UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2018~~2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period			to

Commission File Number: 001-31648

EURONET WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)



Delaware	74-2806888
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

3500 College Boulevard
Leawood, Kansas	66211
(Address of principal executive offices)	(Zip Code)

(913) 327-4200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o~~(Do not check if a smaller reporting company)~~
Smaller reporting company o
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	EEFT	The Nasdaq Stock Market, LLC (Nasdaq Global Select Market)

On May ~~9, 2018~~6, 2019, Euronet Worldwide, Inc. had ~~51,280,843~~51,964,031 shares of Common Stock outstanding.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

Table of Contents



		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets as of March 31, ~~2018~~2019 and December 31, ~~2017~~2018	3
	Consolidated Statements of Income for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	5
	Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2019 and 2018	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	68
	Notes to the Unaudited Consolidated Financial Statements	79
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2022
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3740
Item 4.	Controls and Procedures	3841
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	3841
Item 1A.	Risk Factors	3942
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4042
Item 6.	Exhibits	4143

	Signatures	4244

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	As of						As of
	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	885,646		$	819,144		$	1,216,297		$	1,054,357
Restricted cash	63,842			81,374			74,945			76,595
Trade accounts receivable, net of allowances for doubtful accounts of $23,637 at March 31, 2018 and $20,958 at December 31, 2017	707,242			744,879
Trade accounts receivable, net of allowances for doubtful accounts of $24,564 at March 31, 2019 and $24,287 at December 31, 2018							715,612			693,616
Prepaid expenses and other current assets	213,212			244,789			228,675			263,019
Total current assets	1,869,942			1,890,186			2,235,529			2,087,587
Property and equipment, net of accumulated depreciation of $357,181 at March 31, 2018 and $340,128 at December 31, 2017	280,606			268,303
Operating right of use lease asset							351,169			—
Property and equipment, net of accumulated depreciation of $381,406 at March 31, 2019 and $373,180 at December 31, 2018							303,796			291,869
Goodwill	743,456			717,386			704,054			704,197
Acquired intangible assets, net of accumulated amortization of $187,761 at March 31, 2018 and $179,142 at December 31, 2017	148,057			150,543
Other assets, net of accumulated amortization of $46,381 at March 31, 2018 and $44,469 at December 31, 2017	115,314			113,611
Acquired intangible assets, net of accumulated amortization of $197,060 at March 31, 2019 and $190,920 at December 31, 2018							110,143			114,485
Other assets, net of accumulated amortization of $52,514 at March 31, 2019 and $50,821 at December 31, 2018							109,362			123,017
Total assets	$	3,157,375		$	3,140,029		$	3,814,053		$	3,321,155
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable	$	409,511		$	494,841		$	408,798		$	528,913
Accrued expenses and other current liabilities	744,369			759,789			758,914			712,012
Current portion of capital lease obligations	5,361			5,369
Current portion of operating lease liabilities							114,654			—
Short-term debt obligations and current maturities of long-term debt obligations	46,972			41,288			360,358			38,017
Income taxes payable	56,696			54,437			40,227			40,159
Deferred revenue	55,413			51,996			61,456			59,293
Total current liabilities	1,318,322			1,407,720			1,744,407			1,378,394
Debt obligations, net of current portion	573,594			404,012			412,862			589,782
Capital lease obligations, net of current portion	9,492			9,753
Operating lease obligations, net of current portion							225,093			—
Deferred income taxes	59,871			54,969			82,143			57,145
Other long-term liabilities	67,064			64,097			61,638			62,992
Total liabilities	2,028,343			1,940,551			2,526,143			2,088,313
Equity:
Euronet Worldwide, Inc. stockholders’ equity:
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued	—			—			—			—
Common Stock, $0.02 par value. 90,000,000 shares authorized; 59,020,849 issued at March 31, 2018 and 58,892,744 issued at December 31, 2017	1,180			1,178
Common Stock, $0.02 par value. 90,000,000 shares authorized; 60,035,677 issued at March 31, 2019 and 59,897,309 issued at December 31, 2018							1,201			1,198
Additional paid-in-capital	1,078,502			1,072,005			1,142,691			1,104,264
Treasury stock, at cost, 7,515,228 shares at March 31, 2018 and 6,084,586 shares at December 31, 2017	(343,398		)	(217,161		)
Treasury stock, at cost, 8,085,537 shares at March 31, 2019 and 8,077,311 shares at December 31, 2018							(393,307		)	(391,551		)
Retained earnings	463,367			436,954			704,348			669,805
Accumulated other comprehensive loss	(71,564		)	(94,458		)	(167,199		)	(151,043		)
Total Euronet Worldwide, Inc. stockholders’ equity	1,128,087			1,198,518			1,287,734			1,232,673
Noncontrolling interests	945			960			176			169
Total equity	1,129,032			1,199,478			1,287,910			1,232,842
Total liabilities and equity	$	3,157,375		$	3,140,029		$	3,814,053		$	3,321,155

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except share and per share data)


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2019			2018
Revenues	$	550,515		$	473,380		$	577,509		$	550,515
Operating expenses:
Direct operating costs	343,324			296,607			353,833			343,324
Salaries and benefits	85,706			71,863			92,795			85,706
Selling, general and administrative	50,011			41,987			48,147			50,011
Depreciation and amortization	26,002			21,637			26,640			26,002
Total operating expenses	505,043			432,094			521,415			505,043
Operating income	45,472			41,286			56,094			45,472
Other income (expense):
Interest income	296			1,170			343			296
Interest expense	(7,606		)	(7,148		)	(8,199		)	(7,606		)
Loss on early retirement of debt							(928		)	—
Loss from unconsolidated affiliates	(117		)	—			—			(117		)
Foreign currency exchange gain, net	1,935			1,715			3,208			1,935
Other gains	31			17			25			31
Other expense, net	(5,461		)	(4,246		)	(5,551		)	(5,461		)
Income before income taxes	40,011			37,040			50,543			40,011
Income tax expense	(13,667		)	(8,971		)	(15,964		)	(13,667		)
Net income	26,344			28,069			34,579			26,344
Net loss attributable to noncontrolling interests	69			54
Net loss (income) attributable to noncontrolling interests							(36		)	69
Net income attributable to Euronet Worldwide, Inc.	$	26,413		$	28,123		$	34,543		$	26,413

Earnings per share attributable to Euronet Worldwide, Inc. stockholders:
Basic	$	0.51		$	0.54		$	0.67		$	0.51
Diluted	$	0.49		$	0.51		$	0.62		$	0.49

Weighted average shares outstanding:
Basic	51,899,282			52,345,944			51,880,534			51,899,282
Diluted	53,953,246			54,921,779			55,576,867			53,953,246

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)


	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2019			2018
Net income	$	26,344	$	28,069	$	34,579		$	26,344
Translation adjustment	22,948		19,420		(16,156		)	22,948
Comprehensive income	49,292		47,489		18,423			49,292
Comprehensive loss attributable to noncontrolling interests	15		30
Comprehensive (income) loss attributable to noncontrolling interests					(7		)	15
Comprehensive income attributable to Euronet Worldwide, Inc.	$	49,307	$	47,519	$	18,416		$	49,307

See accompanying notes to the unaudited consolidated financial statements.

Euronet Worldwide, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(in thousands, except share data)



	Number of Shares Outstanding		Common Stock		Additional Paid-in Capital		Treasury Stock
Balance as of December 31, 2017	52,808,158		$	1,178	$	1,072,005	$	(217,161	)
Net income (loss)
Other comprehensive income
Stock issued under employee stock plans	116,358		2		2,468		(1,237		)
Share-based compensation					4,029
Repurchase of shares	(1,418,895	)					(125,000		)
Balance as of March 31, 2018	51,505,621		$	1,180	$	1,078,502	$	(343,398	)



	Number of Shares Outstanding	Common Stock		Additional Paid-in Capital			Treasury Stock
Balance as of December 31, 2018	51,819,998	$	1,198	$	1,104,264		$	(391,551	)
Net income
Other comprehensive loss
Stock issued under employee stock plans	130,136	3		5,194			(1,756		)
Share-based compensation				4,490
Repurchase of shares
Issuance of convertible notes, net of tax				71,660
Repurchases and conversions of convertible notes, net of tax	6			(42,917		)
Balance as of March 31, 2019	51,950,140	$	1,201	$	1,142,691		$	(393,307	)

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity (continued)

(in thousands)



	Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balance as of December 31, 2017	$	436,954	$	(94,458	)	$	960		$	1,199,478
Net income (loss)	26,413					(69		)	26,344
Other comprehensive income			22,894			54			22,948
Stock issued under employee stock plans									1,233
Share-based compensation									4,029
Repurchase of shares									(125,000		)
Balance as of March 31, 2018	$	463,367	$	(71,564	)	$	945		$	1,129,032



	Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balance as of December 31, 2018	$	669,805	$	(151,043	)	$	169		$	1,232,842
Net income	34,543					36			34,579
Other comprehensive loss			(16,156		)	(29		)	(16,185		)
Stock issued under employee stock plans									3,441
Share-based compensation									4,490
Issuance of convertible notes, net of tax									71,660
Repurchases and conversions of convertible notes, net of tax									(42,917		)
Balance as of March 31, 2019	$	704,348	$	(167,199	)	$	176		$	1,287,910

