Euronet Worldwide(EEFT) - 2024 Q4 - Annual Report

Financial Performance - Annual consolidated revenues increased by 8.2% for 2024, driven by higher transaction volumes across all segments[250]. - Annual consolidated operating income rose by 16.3% for 2024, primarily due to increased transaction volumes[250]. - Net income attributable to Euronet for 2024 was $306.0 million, or$ 6.45 per diluted share, compared to $279.7 million, or$ 5.50 per diluted share in 2023[251]. - Euronet's revenues for the year ended December 31, 2024, were primarily derived from three segments: Money Transfer (42%), epay (29%), and EFT Processing (29%) of total consolidated revenues[239][238][237]. - Money Transfer Segment revenues were $1,686.5 million for 2024, up from$ 1,555.2 million in 2023[248]. - epay Segment total revenues reached $1,150.5 million for 2024, reflecting a 6.3% increase from 2023[266]. - EFT Processing Segment total revenues were$ 1,161.2 million for 2024, an increase of 9.7% compared to 2023[255]. - Operating income for the Money Transfer Segment was $201.0 million for the year ended December 31, 2024, an increase of$ 15.6 million or 8.4% compared to 2023, with an operating margin of 11.9%[283]. - Gross profit increased to $766.8 million for the year ended December 31, 2024, up by$ 51.1 million or 7.1% compared to 2023, with a gross margin of 45.5%[278]. Transaction Volumes - The EFT Processing Segment processed 11,424 million transactions in 2024, up from 8,473 million in 2023, reflecting a compound annual growth rate (CAGR) of approximately 36.7% over the past five years[32]. - The number of transactions processed on the epay POS networks increased at a CAGR of approximately 16.2%, reaching 4,374 million transactions in 2024[76]. - The Money Transfer Segment processed approximately $71.3 billion in money transfers in 2024[90]. - The number of transactions in the Money Transfer Segment increased at a CAGR of approximately 11.0%, reaching 176.9 million transactions in 2024[89]. - Transactions processed in the EFT Processing Segment increased by 34.8% to 11,424 million in 2024[254]. ATM and POS Network Expansion - The company operated 55,248 ATMs as of December 31, 2024, compared to 47,303 ATMs at the end of 2023, indicating a growth of 16.4%[30]. - The EFT Processing Segment's strategy includes expanding ATM and POS terminal networks into new and existing markets, focusing on diversifying the business and increasing the penetration of value-added services[48]. - The company has a network of approximately 777,000 POS terminals across 362,000 retailer locations, processing prepaid mobile airtime and other electronic content[58]. - Active ATMs as of December 31, 2024, totaled 49,945, an increase of 5.6% from 2023[254]. Revenue Sources and Growth Strategies - Revenue growth from lower value, digitally initiated payment processing transactions is not proportionate to the increase in transaction volume due to lower associated revenue[32]. - The company offers dynamic currency conversion (DCC) services, which increase revenue from ATM transactions by earning a foreign exchange margin on conversions[41]. - The epay Segment aims to grow revenue by increasing distribution of electronic content and expanding into new geographic markets[77]. - The company has established relationships with global consumer product brands, including iTunes, Google Play, Sony, and Microsoft, to enhance its product offerings[77]. - The company plans to continue expanding its technology and business methods into other markets, leveraging relationships with mobile operators and financial institutions[53]. Compliance and Regulatory Environment - The company is subject to various regulations, including anti-money laundering and consumer protection laws, which could impact operations if not complied with[103][111]. - The company holds payment institution licenses in multiple European countries and has obtained an e-money license in the U.K., allowing it to provide payment services[106]. - The company has developed risk-based compliance policies and programs to adhere to existing laws and regulations, including anti-money laundering measures[119]. - Intellectual property, including trademarks and patents, is crucial for the Money Transfer Segment, with brand names like "Ria" and "Xe" being registered in most operational markets[121]. - The company is actively monitoring compliance with privacy and information security regulations, including the GDPR, to avoid potential fines that could affect financial results[113]. Operational Challenges and Workforce - Employee count increased from approximately 9,500 in 2022 to 10,600 in 2024, reflecting growth in workforce[101]. - Euronet faces operational challenges in maintaining licenses and navigating regulations that govern DCC transactions, particularly in the EU[243]. - The primary competitor, The Western Union Company, has revenues approximately twice that of the company, highlighting a significant competitive challenge[100]. Cash Flow and Capital Management - Cash flows provided by operating activities increased to$ 732.8 million for the year ended December 31, 2024, compared to $643.1 million for the same period in 2023[305]. - Cash flows used in investing activities were$ 223.3 million for the year ended December 31, 2024, with $117.2 million allocated for purchases of property and equipment and$ 91.6 million for acquisitions[307]. - The Company had $1,278.8 million of unrestricted cash as of December 31, 2024, compared to$ 1,254.2 million as of December 31, 2023, with access to $2,289.8 million in available cash[303]. - The Company amended its revolving credit agreement to increase the facility from$ 1.25 billion to $1.9 billion, extending the expiration to December 17, 2029[309]. - The Company anticipates that cash generated from operations, along with cash on hand and amounts available under the Credit Facility, will be sufficient to meet its debt, leasing, and capital expenditure obligations[316]. Share Repurchase and Stock Management - The Company repurchased$ 265.2 million of common stock during the year ended December 31, 2024, compared to $378.4 million for the same period in 2023[308]. - The company completed its initial share repurchase program, repurchasing 850,528 shares at an average price of$ 113.63 for a total value of $96.6 million during 2024[317]. - A new repurchase program was initiated on September 13, 2023, allowing for the repurchase of up to$ 350 million in value, with a maximum of 7.0 million shares through September 13, 2025[318]. - During 2024, the company repurchased 1,625,005 shares at an average price of $103.73 for a total value of$ 168.6 million under the new program[318]. - A third repurchase program was initiated on September 11, 2024, with the same terms as previous programs, but no shares were repurchased under this plan during 2024[319]. - The Inflation Reduction Act imposes a 1% excise tax on net share repurchases, which may impact future repurchase strategies[320]. Miscellaneous Financial Information - Working capital decreased to $810.5 million as of December 31, 2024, from$ 1,462.1 million as of December 31, 2023, with a current assets to current liabilities ratio of 1.25[300]. - Total capital expenditures for 2024 were $117.2 million, primarily for expanding the IAD network in Europe and purchasing POS terminals, with estimated capital expenditures for 2025 projected to be between$ 85 million and $95 million[314]. - The Company recorded a net loss on translation adjustments of$ 117.8 million for 2024, compared to a net gain of $47.9 million for 2023, due to the strengthening of the U.S. dollar against key foreign currencies[299]. - There are significant off-balance sheet arrangements, including guarantees for subsidiaries, but no significant claims have been reported as of December 31, 2024[322]. - Critical accounting policies involve estimates related to income taxes, acquisitions, and potential impairments, which could materially affect financial results[323]. - Deferred income tax effects are recorded under ASC Topic 740, considering future tax consequences of deferred items[324]. - The company has significant tax loss carryforwards and other temporary differences recorded as deferred tax assets and liabilities[325].