Euronet Worldwide(EEFT) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements (unaudited) Unaudited H1 2025 consolidated financial statements show increased assets, liabilities, revenues, and net income attributable to the company Consolidated Balance Sheets Consolidated Balance Sheet Summary (in millions) | Balance Sheet Item | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Total current assets | $4,536.3 | $4,036.5 | | Goodwill | $954.9 | $859.2 | | Total assets | $6,554.9 | $5,834.5 | | Liabilities & Equity | | | | Total current liabilities | $3,935.2 | $3,226.0 | | Debt obligations, net of current portion | $1,002.3 | $1,134.4 | | Total liabilities | $5,191.5 | $4,605.3 | | Total equity | $1,363.4 | $1,229.2 | Consolidated Statements of Operations Consolidated Statements of Operations Summary (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,074.3 | $986.2 | $1,989.8 | $1,843.2 | | Operating income | $158.6 | $134.3 | $233.8 | $198.3 | | Net income attributable to Euronet | $97.6 | $83.1 | $136.0 | $109.3 | | Diluted EPS | $2.27 | $1.73 | $3.08 | $2.28 | Consolidated Statements of Comprehensive Income (loss) - Comprehensive income attributable to Euronet was significantly impacted by foreign currency translation adjustments, resulting in a comprehensive income of $283.8 million for Q2 2025, compared to $73.3 million in Q2 2024. For the six-month period, comprehensive income was $405.2 million in 2025 versus $54.5 million in 2024[15] Consolidated Statements of Changes in Equity - The company repurchased 2,287,052 shares in Q2 2025 and a total of 2,878,310 shares in the first six months of 2025. This compares to 1,000,000 shares repurchased in Q2 2024[17] - Total equity increased from $1,229.2 million at the end of 2024 to $1,363.4 million as of June 30, 2025, driven by net income of $136.1 million and positive other comprehensive income of $270.0 million, partially offset by share repurchases[20] Consolidated Statements of Cash Flows Consolidated Cash Flow Summary (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $184.6 | $212.2 | | Net cash used in investing activities | ($88.9) | ($155.2) | | Net cash provided by financing activities | $79.2 | $304.4 | | Effect of exchange rate changes | $257.8 | ($53.2) | | Increase in cash and cash equivalents | $432.7 | $308.2 | - Cash used in financing activities for the six months ended June 30, 2025 included $310.6 million for share repurchases and a $491.8 million repayment of convertible notes, funded by net borrowings from credit agreements[22][23] Notes to the Unaudited Consolidated Financial Statements - On May 31, 2025, Euronet acquired a 60% equity stake in UNIDOS CO. LTD for $18 million, with the results included in the Money Transfer segment. This follows the February 2024 acquisition of Infinitium Group for $70 million in cash and $5 million in stock[31][32] - In March 2025, the company repurchased $491.8 million of its 0.75% Convertible Senior Notes due 2049 after holders exercised their repurchase right, leaving $33.2 million outstanding. This significantly reduced the potential share dilution from these notes[41][60] - The company has multiple active share repurchase programs. As of June 30, 2025, approximately $224.8 million remained available under a 2024 program and $400 million was available under a new program established in June 2025[43][44] - Subsequent to the quarter's end, on July 30, 2025, Euronet entered into a definitive agreement to acquire CoreCard in a stock-for-stock merger transaction valued at approximately $248 million[104] Management's Discussion and Analysis of Financial Condition and Results of Operations Q2 2025 results show revenue and operating income growth across all segments, supported by strong liquidity and available credit Overview - Euronet operates in three segments: EFT Processing (ATM/POS services), epay (prepaid product distribution), and Money Transfer (global money transfers via Ria, Xe, and Dandelion)[121][122][123] - For the first six months of 2025, approximately 75.6% of revenues were denominated in currencies other than the U.S. dollar, making foreign currency exchange rates a significant factor in reported results[124] Revenue Contribution by Segment (Six Months Ended June 30, 2025) | Segment | Revenue Contribution | | :--- | :--- | | Money Transfer | ~44% | | EFT Processing | ~29% | | epay | ~27% | Segment Summary Results of Operations Revenue by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | EFT Processing | $338.5 | $305.4 | +11% | $571.0 | $522.6 | +9% | | epay | $280.1 | $260.9 | +7% | $547.5 | $518.0 | +6% | | Money Transfer | $457.9 | $421.8 | +9% | $875.6 | $806.4 | +9% | | Total | $1,074.3 | $986.2 | +9% | $1,989.8 | $1,843.2 | +8% | Operating Income by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | EFT Processing | $84.6 | $79.9 | +6% | $107.9 | $101.4 | +6% | | epay | $31.1 | $26.2 | +19% | $57.9 | $52.8 | +10% | | Money Transfer | $65.6 | $47.3 | +39% | $110.7 | $84.5 | +31% | | Total | $158.6 | $134.3 | +18% | $233.8 | $198.3 | +18% | Comparison of Operating Results EFT Processing Segment - Q2 2025 revenue increased 11% YoY to $338.5 million, driven by market expansion, growth in existing markets, increased tourism, and new fees. Foreign currency fluctuations contributed $14.0 million to this growth[140] - The number of active ATMs grew by 5% YoY to 56,760, and transactions