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2019			2018
Net income	$	26,344		$	28,069		$	34,579		$	26,344
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	26,002			21,637			26,640			26,002
Share-based compensation	4,029			3,706			4,490			4,029
Unrealized foreign exchange gain, net	(1,935		)	(1,715		)	(3,208		)	(1,935		)
Deferred income taxes	2,818			922			3,468			2,818
Loss from unconsolidated affiliates	117			—			—			117
Accretion of convertible debt discount and amortization of debt issuance costs	3,477			3,317			4,071			3,477
Changes in working capital, net of amounts acquired:
Income taxes payable, net	(674		)	(98		)	635			(674		)
Trade accounts receivable	51,720			140,012			(31,456		)	51,720
Prepaid expenses and other current assets	36,763			62,147			33,787			36,763
Trade accounts payable	(98,581		)	(144,333		)	(115,380		)	(98,581		)
Deferred revenue	2,501			1,924			3,005			2,501
Accrued expenses and other current liabilities	(28,241		)	(45,441		)	51,377			(28,241		)
Changes in noncurrent assets and liabilities	3,488			656			953			3,488
Net cash provided by operating activities	27,828			70,803			12,961			27,828
Cash flows from investing activities:
Acquisitions, net of cash acquired	(7,257		)	—			—			(7,257		)
Purchases of property and equipment	(24,415		)	(22,659		)	(31,390		)	(24,415		)
Purchases of other long-term assets	(1,808		)	(1,513		)	(1,783		)	(1,808		)
Other, net	201			259			187			201
Net cash used in investing activities	(33,279		)	(23,913		)	(32,986		)	(33,279		)
Cash flows from financing activities:
Proceeds from issuance of shares	2,300			2,084			5,171			2,300
Repurchase of shares	(126,577		)	(2,188		)	(2,275		)	(126,577		)
Borrowings from revolving credit agreements	1,010,643			342,113			1,209,446			1,010,643
Repayments of revolving credit agreements	(841,786		)	(342,900		)	(1,425,398		)	(841,786		)
Proceeds from long-term debt obligations							525,000			—
Repayments of long-term debt obligations	(2,449		)	(1,875		)	(94,199		)	(2,449		)
Repayments of capital lease obligations	(1,793		)	(1,150		)
Borrowings from (repayments of) short-term debt obligations, net	1,557			(2,746		)
(Repayments of) borrowings from short-term debt obligations, net							(11,779		)	1,557
Debt issuance costs							(11,812		)	—
Other, net	1			301			(1,452		)	(1,792		)
Net cash provided by (used in) financing activities	41,896			(6,361		)
Net cash provided by financing activities							192,702			41,896
Effect of exchange rate changes on cash and cash equivalents and restricted cash	12,525			10,962			(12,387		)	12,525
Increase in cash and cash equivalents and restricted cash	48,970			51,491			160,290			48,970
Cash and cash equivalents and restricted cash at beginning of period	900,518			812,088			1,130,952			900,518

Cash and cash equivalents and restricted cash at end of period	$	949,488		$	863,579		$	1,291,242		$	949,488

Supplemental disclosure of cash flow information:
Interest paid during the period	$	5,621		$	6,387		$	5,491		$	5,621
Income taxes paid during the period	$	11,981		$	5,825		$	12,074		$	11,981

See accompanying notes to the unaudited consolidated financial statements.

EURONET WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL

Organization

Euronet Worldwide, Inc. (together with its subsidiaries, the “Company” or “Euronet”) is a leading electronic payments provider. Euronet offers payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Euronet's primary product offerings include comprehensive automated teller machine (“ATM”), point-of-sale (“POS”), card outsourcing, card issuing and merchant acquiring services, software solutions, electronic distribution of prepaid mobile airtime and other electronic payment products, foreign currency exchange services and global money transfer services.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the consolidated financial position and the results of operations, comprehensive income and cash flows for the interim periods. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, ~~2017~~2018, including the notes thereto, set forth in the Company’s ~~2017~~2018 Annual Report on Form 10-K. Certain amounts in prior years have been reclassified to conform to the current year's presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Significant items subject to such estimates and assumptions include computing income taxes, estimating the useful lives and potential impairment of long-lived assets and goodwill, as well as allocating the purchase price to assets acquired and liabilities assumed in acquisitions and revenue recognition. Actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, ~~2018.~~2019.

Seasonality

Euronet’s EFT Processing Segment experiences its heaviest demand for ATM cash withdrawal transaction and dynamic currency conversion ("DCC") services during the third quarter of the fiscal year, coinciding with the tourism ~~season.~~season followed by lower transaction levels during the fourth quarter. Additionally, the ~~EFT Processing and~~ epay Segments ~~are~~is impacted by seasonality during the fourth quarter and the first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Seasonality in the Money Transfer Segment varies by regions of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and experiences its lowest transaction levels during the first quarter of each year.

(2) RECENTLY ISSUED AND ADOPTED ACCOUNTING PRONOUNCEMENTS

The Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), as amended, as of January 1, 2019, using the modified retrospective approach and comparative periods were not restated. The new standards provide a number of optional practical expedients in transition.

The Company elected the “package of practical expedients” which permits the Company not to reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected to combine lease and non-lease components and to include short-term leases with an initial term of 12 months or less on the balance sheet.

In ~~May 2014,~~addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases. The election of the hindsight practical expedient resulted in, for substantially all leases in effect on January 1, 2019, the lease term for implementation of this pronouncement, as the lease’s life being January 1, 2019 through the lease’s contractual termination date, rather than the actual lease life as set out in the lease agreement. Lease lives for lease agreements committed to on January 1, 2019 and, thereafter, are included based on the lease’s commencement date and termination date. In the application of hindsight, the Company evaluated the performance of all the leases and the associated markets in relation to the Company’s

operations, which resulted in the determination that the exercise of renewal options would not be reasonably certain in determining the expected lease term.

Adoption of the new standard resulted in the recognition of additional operating right of use lease assets and lease liabilities of approximately $296.9 million, as of January 1, 2019. The Company reclassified $16.6 million and $2.7 million of deferred cost and deferred credits, respectively, to Right of use (ROU) lease assets as of March 31, 2019.

In June 2016, the Financial Accounting Standards Board ("FASB") issued ~~Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”~~ (“Topic 606”), and subsequently modified the standard with several ASUs. The Company adopted the standard on January 1, 2018 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting under Topic 605.

The Company completed its review of customer contracts relative to the requirements of Topic 606 and concluded that revenues from certain customer contracts in the epay Segment should be recorded differently under the principal versus agent guidance of Topic 606. With respect to those contracts, the Company concluded that it earns a commission from content providers for distributing and processing their prepaid mobile airtime and other electronic payment products, but it is not the principal for the products themselves. As a result, the impact of the change in accounting principle was a $22.6 million reduction in both revenues and direct operating expenses for the three months ended March 31, 2018.

~~Contract Balances~~

The new standard requires the deferral of incremental costs to obtain customer contracts, known as contract assets, which are then amortized to expense as part of selling, general and administrative expense over the respective periods of expected benefit. The Company completed its review of such costs and concluded that a transition adjustment was not necessary related to contract assets. However, the Company has implemented processes and controls to record such costs on an ongoing basis and will disclose them if they become material.

The Company records deferred revenues when cash payments are received or due in advance of its performance. The increase in the deferred revenue balance for the three months ended March 31, 2018 is primarily driven by $17.6 million of cash payments received or due in advance of satisfying the performance obligations, offset by $15.2 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2017.

~~Variable Consideration~~

Within the EFT segment, outsourcing services area generally billed on the basis of a fixed fee per ATM, plus a transaction-based fee. Transaction-based fees are recognized at the time the transactions are processed and outsourcing management fees are recognized ratably over the contract period. These fees can be variable based on transaction volume tiered discounts; however, as all tiered discounts are calculated monthly, the actual discount is recorded on a monthly basis. In addition, the epay segment generates commissions from the distribution of electronic content. It is common for these long-term contracts to contain award fees, incentive fees, or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics or program milestones and can be based upon customer discretion.

Transaction fees, as well as any tiered volume discounts or incentive fees, are calculated and billed monthly in accordance with the terms established in the contract. The Company estimates variable consideration at the most likely amount to which it expects to be entitled. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainly associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on as assessment of Euronet's anticipated performance and all information (historical, current and forecast) that is reasonably available.

~~Arrangements with Multiple Performance Obligations~~

The Company's most significant revenues are generated from transaction fees for which there are no remaining performance obligations left to fulfill after revenue is recognized. An insignificant amount of revenues are generated from contracts with customers which may include multiple performance obligations. For such arrangements, Euronet allocates revenues to each performance obligation based on its relative standalone selling price.

~~Disaggregation of Revenues~~

Revenues are recognized when control of the promised goods or services is transferred to Euronet's customers, in an amount that reflects the consideration it expects to be entitled to in exchange for goods or services.

The following table presents the Company's revenues disaggregated by segment and region. Sales and usage-based taxes are excluded from revenues. The Company believes disaggregation by segment and region best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The disaggregation of revenues by segment and region is based on management's assessment of segment performance together with allocation of financial resources, both capital and operating support costs, on a segment and regional level. Both segments and regions benefit from synergies achieved through concentration of operations and are influenced by macro-economic, regulatory and political factors in the respective segment and region.

For the Three Months Ended March 31, 2018
(in thousands)
EFT
Processing
epay
Money
Transfer
Total
North America $ 8,016
$ 41,051
$ 128,984
$ 178,051
Europe 100,087
113,451
73,958
287,496
Asia Pacific 27,594
17,453
32,141
77,188
Other 7
4,890
3,753
8,650
Total $ 135,704
$ 176,845
$ 238,836
$ 551,385

For the Three Months Ended March 31, 2017
(in thousands)
EFT
Processing
epay
Money
Transfer
Total
North America $ 7,398
$ 16,971
$ 121,548
$ 145,917
Europe 75,895
119,834
55,723
251,452
Asia Pacific 22,456
22,927
24,796
70,179
Other 3
4,438
1,906
6,347
Total $ 105,752
$ 164,170
$ 203,973
$ 473,895
As noted above, prior period amounts have not been adjusted under the modified retrospective method.

