated Balance Sheets(in
millions) |
|
|
As ofJune
30,2023(unaudited) |
|
As ofDecember
31,2022 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
1,139.1 |
|
$ |
1,131.2 |
ATM cash |
776.3 |
|
515.6 |
Restricted cash |
14.4 |
|
7.4 |
Settlement assets |
1,206.5 |
|
1,442.7 |
Trade accounts receivable, net |
242.6 |
|
270.8 |
Prepaid expenses and other current assets |
165.7 |
|
359.0 |
Total current assets |
3,544.6 |
|
3,726.7 |
|
|
|
|
Property and equipment, net |
336.2 |
|
336.6 |
Right of use lease asset, net |
146.2 |
|
149.7 |
Goodwill and acquired intangible assets, net |
1,015.1 |
|
1,016.6 |
Other assets, net |
178.9 |
|
174.0 |
Total assets |
$ |
5,221.0 |
|
$ |
5,403.6 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities: |
|
|
|
Settlement obligations |
$ |
1,206.5 |
|
$ |
1,442.7 |
Accounts payable and other current liabilities |
628.7 |
|
858.1 |
Current portion of operating lease liabilities |
49.9 |
|
50.2 |
Short-term debt obligations |
452.1 |
|
3.1 |
Total current liabilities |
2,337.2 |
|
2,354.1 |
|
|
|
|
Debt obligations, net of current portion |
1,306.5 |
|
1,609.1 |
Operating lease liabilities, net of current portion |
99.3 |
|
102.6 |
Capital lease obligations, net of current portion |
2.2 |
|
1.3 |
Deferred income taxes |
31.2 |
|
28.4 |
Other long-term liabilities |
62.9 |
|
63.7 |
Total liabilities |
3,839.3 |
|
4,159.2 |
Equity |
1,381.7 |
|
1,244.4 |
Total liabilities and equity |
$ |
5,221.0 |
|
$ |
5,403.6 |
EURONET WORLDWIDE, INC.Consolidated
Statements of Operations(unaudited - in millions,
except share and per share data) |
|
Three Months EndedJune 30, |
|
2023 |
|
2022 |
|
|
|
|
Revenues |
$ |
939.1 |
|
|
$ |
843.3 |
|
|
|
|
|
Operating expenses: |
|
|
|
Direct operating costs |
558.1 |
|
|
500.7 |
|
Salaries and benefits |
149.4 |
|
|
131.3 |
|
Selling, general and administrative |
75.3 |
|
|
74.2 |
|
Depreciation and amortization |
33.7 |
|
|
36.0 |
|
Total operating expenses |
816.5 |
|
|
742.2 |
|
Operating income |
122.6 |
|
|
101.1 |
|
|
|
|
|
Other income (expense): |
|
|
|
Interest income |
3.5 |
|
|
0.2 |
|
Interest expense |
(14.0 |
) |
|
(8.8 |
) |
Foreign currency exchange gain (loss) |
6.3 |
|
|
(14.7 |
) |
Other expense |
(0.1 |
) |
|
— |
|
Total other expense, net |
(4.3 |
) |
|
(23.3 |
) |
Income before income taxes |
118.3 |
|
|
77.8 |
|
|
|
|
|
Income tax expense |
(32.3 |
) |
|
(20.7 |
) |
|
|
|
|
Net income |
86.0 |
|
|
57.1 |
|
Net loss attributable to noncontrolling interests |
0.1 |
|
|
0.2 |
|
Net income attributable to Euronet Worldwide, Inc. |
$ |
86.1 |
|
|
$ |
57.3 |
|
Add: Interest expense from assumed conversion of convertible notes,
net of tax |
|
1.1 |
|
|
|
1.1 |
|
Net income for diluted earnings per share calculation |
$ |
87.2 |
|
|
$ |
58.4 |
|
Earnings per share attributable to Euronet |
|
|
|
Worldwide, Inc. stockholders - diluted |
$ |
1.65 |
|
|
$ |
1.08 |
|
|
|
|
|
Diluted weighted average shares outstanding |
52,871,415 |
|
|
53,766,914 |
|
EURONET WORLDWIDE, INC.Reconciliation of Net Income to
Operating Income (Expense), Adjusted Operating Income (Expense) and
Adjusted EBITDA(unaudited - in millions) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
EFT Processing |
|
epay |
|
Money Transfer |
|
CorporateServices |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
$ |
86.0 |
|
|
|
|
|
|
|
|
|
|
|
Add: Income tax expense |
|
|
|
|
|
|
|
|
32.3 |
|
Add: Total other expense,
net |
|
|
|
|
|
|
|
|
4.3 |
|
Operating income (expense) |
$ |
69.1 |
|
|
$ |
26.8 |
|
$ |
47.2 |
|
$ |
(20.5 |
) |
|
$ |
122.6 |
|
|
|
|
|
|
|
|
|
|
|
Less: Non-cash gain |
(3.0 |
) |
|
— |
|
— |
|
— |
|
|
(3.0 |
) |
Adjusted operating income
(expense) (1) |
66.1 |
|
|
26.8 |
|
47.2 |
|
(20.5 |
) |
|
119.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Depreciation and