processed surged by 36% to 3.7 billion in Q2 2025[139] - Operating income for Q2 2025 grew 6% to $84.6 million, but the operating margin slightly decreased to 25.0% from 26.2% in the prior year, as direct operating costs rose 14% due to higher business volumes and inflation[141][146] epay Segment - Q2 2025 revenue increased 7% YoY to $280.1 million, driven by continued growth in payments, digital media, and mobile products[149] - Gross margin improved to 24.7% in Q2 2025 from 23.9% in Q2 2024, primarily due to a favorable shift in the mix of transactions processed[151] - Operating income grew 19% YoY to $31.1 million in Q2 2025, with the operating margin expanding to 11.1% from 10.0% in the prior year[156] Money Transfer Segment - Q2 2025 revenue increased 9% YoY to $457.9 million, driven by double-digit growth in cross-border transactions and a 29% growth in direct-to-consumer digital transactions[158] - Gross margin expanded significantly to 48.0% in Q2 2025 from 45.1% in Q2 2024, reflecting growth in higher-margin international and digital transactions[160] - Operating income surged 39% YoY to $65.6 million in Q2 2025, and operating margin increased to 14.3% from 11.2%, as income growth outpaced revenue growth due to margin expansion and expense management[164] Liquidity and Capital Resources - As of June 30, 2025, the company had working capital of $601.1 million, unrestricted cash of $1,329.3 million, and an additional $937.4 million of cash in its ATM network[177][178] - For the first six months of 2025, cash from operations was $184.6 million, a decrease from $212.2 million in the prior year, mainly due to changes in deferred taxes and working capital fluctuations[179][180] - The company amended its revolving credit facility in December 2024, increasing it to $1.9 billion. As of June 30, 2025, $884.2 million was available for borrowing[185][186] Quantitative and Qualitative Disclosures About Market Risk The company faces significant interest rate and foreign currency risks, actively managed through debt structure and derivative contracts - As of June 30, 2025, 40% of total debt ($965.1 million) was variable-rate borrowings under the Credit Facility. A 1% (100 basis points) increase in interest rates would result in approximately $9.7 million of additional annual interest expense on these borrowings[197][198] - For the first six months of 2025, 75.6% of revenues were generated in non-U.S. dollar currencies. The company estimates a 10% fluctuation in key foreign currency exchange rates would have an annualized effect on net income and working capital of approximately $180 million to $190 million[199][200] - The company uses foreign currency derivative contracts to minimize exposure. As of June 30, 2025, it had contracts with a notional value of $677.2 million for Ria operations, $1.1 billion for xe operations, and $198.0 million for other balance sheet hedging[204][205][206] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal controls during the quarter - Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2025, and concluded they were effective[207] - No changes occurred in the company's internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[208] PART II—OTHER INFORMATION Legal Proceedings The company faces an Italian tax dispute with a potential $16.5 million liability and expects to recover $10 million from a fire loss - The company is appealing an adverse judicial decision in Italy related to withholding taxes in its Money Transfer Segment. While a liability is considered reasonably possible, it is not deemed probable. The potential amount for all open periods is approximately $16.5 million[212] - In March 2025, Malaysian Ringgit notes worth approximately $10 million were lost in a fire while in a third-party's custody. The company has determined it is probable the funds will be recovered from the service provider[213] Risk Factors The primary new risk factor involves uncertainties surrounding the CoreCard acquisition's completion and subsequent integration challenges - A significant new risk factor is the pending acquisition of CoreCard Corporation. Completion is uncertain as it depends on conditions beyond the company's control, such as CoreCard stockholder approval and regulatory approvals[215] - If the acquisition is completed, the company faces risks related to the successful integration of CoreCard, which could lead to operational challenges, diversion of management attention, and failure to realize anticipated synergies[216] Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased over 2.2 million shares, with substantial funds remaining for future repurchases under active programs Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 130,000 | $98.87 | | May 2025 | 1,411,752 | $107.62 | | June 2025 | 745,300 | $110.46 | | Total | 2,287,052 | $108.05 | - As of June 30, 2025, the company had approximately $224.8 million available for repurchase under its September 2024 program and the full $400 million available under its new June 2025 program[218] Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[220] Exhibits Key exhibits include the CoreCard merger agreement, CEO/CFO certifications, and financial data in XBRL format - Key exhibits filed with the report include the Agreement and Plan of Merger for the CoreCard acquisition, CEO/CFO certifications, and financial statements in XBRL format[221]