In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. The new standard specifies that liabilities within its scope are considered to be financial liabilities, and amends the guidance in ASC 405-20, Extinguishments of Liabilities, by directing entities to derecognize prepaid stored-value product liabilities based on expected breakage in proportion to the pattern of rights expected to be exercised by the consumer. Derecognition for breakage is permitted only to the extent that it is probable that a significant reversal of recognized breakage will not subsequently occur. The new standard is consistent with the breakage guidance in Topic 606. The ASU is effective for annual periods beginning after December 15, 2017, and is applied either using a modified retrospective transition method or retrospectively. Early adoption is permitted. The Company adopted this ASU as of January 1, 2018 along with Topic 606. The adoption of this standard did not have a significant impact on the Company's consolidated financial statements and related disclosures.

In August 2016, the FASB issued an accounting standard classified under FASB ASC Topic 230, “Statement of Cash Flows”. This accounting standard provides guidance on eight specific cash flow issues. Subsequently, the FASB issued amendments to this accounting standard that required companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the statement of cash flows. The amendments were effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.

The Company adopted these standards as of January 1, 2018. The adoption of these accounting standards resulted in an increase in net cash provided by operating activities of $20.0 million for the three months ended March 31, 2017. As of March 31, 2018, the Company had $63.8 million of restricted cash consisting of restricted cash held in trust and/or cash held on behalf of others and cash collateral on bank credit arrangements. Cash held in trust and/or cash held on behalf of others is in connection with the administration of the customer collection and vendor remittance activities by certain subsidiaries within the Company’s epay and EFT Processing Segments. Amounts collected on behalf of certain mobile phone operators and/or merchants are deposited into a restricted cash account. The bank credit arrangements primarily represent cash collateral on deposit with commercial banks to cover guarantees.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting~~, which clarifies the changes to terms or conditions of a share-based payment award that require an entity to apply modification accounting. The amendments of this ASU are effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017 and prospective application is required. The Company adopted ASU 2017-09 as of January 1, 2018 and the adoption did not have a significant impact on its consolidated financial statements.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases(Topic 842)~~, which will update the existing guidance on accounting for leases and require new qualitative and quantitative disclosures about the Company’s leasing activities. The new standard requires lessees to account for all leases on the balance sheet, except for certain short-term leases that have a maximum possible lease term of 12 months. The accounting for lessors is largely unchanged from the previous accounting guidance, except for leverage lease accounting which is not permitted for leases entered into or modified after the effective date of the new standard. The new standard is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that the Company may elect to apply. The Company is currently evaluating the expected impact of the adoption of this standard on its consolidated financial statements and related disclosures.

~~In June 2016, the FASB issued~~ ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the

measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application ~~will be~~is permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently in the process of evaluating the effect of the adoption of ASU 2016-13 on its consolidated financial statements.

(3) STOCKHOLDERS' EQUITY

Earnings Per Share

Basic earnings per share has been computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the respective periods. Diluted earnings per share has been computed by dividing earnings available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for any potential dilution from options to purchase the Company's common stock, assumed vesting of restricted stock and the assumed conversion of the Company’s convertible debentures. The following table provides the computation of diluted weighted average number of common shares outstanding:


	Three Months Ended March 31,		Three Months Ended March 31,
	2018	2017	2019	2018
Computation of diluted weighted average shares outstanding:
Basic weighted average shares outstanding	51,899,282	52,345,944	51,880,534	51,899,282
Incremental shares from assumed exercise of stock options and vesting of restricted stock	1,578,071	1,706,342	1,285,139	1,578,071
Incremental shares from assumed conversion of convertible notes	475,893	869,493	2,411,194	475,893
Diluted weighted average shares outstanding	53,953,246	54,921,779	55,576,867	53,953,246

The table includes the impact of all stock options and restricted stock that are dilutive to the Company’s weighted average common shares outstanding during the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018. The calculation of diluted earnings per share excludes stock options or shares of restricted stock that are anti-dilutive to the Company’s weighted average common shares outstanding of approximately ~~1,151,000 and 969,000~~402,000 for the three months ended March 31, ~~2018~~2019 and ~~2017, respectively.~~approximately 1,151,000 for the three months ended March 31, 2018.

The Company's convertible notes have settlement features requiring the Company upon conversion to settle the principal amount of the debt and ~~the~~any conversion value in excess of the principal value ("conversion premium"), for cash or shares of the Company's common stock or a combination thereof, at the Company's option. At issuance, the Company stated its intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium. Accordingly, the convertible notes are included in the calculation of diluted earnings per share if their inclusion is dilutive. The convertible notes would only have a dilutive effect if the market price per share of common stock exceeds the conversion price of $188.73 per share and $72.18 per share for the new Convertible Senior Notes ("Convertible Notes") issued on March 18, 2019 and the existing convertible notes due on 2044, respectively. The dilutive effect increases the more the market price exceeds the conversion price. Upon issuance of the Convertible Notes, the Company provided a notice of redemption to the trustee of the indenture governing the existing convertible notes. As of March 31, ~~2018~~2019 and ~~2017,~~2018, the stock price exceeded the conversion price and ~~these~~the existing convertible notes were dilutive to earnings per share. Further, as a result of the share price ~~decreasing~~increasing from ~~$85.52 at March 31, 2017 to~~ $78.92 at March 31, 2018 to $142.59 at March 31, 2019, there was ~~a decrease~~an increase in shares from the assumed conversion of convertible notes.

Share repurchases

The Company's Board of Directors has authorized a stock repurchase program ("Repurchase Program") allowing Euronet to repurchase up to $375 million in value or 10.0 million shares of stock through March 31, 2020. For the three months ended March 31, 2019, the remaining maximum dollar value of shares that may yet be purchased under the Repurchase program was

$200.0 million. Repurchases under the Repurchase Program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan. For the ~~three months ended March 31, 2018,~~first quarter of 2019, the Company ~~repurchased $125.0 million in value of Euronet common stock~~did not make any repurchases under the Repurchase Program. In connection with the issuance of the Convertible Notes, the Board of Directors of the Company authorized the Company to repurchase up to $120 million of the Company’s common stock concurrently with or following the issuance of the Convertible Notes. This authorization will expire on March 11, 2021. For the first quarter 2019, the Company did not make any repurchases under this special authorization.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded foreign currency translation ~~gains~~losses of ~~$22.9 million and $19.4~~$16.2 million for the three months ended March 31, ~~2018~~2019, and ~~2017, respectively.~~gains of $22.9 million for the three months ended March 31, 2018. There were no reclassifications of foreign currency translation into the consolidated statements of income for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.

(4) GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET

A summary of acquired intangible assets and goodwill activity for the three months ended March 31, ~~2018~~2019 is presented below:


(in thousands)	Acquired Intangible Assets			Goodwill		Total Intangible Assets			Acquired Intangible Assets			Goodwill			Total Intangible Assets
Balance as of December 31, 2017	$	150,543		$	717,386	$	867,929
Balance as of December 31, 2018									$	114,485		$	704,197		$	818,682
Increases (decreases):
Acquisition	—			15,229		15,229			—			686			686
Amortization	(5,841		)	—		(5,841		)	(5,186		)	—			(5,186		)
Other (primarily changes in foreign currency exchange rates and impairment)	3,355			10,841		14,196
Balance as of March 31, 2018	$	148,057		$	743,456	$	891,513
Other (primarily changes in foreign currency exchange rates)									844			(829		)	15
Balance as of March 31, 2019									$	110,143		$	704,054		$	814,197

Estimated amortization expense on intangible assets with finite lives, before income taxes, as of March 31, ~~2018,~~2019, is expected to total ~~$17.6~~$15.5 million for the remainder of ~~2018, $22.5 million for~~ 2019, ~~$21.7~~$19.9 million for 2020, ~~$20.7~~$19.0 million for 2021, ~~$19.6~~$18.0 million for 2022, ~~and $14.5~~$13.2 million for ~~2023.~~2023 and $6.7 million for 2024.

~~In March 2018, the~~The Company completed the ~~acquisition~~acquisitions of a small ~~European~~Indonesian business for an immaterial amount of cash consideration. The acquisition has been accounted for as a business ~~combination~~combinations in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment.

The Company’s annual goodwill impairment test is performed during the fourth quarter of its fiscal year. The annual impairment test for the year ended December 31, ~~2017~~2018 resulted in no impairment ~~charges of $31.8 million.~~charge.

Determining the fair value of reporting units requires significant management judgment in estimating future cash flows and assessing potential market and economic conditions. It is reasonably possible that the Company’s operations will not perform as expected, or that the estimates or assumptions included in the ~~2017~~2018 annual impairment test could change, which may result in the Company recording material non-cash impairment charges during the year in which these changes take place.

(5) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:


	As of				As of
(in thousands)	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Money transfer settlement obligations					$	464,888	$	310,710
Accrued expenses	$	253,627	$	301,390	187,521		293,864
Money transfer settlement obligations	328,962		343,613
Accrued amounts due to mobile operators and other content providers	138,356		92,291		73,434		65,878
Derivative liabilities	23,424		22,495		27,526		36,102
Current portion of capital lease obligations					$	5,545	$	5,458
Total	$	744,369	$	759,789	$	758,914	$	712,012

(6) UNEARNED REVENUES

Accounting Standards Codification ("ASC") Topic 606, “Revenue from Contracts with Customers” (“Topic 606”) requires the deferral of incremental costs to obtain customer contracts, known as contract assets, which are then amortized to expense as part of selling, general and administrative expense over the respective periods of expected benefit. Such costs are not material; however, the Company has implemented processes and controls to record such costs on an ongoing basis and will disclose them if they become material.