amortization |
23.8 |
|
|
1.7 |
|
8.1 |
|
0.1 |
|
|
33.7 |
|
Add: Share-based
compensation |
— |
|
|
— |
|
— |
|
12.5 |
|
|
12.5 |
|
Earnings before interest,
taxes, depreciation, amortization, share-based compensation, and
non-cash gain (Adjusted EBITDA) (1) |
$ |
89.9 |
|
|
$ |
28.5 |
|
$ |
55.3 |
|
$ |
(7.9 |
) |
|
$ |
165.8 |
|
|
|
|
|
|
|
|
|
|
|
|
EFT Processing |
|
epay |
|
Money Transfer |
|
Corporate Services |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
$ |
57.1 |
|
|
|
|
|
|
|
|
|
|
|
Add: Income tax
expense |
|
|
|
|
|
|
|
|
20.7 |
|
Add: Total other expense,
net |
|
|
|
|
|
|
|
|
23.3 |
|
Operating income
(expense) |
$ |
54.8 |
|
|
$ |
24.3 |
|
$ |
40.6 |
|
$ |
(18.6 |
) |
|
$ |
101.1 |
|
Add: Depreciation and
amortization |
25.7 |
|
|
1.6 |
|
8.6 |
|
0.1 |
|
|
36.0 |
|
Add: Share-based
compensation |
— |
|
|
— |
|
— |
|
10.1 |
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest,
taxes, depreciation, amortization and share-based compensation
(Adjusted EBITDA) (1) |
$ |
80.5 |
|
|
$ |
25.9 |
|
$ |
49.2 |
|
$ |
(8.4 |
) |
|
$ |
147.2 |
|
(1) Adjusted operating income (expense)and
adjusted EBITDA are non-GAAP measures that should be considered in
addition to, and not a substitute for, net income computed in
accordance with U.S. GAAP.
EURONET WORLDWIDE, INC.Reconciliation of Adjusted
Earnings per Share(unaudited - in millions, except share and per
share data) |
|
|
|
Three Months EndedJune 30, |
|
2023 |
|
2022 |
|
|
|
|
Net income attributable to Euronet Worldwide, Inc. |
$ |
86.1 |
|
|
$ |
57.3 |
|
|
|
|
|
Foreign currency exchange
(gain) loss |
(6.3 |
) |
|
14.7 |
|
Intangible asset
amortization(1) |
6.6 |
|
|
7.7 |
|
Share-based
compensation(2) |
12.5 |
|
|
10.1 |
|
Non-cash gain(3) |
(3.0 |
) |
|
— |
|
Income tax effect of above
adjustments(4) |
1.7 |
|
|
(4.7 |
) |
Non-cash GAAP tax
expense(5) |
4.5 |
|
|
3.5 |
|
|
|
|
|
Adjusted earnings(6) |
$ |
102.1 |
|
|
$ |
88.6 |
|
|
|
|
|
Adjusted earnings per share -
diluted(6) |
$ |
2.03 |
|
|
$ |
1.73 |
|
|
|
|
|
Diluted weighted average
shares outstanding (GAAP) |
|
52,871,415 |
|
|
53,766,914 |
|
Effect of adjusted EPS
dilution of convertible notes |
|
(2,781,818 |
) |
|
|
(2,781,818 |
) |
Effect of unrecognized
share-based compensation on diluted shares outstanding |
|
228,127 |
|
|
226,318 |
|
Adjusted diluted weighted
average shares outstanding |
|
50,317,724 |
|
|
51,211,414 |
|
(1) Intangible asset amortization of $6.6
million and $7.7 million are included in
depreciation and amortization expense of $33.7
million and $36.0 million for the three months
ended June 30, 2023 and June 30, 2022, respectively, in the
consolidated statements of operations.
(2) Share-based compensation of $12.5 million
and $10.1 million are included in salaries and benefits expense of
$149.4 million and $131.3 million for the three months ended June
30, 2023 and June 30, 2022, respectively, in the consolidated
statements of operations.
(3) A non-cash gain of $3.0 million is
included in operating income for the three months ended June 30,
2023, in the consolidated statements of operations.
(4) Adjustment is the aggregate U.S. GAAP
income tax effect on the preceding adjustments determined by
applying the applicable statutory U.S. federal, state and/or
foreign income tax rates.
(5) Adjustment is the non-cash GAAP tax impact
recognized on certain items such as the utilization of certain
material net deferred tax assets and amortization of
indefinite-lived intangible assets.
(6) Adjusted earnings and adjusted earnings per
share are non-GAAP measures that should be considered in addition
to, and not as a substitute for, net income and earnings per share
computed in accordance with U.S. GAAP.
Euronet Worldwide (NASDAQ:EEFT)
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