The Company records deferred revenues when cash payments are received or due in advance of its performance. The increase in the deferred revenue balance for the first quarter of 2019 is primarily driven by $16.0 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, largely offset by $13.9 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2018.

(7) DEBT OBLIGATIONS

Debt obligations consist of the following:


	As of						As of
(in thousands)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Credit Facility:
Term loan, due 2019	$	48,750		$	51,094
Revolving credit agreements, due 2019	171,804			3,000
Revolving credit agreements, due 2023							$	—		$	215,725
	220,554			54,094
Convertible Debt:
1.50% convertible notes, unsecured, due 2044	372,090			369,259			333,886			379,859
0.75% convertible notes, unsecured, due 2049							425,947			—

Other obligations	33,097			27,763			26,845			38,513

Total debt obligations	625,741			451,116			786,678			634,097
Unamortized debt issuance costs	(5,175		)	(5,816		)	(13,458		)	(6,298		)
Carrying value of debt	620,566			445,300			773,220			627,799
Short-term debt obligations and current maturities of long-term debt obligations	(46,972		)	(41,288		)	(360,358		)	(38,017		)
Long-term debt obligations	$	573,594		$	404,012		$	412,862		$	589,782

Credit Facility

~~As of March 31,~~On October 17, 2018, the Company ~~had~~entered into a ~~$675 million senior secured~~new unsecured revolving credit ~~facility~~agreement (the "Credit Facility") ~~consisting of a $600 million revolving credit facility~~for $1.0 billion that expires on October 17, 2023. Fees and ~~a $75 million term loan ("Term Loan A"), which had been reduced to $48.8 million through principal amortization payments. The Credit Facility expires April 9, 2019.~~

~~Interest~~interest on borrowings ~~under the revolving credit facility and Term Loan A varies~~are based upon the Company's ~~consolidated total leverage ratio, as defined~~corporate credit rating and are based, in the ~~Company's~~case of letter of credit ~~agreement, and is based~~fees, on a margin , and in the case of interest, on a margin over ~~the~~ London Inter-Bank Offered Rate (“LIBOR”) or a margin over athe base rate, as selected by the Company, with the applicable margin ranging from ~~1.375%~~1.125% to ~~2.375% for LIBOR loans~~2.0% or ~~0.375%~~0.175% to ~~1.375%~~1.0% for base rate loans. ~~Accordingly, the weighted average interest rate~~The Credit Facility allows for borrowings ~~outstanding under the Company's revolving credit facility~~in Australian Dollars, British Pounds Sterling, Canadian Dollars, Czech Koruna, Danish Krone, Euros, Hungarian Forints, Japanese Yen, New Zealand Dollars, Norwegian Krone, Polish Zlotys, Swedish Krona, Swiss Francs, and ~~Term Loan A was 3.14% and 3.25%, respectively, as of March 31, 2018.~~U.S. Dollars.

Convertible Debt

~~The~~On March 18, 2019, the Company completed the sale of $525 million of Convertible Senior Notes (“("Convertible ~~Notes”~~Notes") ~~had a principal amount outstanding of $402.5 million as of March 31, 2018.~~. The Convertible Notes mature in ~~October 2044~~March 2049 unless repurchased or converted prior to such date, and are convertible into shares of Euronet Common Stock at a conversion price of approximately ~~$72.18~~$188.73 per share. ~~Holders~~The Company used $94.2 million of the new debt to repurchase $49 million aggregate principal amount of the Company's 1.5% Convertible Senior Notes outstanding due 2044 (the "Existing Convertible Notes") from a limited number of holders in privately negotiated transactions. The Company expects to use the remainder of the net proceeds for general corporate purposes, which may include redeeming the remaining Existing Convertible Notes, repaying borrowings outstanding under the Credit Facility, share repurchases or acquisitions.

On March 18, 2019, the Company provided a notice of redemption to the trustee of the indenture governing the Existing Convertible Notes (the "Existing Indenture"), pursuant to which the Company will redeem all of the remaining principal

amount outstanding of the Existing Convertible Notes on May 28, 2019 (the "Redemption Date"). The redemption price of the Existing Convertible Notes to be redeemed is cash equal to 100% of the principal amount of the Existing Convertible Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date.

In accordance with ASC 470-20-30-27, proceeds from the issuance of convertible debt is allocated between debt and equity components so that debt is discounted to reflect the Company's nonconvertible debt borrowing rate. ASC 470-20-35-13 requires the debt discount to be amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. The allocation resulted in an increase to additional paid-in capital of $99.7 million and $66.1 million for the Convertible Notes and the Existing Convertible Notes, respectively. The issuance of the Convertible Notes ~~have~~and the option to require the Company to purchase their notes at par on October 1, 2020, and have additional options to require the Company to purchase their notes at par on October 1, 2024, 2029, 2034, and 2039, or upon a change in controlredemption of the ~~Company.~~

~~Holders may convert all or any portion of their~~Existing Convertible Notes ~~at their option at any time prior to October 1, 2044 only under~~resulted in a net $21.5 million recognition of deferred tax liabilities within the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the closing sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (2) during the five consecutive business day period after any ten consecutive trading day period (the measurement period) in which the trading price for the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the closing sale price of the Company's common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. If the holders exercise their option to convert, the Company is required to deliver cash or shares of the Company's common stock, at the Company's option, to satisfy the principal amount and the conversion premium.

~~None of the above conversion conditions are currently in effect.~~additional paid-in capital.

Contractual interest expense for the Existing Convertible Notes was $1.5 million for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively. Accretion expense was ~~$2.8~~$2.9 million and ~~$2.7~~$2.8 million for the three months ended March 31, 2019 and 2018, ~~and 2017,~~

respectively. The effective interest rate was 4.7% for both the three months ended March 31, 2019 and 2018. As of March 31, ~~2018,~~2019, the unamortized discount was ~~$30.4~~$16.4 million.

Contractual interest expense for the Convertible Notes was $0.2 million for the three months ended March 31, 2019. Accretion expense was $0.6 million for the three months ended March 31, 2019. The effective interest rate was 4.4% for the three months ended March 31, 2019. As of March 31, 2019, the unamortized discount was $99.1 million and will be amortized through ~~October 1, 2020.~~

March 2025.

~~(7)~~(8) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. Dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) short-term borrowings that are payable in currencies other than the U.S. dollar. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"), primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates being reflected concurrently in earnings for both the derivative instrument and the hedged transaction and having an offsetting effect.

Foreign currency exchange contracts - Ria Operations and Corporate

In the United States, the Company's Ria operations use short-duration foreign currency forward contracts, generally with maturities up to 14 days, to offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction and its settlement. Due to the short duration of these contracts and the Company’s credit profile, the Company is generally not required to post collateral with respect to these foreign currency forward contracts. Most derivative contracts executed with counterparties in the U.S. are governed by an International Swaps and Derivatives Association agreement that includes standard netting arrangements; therefore, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity. As of March 31, ~~2018,~~2019, the Company held in its Ria operations foreign currency forward contracts outstanding in the U.S. with a notional value of ~~$301~~$338 million, primarily in Australian dollars, Canadian dollars, British pounds, euros and Mexican pesos.

In addition, the Company uses forward contracts, typically with maturities from a few days to less than one year, to offset foreign exchange rate fluctuations on certain foreign currency denominated other asset and liability positions. As of March 31, ~~2018,~~2019, the Company had foreign currency forward contracts outstanding with a notional value of ~~$132~~$166 million, primarily in ~~British pounds,~~ euros and Polish zloty.

Foreign currency exchange contracts - HiFX Operations

HiFX writes derivative instruments, primarily foreign currency forward contracts and cross-currency swaps, mostly with counterparties comprised of individuals and small-to-medium size businesses and derives a currency margin from this activity as part of its operations. HiFX aggregates its foreign currency exposures arising from customer contracts and may hedge some or all of the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from HiFX's total portfolio of positions were ~~$18.7~~$18.6 million and ~~$15.7~~$18.7 million for the three months ended March 31, ~~2018~~2019 and ~~2017, respectively.~~2018. All of the derivative contracts used in the Company's HiFX operations are economic hedges and are not designated as hedges under ASC Topic 815. The duration of these derivative contracts is generally less than one year.

The fair value of HiFX's total portfolio of positions can change significantly from period to period based on, among other factors, market movements and changes in customer contract positions. HiFX manages counterparty credit risk (the risk that counterparties will default and not make payments according to the terms of the agreements) on an individual counterparty basis. It mitigates this risk by entering into contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. HiFX does not expect any significant losses from counterparty defaults.

The aggregate equivalent U.S. dollar notional amounts of foreign currency derivative customer contracts held by the Company in its HiFX operations as of March 31, ~~2018~~2019 was approximately $1.3 billion. The majority of customer contracts are written in major currencies such as the U.S. dollar, euro, New Zealand dollar, British pound, and Australian dollar.

Balance Sheet Presentation

The following table summarizes the fair value of the derivative instruments as recorded in the Consolidated Balance Sheets as of the dates below:


	Asset Derivatives					Liability Derivatives							Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value							Fair Value					Fair Value
(in thousands)	Balance Sheet Location	March 31, 2018		December 31, 2017		Balance Sheet Location	March 31, 2018			December 31, 2017			Balance Sheet Location	March 31, 2019		December 31, 2018		Balance Sheet Location	March 31, 2019			December 31, 2018
Derivatives not designated as hedging instruments
Foreign currency exchange contracts	Other current assets	$	40,105	$	36,574	Other current liabilities	$	(23,424	)	$	(22,495	)	Prepaid expenses and other current assets	$	45,542	$	44,637	Accrued expenses and other current liabilities	$	(27,526	)	$	(36,102	)

The following tables summarize the gross and net fair value of derivative assets and liabilities as of March 31, ~~2018~~2019 and December 31, ~~2017~~2018 (in thousands):

Offsetting of Derivative Assets


							Gross Amounts Not Offset in the Consolidated Balance Sheet														Gross Amounts Not Offset in the Consolidated Balance Sheet
As of March 31, 2018	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet		Financial Instruments			Cash Collateral Received			Net Amounts
As of March 31, 2019															Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet		Financial Instruments			Cash Collateral Received			Net Amounts
Derivatives subject to a master netting arrangement or similar agreement	$	40,105	$	—	$	40,105	$	(15,816	)	$	(7,550	)	$	16,739	$	45,542	$	—	$	45,542	$	(21,436	)	$	(7,232	)	$	16,874

As of December 31, 2017
As of December 31, 2018
Derivatives subject to a master netting arrangement or similar agreement	$	36,574	$	—	$	36,574	$	(15,050	)	$	(7,603	)	$	13,921	$	44,637	$	—	$	44,637	$	(25,187	)	$	(9,918	)	$	9,532

Offsetting of Derivative Liabilities


									Gross Amounts Not Offset in the Consolidated Balance Sheet															Gross Amounts Not Offset in the Consolidated Balance Sheet
As of March 31, 2018	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet			Financial Instruments		Cash Collateral Paid		Net Amounts
As of March 31, 2019																Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet			Financial Instruments		Cash Collateral Paid		Net Amounts
Derivatives subject to a master netting arrangement or similar agreement	$	(23,424	)	$	—	$	(23,424	)	$	15,816	$	940	$	(6,668	)	$	(27,526	)	$	—	$	(27,526	)	$	21,436	$	153	$	(5,937	)

As of December 31, 2017
As of December 31, 2018
Derivatives subject to a master netting arrangement or similar agreement	$	(22,495	)	$	—	$	(22,495	)	$	15,050	$	2,716	$	(4,729	)	$	(36,102	)	$	—	$	(36,102	)	$	25,187	$	2,048	$	(8,867	)

See Note 8,9, Fair Value Measurements, for the determination of the fair values of derivatives.

Income Statement Presentation

The following ~~tables summarize~~table summarizes the location and amount of gains and losses on derivatives in the Consolidated Statements of Income for the three months ended March 31, ~~2018~~2019 and ~~2017:~~2018:


			Amount of Gain (Loss) Recognized in Income on Derivative Contracts (a)									Amount of Gain Recognized in Income on Derivative Contracts (a)
	Location of Gain (Loss) Recognized in Income on Derivative Contracts		Three Months Ended March 31,							Location of Gain Recognized in Income on Derivative Contracts		Three Months Ended March 31,
(in thousands)		2018				2017					2019				2018
Foreign currency exchange contracts		Foreign currency exchange gain, net		$	1,295		$	(4,659	)		Foreign currency exchange gain, net		$	2,459		$	1,295

(a) The Company enters into derivative contracts such as foreign currency exchange forwards and cross-currency swaps as part of its HiFX operations. These derivative contracts are excluded from this table as they are part of the broader disclosure of foreign currency exchange revenues for this business discussed above.

~~(8)~~(9) FAIR VALUE MEASUREMENTS

Fair value measurements used in the unaudited consolidated financial statements are based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data

obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the inputs that market participants would use in pricing.

The following table details financial assets and liabilities measured and recorded at fair value on a recurring basis:


		As of March 31, 2018											As of March 31, 2019
(in thousands)	Balance Sheet Classification	Level 1		Level 2			Level 3		Total			Balance Sheet Classification	Level 1		Level 2			Level 3		Total
Assets
Foreign currency exchange contracts	Other current assets	$	—	$	40,105		$	—	$	40,105		Other current assets	$	—	$	45,542		$	—	$	45,542
Liabilities
Foreign currency exchange contracts	Other current liabilities	$	—	$	(23,424	)	$	—	$	(23,424	)	Other current liabilities	$	—	$	(27,526	)	$	—	$	(27,526	)


		As of December 31, 2017											As of December 31, 2018
(in thousands)	Balance Sheet Classification	Level 1		Level 2			Level 3		Total			Balance Sheet Classification	Level 1		Level 2			Level 3		Total
Assets
Foreign currency exchange contracts	Other current assets	$	—	$	36,574		$	—	$	36,574		Other current assets	$	—	$	44,637		$	—	$	44,637
Liabilities
Foreign currency exchange contracts	Other current liabilities	$	—	$	(22,495	)	$	—	$	(22,495	)	Other current liabilities	$	—	$	(36,102	)	$	—	$	(36,102	)

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, accounts receivable, trade accounts payable, accrued expenses and other current obligations approximate their fair values because of the relatively short-term maturities of these financial instruments. The carrying values of the Company’s long-term debt (other than the Convertible Notes), including the current portion, approximate fair value because interest is primarily based on LIBOR, which resets at various intervals of less than one year. The Company estimates the fair value of the ~~Convertible Notes~~convertible notes using quoted prices in inactive markets for identical liabilities (Level 2). As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, the fair values of the Existing Convertible Notes were ~~$495.1~~$660.8 million and ~~$503.7~~$571.6 million, respectively, with carrying values of ~~$372.1~~$333.9 million and ~~$369.3~~$379.9 million, respectively. As of March 31, 2019, the fair value of the Convertible Notes was $581.0 million with carrying value of $425.9 million.

~~(9)~~(10) SEGMENT INFORMATION

The Company’s reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting. The Company currently operates in the following three reportable operating segments:

Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East, Asia Pacific and ~~Asia Pacific.~~the United States. The Company provides comprehensive electronic payment solutions consisting of ATM cash withdrawal services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, dynamic currency conversion, domestic and international surcharge and other value added services. Through this segment, the Company also offers a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.


2)	Through the epay Segment, the Company provides distribution, processing and collection services for prepaid mobile airtime and other electronic payment products in Europe, the Middle East, Asia Pacific, the United States and South America.

Through the Money Transfer Segment, the Company provides global money transfer services under the brand names Ria, HiFX, IME and xe. Ria and IME provide global consumer-to-consumer money transfer services through a network of sending agents, Company-owned stores and Company-owned websites, disbursing money transfers through a worldwide correspondent network. HiFX offers account-to-account international payment services to high-income individuals and small-to-medium sized businesses. xe is a provider of foreign currency exchange information and offers money transfers on its currency data websites. The Company also offers customers bill payment services, payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services, foreign currency exchange services and mobile top-up. The Company provides cash management solutions and foreign currency risk management services to small-to-medium sized businesses under the brand name HiFM.

In addition, the Company accounts for non-operating activity, most share-based compensation expense, certain intersegment eliminations and the costs of providing corporate and other administrative services in its administrative division, “Corporate Services, Eliminations and Other.” These services are not directly identifiable with the Company’s reportable operating segments.

The following tables present the Company’s reportable segment results for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018:



	For the Three Months Ended March 31, 2019
(in thousands)	EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated
Total revenues	$	145,703	$	176,114	$	256,581	$	(889	)	$	577,509
Operating expenses:
Direct operating costs	83,776		133,525		137,404		(872		)	353,833
Salaries and benefits	19,431		14,753		51,156		7,455			92,795
Selling, general and administrative	9,086		8,052		29,109		1,900			48,147
Depreciation and amortization	16,642		1,785		8,138		75			26,640
Total operating expenses	128,935		158,115		225,807		8,558			521,415
Operating income (expense)	$	16,768	$	17,999	$	30,774	$	(9,447	)	$	56,094



	For the Three Months Ended March 31, 2018
(in thousands)	EFT Processing		epay		Money Transfer		Corporate Services, Eliminations and Other			Consolidated
Total revenues	$	135,704	$	176,845	$	238,836	$	(870	)	$	550,515
Operating expenses:
Direct operating costs	81,837		134,922		127,431		(866		)	343,324
Salaries and benefits	17,005		14,417		47,357		6,927			85,706
Selling, general and administrative	9,115		8,733		29,699		2,464			50,011
Depreciation and amortization	16,200		1,878		7,895		29			26,002
Total operating expenses	124,157		159,950		212,382		8,554			505,043
Operating income (expense)	$	11,547	$	16,895	$	26,454	$	(9,424	)	$	45,472

For the Three Months Ended March 31, 2017
(in thousands)
EFT
Processing
epay
Money
Transfer

Corporate
Services,
Eliminations
and Other
Consolidated
Total revenues $ 105,752
$ 164,170
$ 203,973
$ (515 ) $ 473,380
Operating expenses:
Direct operating costs 62,073
126,160
108,885
(511 ) 296,607
Salaries and benefits 13,746
12,595
38,889
6,633
71,863
Selling, general and administrative 7,186
8,960
22,813
3,028
41,987
Depreciation and amortization 11,785
2,533
7,291
28
21,637
Total operating expenses 94,790
150,248
177,878
9,178
432,094
Operating income (expense) $ 10,962
$ 13,922
$ 26,095
$ (9,693 ) $ 41,286

The following table presents the Company’s property and equipment and total assets by reportable segment:


	Property and Equipment, net as of				Total Assets as of				Property and Equipment, net as of				Total Assets as of
(in thousands)	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
EFT Processing	$	207,284	$	196,451	$	1,224,959	$	1,040,135	$	222,338	$	215,106	$	1,533,051	$	1,220,141
epay	29,261		28,135		624,573		695,990		34,105		31,172		689,573		780,220
Money Transfer	43,974		43,564		1,301,563		1,255,765		47,282		45,517		1,461,137		1,310,775
Corporate Services, Eliminations and Other	87		153		6,280		148,139		71		74		130,292		10,019
Total	$	280,606	$	268,303	$	3,157,375	$	3,140,029	$	303,796	$	291,869	$	3,814,053	$	3,321,155



	For the Three Months Ended March 31, 2019
(in thousands)	EFT Processing		epay		Money Transfer		Total
Europe	$	107,611	$	114,906	$	85,559	$	308,076
North America	8,205		39,664		134,832		182,701
Asia Pacific	29,877		17,374		30,713		77,964
Other	10		4,170		5,477		9,657
Eliminations	—		—		—		(889		)
Total	$	145,703	$	176,114	$	256,581	$	577,509



	For the Three Months Ended March 31, 2018
(in thousands)	EFT Processing		epay		Money Transfer		Total
Europe	100,087		113,451		73,958		287,496
North America	$	8,016	$	41,051	$	128,984	$	178,051
Asia Pacific	27,594		17,453		32,141		77,188
Other	7		4,890		3,753		8,650
Eliminations	—		—		—		(870		)
Total	$	135,704	$	176,845	$	238,836	$	550,515

~~(10)~~(11) INCOME TAXES

The Company's effective income tax rate was ~~34.2%~~31.6% and ~~24.2%~~34.2% for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively. The Company's effective income tax ~~rate~~rates for the three months ended March 31, 2017 was less than the applicable statutory rate of 35% primarily as a result of the Company's U.S. tax position. The Company had significant U.S. federal tax net operating loss carryforwards with no recent history of significant U.S. taxable income; therefore, the Company had recorded a valuation allowance against its net U.S. deferred tax assets. Accordingly, in instances when the Company generated pre-tax U.S. GAAP income, no income tax expense was recognized to the extent there2019 and 2018 were ~~net operating loss carryforwards to offset the pre-tax U.S. GAAP income.~~

~~The Company's effective income tax rate for the three months ended March 31, 2018 was~~ higher than the applicable statutory income tax rate of 21% as a result of the enactment into law what is commonly known as the Tax Cuts and Jobs Act of 2017 (the "Act") and the Act's impact on the Company's U.S. income tax positions at the end of 2017. The most significant provisions of the Act are the transition tax on previously undistributedcertain foreign earnings of ~~foreign subsidiaries,~~ the ~~reduction in the U.S. corporate~~Company being subject to higher local statutory income tax ~~rate from 35%~~rates and the application to ~~21% beginning on January 1, 2018, and new taxes on certain foreign sourced earnings. As stated above,~~ the Company ~~had recorded a valuation allowance against its net U.S. deferred tax assets. Upon enactment~~ of the ~~Act, the Company expected to utilize its historic~~ U.S. federal tax net operating losses to partially offset the transition tax and released the associated valuation allowance in the fourth quarter of 2017. This change has created additional U.S. tax expense as the Company now recognizes income tax expense on its pre-tax U.S. GAAP income. In addition, the Act's global intangible low-taxed income ("GILTI") tax provision. The GILTI provision ~~has subjected~~subjects the Company's current foreign earnings to U.S. taxation creating additional U.S. tax expense.

The SEC staff issued Staff Accounting Bulletin ("SAB") 118, which provides guidance on accounting for the tax effects of the Act. SAB 118 provides a measurement period of up to one year from the Act's enactment date for companies to complete their accounting. In accordance with SAB 118, we provided provisional amounts where appropriate which we believe represent a reasonable estimate based on available information and our interpretations of the Act. Further, the Company is allowed to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or recognize such taxes as current period expenses when incurred. Due to the complexity of calculating GILTI, we have not determined which method we will apply. We will continue to evaluate the Act and adjust the provisional amounts as additional information becomes available.

~~(11)~~(12) COMMITMENTS

As of March 31, ~~2018,~~2019, the Company had ~~$85.4~~$76.7 million of stand-by letters of credit/bank guarantees issued on its behalf, of which ~~$56.8~~$46.2 million are outstanding under the Credit Facility. The remaining stand-by letters of credit/bank guarantees are collateralized by ~~$4.0~~$3.7 million of cash deposits held by the respective issuing banks.

Under certain circumstances, Euronet grants guarantees in support of obligations of subsidiaries. As of March 31, ~~2018,~~2019, the Company had granted off balance sheet guarantees for cash in various ATM networks amounting to ~~$17.5~~$12.3 million over the terms of the cash supply agreements and performance guarantees amounting to approximately ~~$21.8~~$54.6 million over the terms of agreements with the customers.

Once each of Euronet's subsidiaries reaches a certain size, it is required under the Credit Facility to provide a guarantee of all or a portion of the outstanding obligations under the Credit Facility depending upon whether the subsidiary is a domestic or foreign entity.

From time to time, the Company enters into agreements with commercial counterparties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. The amount of such potential obligations is generally not stated in the agreements. Euronet's liability under such indemnification provisions may be mitigated by relevant insurance coverage and may be subject to time and materiality limitations, monetary caps and other conditions and defenses. Such indemnification obligations include the following:

In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for damage to ATMs and theft of ATM network cash that, generally, is not recorded on the Company’s Consolidated Balance Sheets. As of March 31, ~~2018,~~2019, the balance of cash used in the Company's ATM networks for which the Company was responsible was approximately ~~$422~~$461 million. The Company maintains insurance policies to mitigate this exposure;

In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for losses suffered by its customers and other parties as a result of the breach of its computer systems, including in particular, losses arising from fraudulent transactions made using information stolen through its processing systems. The Company maintains systems of internal controls and insurance policies to mitigate this exposure;

In connection with the license of proprietary systems to customers, the Company provides certain warranties and infringement indemnities to the licensee, which generally warrant that such systems do not infringe on intellectual property owned by third parties and that the systems will perform in accordance with their specifications;

Euronet has entered into purchase and service agreements with vendors and consulting agreements with providers of consulting services, pursuant to which the Company has agreed to indemnify certain of such vendors and consultants, respectively, against third-party claims arising from the Company’s use of the vendor’s product or the services of the vendor or consultant;

In connection with acquisitions and dispositions of subsidiaries, operating units and business assets, the Company has entered into agreements containing indemnification provisions, which can be generally described as follows: (i) in connection with acquisitions of operating units or assets made by Euronet, the Company has agreed to indemnify the seller against third-party claims made against the seller relating to the operating unit or asset and arising after the closing of the transaction, and (ii) in connection with dispositions made by Euronet, Euronet has agreed to indemnify the buyer against damages incurred by the buyer due to the buyer’s reliance on representations and warranties relating to the subject subsidiary, operating unit or business assets in the disposition agreement if such representations or warranties were untrue when made; and

Euronet has entered into agreements with certain third parties, including banks that provide fiduciary and other services to Euronet or to the Company’s benefit plans. Under such agreements, the Company has agreed to indemnify such service providers for third-party claims relating to carrying out their respective duties under such agreements.

The Company is also required to meet minimum capitalization and cash requirements of various regulatory authorities in the jurisdictions in which the Company has money transfer operations. The Company has obtained surety bonds in compliance with money transfer licensing requirements of the applicable governmental authorities.

To date, the Company is not aware of any significant claims made by the indemnified parties or third parties to guarantee agreements with the Company and, accordingly, no liabilities were recorded as of March 31, ~~2018~~2019 or December 31, ~~2017.~~2018.

~~(12)~~(13) LITIGATION AND CONTINGENCIES

From time to time, the Company is a party to legal or regulatory proceedings arising in the ordinary course of its business. Currently, there are no legal proceedings or regulatory findings that management believes, either individually or in the aggregate, would have a material adverse effect on the Company's consolidated financial condition or results of operations. In accordance with U.S. GAAP, the Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case.

(14) LEASES

The Company enters into operating leases for ATM sites, office space, retail stores and equipment. The Company's finance leases are immaterial. Right of use assets and lease liabilities are recognized at commencement date based on the present value of the lease payment over the lease term. The present value of lease payments is determined using the incremental borrowing rate based on information available at the lease commencement date. All leases with fixed payments, including leases with an initial term of 12 months or less are recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Most leases include an option to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at the Company’s sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. The Company also has a unilateral termination right for a majority of the ATM site leases. Since the Company is not reasonably certain to exercise the renewal or terminal options, the options are not considered in determining the lease term, and associated payment impacts are excluded from lease payments.

Certain of the Company's lease agreements include variable rental payments based on revenues generated from the use of the leased location and certain leases include rental payments adjusted periodically for inflation. Variable lease payments are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs and are excluded from the right of use assets and lease liabilities balances. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Future minimum lease payments

Future minimum lease payments under the operating leases as of March 31, 2019 are:



	As of March 31, 2019
Maturity of Lease Liabilities (in thousands)	Operating Leases
Remainder of 2019	$	115,891
2020	93,975
2021	68,283
2022	43,471
2023	24,907
Thereafter	45,003
Total lease payments	$	391,530
Less: imputed interest	(51,783		)
Present value of lease liabilities	$	339,747

Future minimum lease payments under the non-cancelable operating leases (with initial lease terms in excess of one year) as of December 31, 2018 as follows:



(in thousands)	Operating Leases
Year ending December 31,
2019	$	80,803
2020	65,590
2021	49,052
2022	37,823
2023	30,192
Thereafter	48,191
Total minimum lease payments	$	311,651

Lease expense recognized in the Consolidated Statements of Income is summarized as follows:



Lease Expense (in thousands)	Income Statement Classification	Three Months Ended March 31, 2019
Operating lease expense	Selling, general and administrative and Direct operating costs	$	30,460
Variable lease expense	Selling, general and administrative and Direct operating costs	6,569
Total lease expense		$	37,029

Other information about lease amounts recognized in the consolidated financial statements is summarized as follows:



Lease Term and Discount Rate of Operating Leases	As of March 31, 2019
Weighted- average remaining lease term (years)	4.5
Weighted- average discount rate	3.2	%

The following table presents supplemental cash flow and non-cash information related to leases.



Other Information (in thousands)	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities (a)	$	30,083
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets
ROU assets obtained in exchange for new operating lease liabilities	$	71,378

(a) Included in Net cash provided by operating activities on the Company's Consolidated Statements of Cash Flows.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The terms "Euronet," the "Company," "we" and "us" as used herein refer to Euronet Worldwide, Inc. and its subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements that constitute forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Generally, the words "believe," "expect," "anticipate," "intend," "estimate," "will" and similar expressions identify forward-looking statements. However, the absence of these words or similar expressions does not mean the statement is not forward-looking. All statements other than statements of historical facts included in this document are forward-looking statements, including, but not limited to, statements regarding the following:

our business plans and financing plans and requirements;

trends affecting our business plans and financing plans and requirements;

trends affecting our business;

the adequacy of capital to meet our capital requirements and expansion plans;

the assumptions underlying our business plans;

our ability to repay indebtedness;

our estimated capital expenditures;

the potential outcome of loss contingencies;

our expectations regarding the closing of any pending acquisitions;

business strategy;

government regulatory action;

the expected effects of changes in laws or accounting standards;

technological advances; and

projected costs and revenues.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct.

Investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may materially differ from those in the forward-looking statements as a result of various factors, including, but not limited to, conditions in world financial markets and general economic conditions, including the effects in Europe of the ~~Brexit vote~~negotiations related to the United Kingdom's proposed departure of from the European Union, and economic conditions in specific countries and regions; the effects of demonetization in India; 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; Visa's announced rule change to allow our ATMs to provide DCC beginning mid-April 2019; our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, consumer and data protection ~~requirements,~~ and GDPR ~~and~~or PSD2, requirements; changes in laws and regulations affecting our business, including tax and immigration laws and any laws regulating payments, including DCC transactions; changes in our relationships with, general economic, financial and market conditions and the duration and extent of any future economic downturns; the cost of borrowing, availability of credit and terms of and compliance with debt covenants; renewal of sources of funding as they expire and the availability of replacement funding; and the outlook for markets we serve; or in fees charged by, our business partners; competition; the outcome of claims and other loss contingencies affecting Euronet; and those factors referred to above and as set forth and more fully described in Part I, Item 1A — Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 ~~and in Part II, Item 1A-Risk Factors in this Form 10-Q.~~. Our Annual Report on Form 10-K ~~and Quarterly Reports on Form 10-Q are~~is available on the SEC's EDGAR website at www.sec.gov, and copies may also be obtained by contacting the Company. Any forward-looking statements made in this Form 10-Q speak only as of the date of this report. Except as required by law, we do not intend, and do not undertake any obligation, to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

OVERVIEW

COMPANY OVERVIEW, GEOGRAPHIC LOCATIONS AND PRINCIPAL PRODUCTS AND SERVICES

Euronet is a leading electronic payments provider. We offer payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Our primary product offerings include comprehensive automated teller machine (“ATM”), point-of-sale (“POS”), card outsourcing, card issuing and merchant acquiring ~~services,~~services; software solutions and cloud based payment solutions; electronic distribution of prepaid mobile airtime and other electronic payment ~~products,~~products; foreign currency exchange services and global money transfer services. We operate in the following three segments:

The EFT Processing Segment, which processes transactions for a network of ~~38,358~~42,034 ATMs and approximately ~~263,000~~298,000 POS terminals across Europe, the Middle East, Asia Pacific and ~~Asia Pacific.~~the United States. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing, ~~dynamic currency conversion ("DCC"),~~DCC, domestic and international surcharge and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.

The epay Segment, which provides distribution, processing and collection services for digital media (formerly referred to as non-mobile content) and prepaid mobile ~~airtime and other electronic payment products.~~airtime. We operate a network of approximately ~~689,000~~718,000 POS terminals providing electronic processing of digital media and prepaid mobile airtime top-up services ~~and other electronic payment products~~ in Europe, the Middle East, Asia Pacific, the United States and South America. We also provide vouchers and physical gift fulfillment services in Europe.

The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, IME and xe. xe ~~and~~also provides global account-to-account money transfer ~~services under the brand name HiFX.~~services. We offer services under the brand names Ria and IME through a network of sending agents, Company-owned stores (primarily in North America, Europe and Malaysia) and Ria branded websites (riamoneytransfer.com and ~~imeremit.com)~~online.imeremit.com), disbursing money transfers through a worldwide correspondent network that includes approximately ~~350,000~~377,000 locations. xe ~~is a provider of foreign currency exchange information and~~ offers money transfer services on its ~~currency data~~ websites (xe.com and x-rates.com)~~. We offer services under the brand name HiFX~~ and through ~~HiFX branded websites and HiFX~~its customer service representatives. The xe websites also provide foreign currency exchange information. In addition to money transfers, we also offer customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up. Through our HiFM brand, we offer cash management solutions and foreign currency risk management services to small-to-medium sized businesses.

We have six processing centers in Europe, five in Asia Pacific and two in North America. We have 36 principal offices in Europe, 1114 in Asia Pacific, nine in North America, three in the Middle East, two in South America and one in Africa. Our executive offices are located in Leawood, Kansas, USA. With approximately ~~69%~~70% of our revenues denominated in currencies other than the U.S. dollar, any significant changes in foreign currency exchange rates will likely have a significant impact on our results of operations.

SOURCES OF REVENUES AND CASH FLOW

Euronet primarily earns revenues and income from ATM management fees, transaction fees, commissions and foreign currency exchange margin. Each operating segment’s sources of revenues are described below.

EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 25% of total consolidated revenues for the first quarter of ~~2018,~~2019, are primarily derived from fees charged for transactions made by cardholders on our proprietary network of ATMs, fixed management fees and transaction fees we charge to customers for operating ATMs and processing debit and credit cards under outsourcing and cross-border acquiring agreements, foreign currency exchange margin on DCC transactions, domestic and international surcharge, foreign currency dispensing, and other value added services such as advertising, prepaid telecommunication recharges, bill payment, and money transfers provided over ATMs. Revenues in this segment are also derived from license fees, professional services and maintenance fees for proprietary application software and sales of related hardware.

epay Segment — Revenues in the epay Segment, which represented approximately ~~32%~~31% of total consolidated revenues for the first quarter of ~~2018,~~2019, are derived from commissions or processing fees received from mobile phone operators for the processing and distribution of prepaid mobile airtime and commissions earned from the distribution of other electronic payment products, vouchers, and physical gifts. The proportion of epay Segment revenues earned from the distribution of prepaid mobile phone time as compared with other electronic products has decreased over time, and ~~non-mobile content~~digital media now produces approximately ~~66%~~63% of epay Segment revenues. Other electronic payment products offered by this segment include digital content such as music, games and software, as well as other products, including prepaid long distance calling card plans, prepaid Internet plans, prepaid debit cards, gift cards, vouchers, transport payments, lottery payments, bill payment, and money transfer. Agreements with mobile operators and prepaid content providers are important to the success of our business and these agreements permit us to distribute prepaid mobile airtime and other electronic payment products to retailers.

Money Transfer Segment — Revenues in the Money Transfer Segment, which represented approximately ~~43%~~44% of total consolidated revenues for the first quarter of ~~2018,~~2019, are primarily derived from transaction fees, as well as the margin earned from purchasing foreign currency at wholesale exchange rates and selling the foreign currency to customers at retail exchange rates. We have a sending agent network in place comprised of agents, customer service representatives, Company-owned stores, primarily in North America, Europe, and Malaysia, and Ria, xe and HiFX branded websites, along with a worldwide network of correspondent agents, consisting primarily of financial institutions in the transfer destination countries. Sending and correspondent agents each earn fees for cash collection and distribution services, which are recognized as direct operating costs at the time of sale.

The Company offers a money transfer product called Walmart-2-Walmart Money Transfer Service which allows customers to transfer money to and from Walmart stores in the U.S. Our Ria business executes the transfers with Walmart serving as both the sending agent and payout correspondent. Ria earns a lower margin from these transactions than its traditional money transfers; however, the arrangement has added a significant number of transactions to Ria’s business. The agreement with Walmart establishes Ria as the only party through which Walmart will sell U.S. domestic money transfers branded with Walmart marks. The agreement ~~had an initial term expiring in April 2017, and was renewed for an additional three years~~is effective until April 2020. Thereafter, it will automatically renew for subsequent one year terms unless either party provides notice to the contrary. The agreement imposes certain obligations on each party, the most significant being service level requirements by Ria and money transfer compliance requirements by Walmart. Any violation of these requirements by Ria could result in an obligation to indemnify Walmart or termination of the contract by Walmart. However, the agreement allows the parties to resolve disputes by mutual agreement without termination of the agreement.

Corporate Services, Eliminations and Other - In addition to operating in our principal operating segments described above, our “Corporate Services, Eliminations and Other” category includes non-operating activity, certain inter-segment eliminations and the cost of providing corporate and other administrative services to the operating segments, including most share-based compensation expense. These services are not directly identifiable with our reportable operating segments.

OPPORTUNITIES AND CHALLENGES

Our expansion plans and opportunities are focused on eight primary areas:

increasing the number of ATMs and cash deposit terminals in our independent networks;

increasing transactions processed on our network of owned and operated ATMs and POS devices;

signing new outsourced ATM and POS terminal management contracts;

expanding value added services and other products offered by our EFT Processing Segment, including the sale of DCC, acquiring and other prepaid card services to banks and retailers;

expanding our epay processing network and portfolio of digital content;

expanding our money transfer services, cross-currency payment products and bill payment network;

expanding our cash management solutions and foreign currency risk management services; and

developing our credit and debit card outsourcing business.

EFT Processing Segment — The continued expansion and development of our EFT Processing Segment business will depend on various factors including, but not necessarily limited to, the following:

the impact of competition by banks and other ATM operators and service providers in our current target markets;

the demand for our ATM outsourcing services in our current target markets;

our ability to develop products or services, including value added services, to drive increases in transactions and revenues;

the expansion of our various business lines in markets where we operate and in new markets;

our entry into additional card acceptance and ATM management agreements with banks;

our ability to obtain required licenses in markets we intend to enter or expand services;

our ability to enter into and renew ATM network cash supply agreements with financial institutions;

the availability of financing for expansion;

our ability efficiently to install ATMs contracted under newly awarded outsourcing agreements;

our ability to renew existing contracts at profitable rates;

our ability to maintain pricing at current levels or mitigate price reductions in certain markets;

the impact of changes in rules imposed by international card organizations such as Visa and Mastercard on card transactions on ATMs, including reductions in ATM interchange ~~fees;~~fees, restrictions on the ability to apply direct access fees, the ability to offer DCC transactions on ATMs, and increases in fees charged on DCC transactions;

the impact of changes in laws and regulations affecting the profitability of our services, including regulation of DCC transactions by the E.U.;

our ability to expand and sign additional customers for the cross-border merchant processing and acquiring business; and

the continued development and implementation of our software products and their ability to interact with other leading products.

We consistently evaluate and add prospects to our list of potential ATM outsource customers. However, we cannot predict the increase or decrease in the number of ATMs we manage under outsourcing agreements because this depends largely on the willingness of banks to enter into outsourcing contracts with us. Due to the thorough internal reviews and extensive negotiations conducted by existing and prospective banking customers in choosing outsource vendors, the process of entering into or renewing outsourcing agreements can take several months. The process is further complicated by the legal and regulatory considerations of local countries. These agreements tend to cover large numbers of ATMs, so significant increases and decreases in our pool of managed ATMs could result from the acquisition or termination of one or more of these management contracts. Therefore, the timing of both current and new contract revenues is uncertain and unpredictable.

Software products are an integral part of our product lines, and our investment in research, development, delivery and customer support reflects our ongoing commitment to an expanded customer base.

epay Segment — The continued expansion and development of the epay Segment business will depend on various factors, including, but not necessarily limited to, the following:

our ability to maintain and renew existing agreements, and to negotiate new agreements in additional markets with mobile operators, digital content providers, agent financial institutions and retailers;

our ability to use existing expertise and relationships with mobile operators, digital content providers and retailers to our advantage;

the continued use of third-party providers such as ourselves to supply electronic processing solutions for existing and additional digital content;

the development of mobile phone networks in the markets in which we do business and the increase in the number of mobile phone users;

the overall pace of growth in the prepaid mobile phone and digital content market, including consumer shifts between prepaid and postpaid services;

our market share of the retail distribution capacity;

the development of new technologies that may compete with POS distribution of prepaid mobile airtime and other products;

the level of commission that is paid to the various intermediaries in the electronic payment distribution chain;

our ability to fully recover monies collected by retailers;

our ability to add new and differentiated products in addition to those offered by mobile operators;

our ability to develop and effectively market additional value added services;

our ability to take advantage of cross-selling opportunities with our EFT Processing and Money Transfer Segments, including providing money transfer services through our distribution network; and

the availability of financing for further expansion.

In all of the markets in which we operate, we are experiencing significant competition which will impact the rate at which we may be able to grow organically. Competition among prepaid mobile airtime and digital content distributors results in the increase of commissions paid to retailers and increases in retailer attrition rates. To grow, we must capture market share from other prepaid mobile airtime and digital content distributors, offer a superior product offering and demonstrate the value of a global network. In certain markets in which we operate, many of the factors that may contribute to rapid growth (growth in electronic payment products, expansion of our network of retailers and access to products of mobile operators and other ~~content~~digital media providers) remain present.

Money Transfer Segment — The continued expansion and development of our Money Transfer Segment business will depend on various factors, including, but not necessarily limited to, the following:

the continued growth in worker migration and employment opportunities;

the mitigation of economic and political factors that have had an adverse impact on money transfer volumes, such as changes in the economic sectors in which immigrants work and the developments in immigration policies in the countries in which we operate;

the continuation of the trend of increased use of electronic money transfer and bill payment services among high-income individuals, immigrant workers and the unbanked population in our markets;

our ability to maintain our agent and correspondent networks;

our ability to offer our products and services or develop new products and services at competitive prices to drive increases in transactions;

the development of new technologies that may compete with our money transfer ~~network;~~network, and our ability to acquire, develop and implement new technologies;

the expansion of our services in markets where we operate and in new markets;

our ability to strengthen our brands;

our ability to fund working capital requirements;

our ability to recover from agents funds collected from customers and our ability to recover advances made to correspondents;

our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate;

our ability to take advantage of cross-selling opportunities with the epay Segment, including providing prepaid services through our stores and agents worldwide;

our ability to leverage our banking and merchant/retailer relationships to expand money transfer corridors to Europe, Asia and Africa, including high growth corridors to Central and Eastern European countries;

the availability of financing for further expansion;

the ability to maintain banking relationships necessary for us to service our customers;

our ability to successfully expand our agent network in Europe using our payment institution licenses under the Second Payment Services Directive ("PSD2") and using our various licenses in the United States; ~~and~~

our ability to provide additional value-added products under the xe ~~brand.~~brand, and;

the considerations regarding the use of our various trade names within the money transfer business.

For all segments, our continued expansion may involve additional acquisitions that could divert our resources and management time and require integration of new assets with our existing networks and services. Our ability to effectively manage our growth has required us to expand our operating systems and employee base, particularly at the management level, which has added incremental operating costs. An inability to continue to effectively manage expansion could have a material adverse effect on our business, growth, financial condition or results of operations. Inadequate technology and resources would impair

our ability to maintain current processing technology and efficiencies, as well as deliver new and innovative services to compete in the marketplace.

SEGMENT SUMMARY RESULTS OF OPERATIONS

Revenues and operating income by segment for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 are summarized in the tables below:


	Revenues for the Three Months Ended March 31,						Year-over-Year Change					Revenues for the Three Months Ended March 31,						Year-over-Year Change
(dollar amounts in thousands)	2018			2017			Increase (Decrease) Amount			Increase Percent		2019			2018			Increase (Decrease) Amount			Increase Percent
EFT Processing	$	135,704		$	105,752		$	29,952		28	%	$	145,703		$	135,704		$	9,999		7	%
epay	176,845			164,170			12,675			8	%	176,114			176,845			(731		)	—	%
Money Transfer	238,836			203,973			34,863			17	%	256,581			238,836			17,745			7	%
Total	551,385			473,895			77,490			16	%	578,398			551,385			27,013			5	%
Corporate services, eliminations and other	(870		)	(515		)	(355		)	69	%	(889		)	(870		)	(19		)	2	%
Total	$	550,515		$	473,380		$	77,135		16	%	$	577,509		$	550,515		$	26,994		5	%


	Operating Income (Expense) for the Three Months Ended March 31,						Year-over-Year Change				Operating Income (Expense) for the Three Months Ended March 31,						Year-over-Year Change
(dollar amounts in thousands)	2018			2017			Increase Amount		Increase (Decrease) Percent		2019			2018			Increase (Decrease) Amount			Increase Percent
EFT Processing	$	11,547		$	10,962		$	585	5	%	$	16,768		$	11,547		$	5,221		45	%
epay	16,895			13,922			2,973		21	%	17,999			16,895			1,104			7	%
Money Transfer	26,454			26,095			359		1	%	30,774			26,454			4,320			16	%
Total	54,896			50,979			3,917		8	%	65,541			54,896			10,645			19	%
Corporate services, eliminations and other	(9,424		)	(9,693		)	269		(3	)%	(9,447		)	(9,424		)	(23		)	—	%
Total	$	45,472		$	41,286		$	4,186	10	%	$	56,094		$	45,472		$	10,622		23	%

Impact of changes in foreign currency exchange rates

Our revenues and local expenses are recorded in the functional currencies of our operating entities and translated into U.S. dollars for financial reporting purposes; therefore, amounts we earn outside the U.S. are negatively impacted by a stronger U.S. dollar and positively impacted by a weaker U.S. dollar. Considering the results by country and the associated functional currency, we estimate that our reported consolidated operating income for the first quarter ~~2018~~of 2019 was ~~10% more~~5% less, due to the changes in foreign currency exchange rates when compared to the same period of ~~2017.~~2018.

To provide further perspective on the impact of foreign currency exchange rates, the following table shows the changes in values relative to the U.S. dollar of the currencies of the countries in which we have our most significant operations:


	Average Translation Rate Three Months Ended March 31,				Increase Percent		Average Translation Rate Three Months Ended March 31,				Decrease Percent
Currency (dollars per foreign currency)	2018		2017		Increase Percent		2019		2018		Decrease Percent
Australian dollar	$	0.7859	$	0.7580	4	%	$	0.7125	$	0.7859	(9	)%
British pound	$	1.3917	$	1.2390	12	%	$	1.3024	$	1.3917	(6	)%
euro	$	1.2289	$	1.0654	15	%	$	1.1354	$	1.2289	(8	)%
Hungarian forint	$	0.0039	$	0.0035	11	%	$	0.0036	$	0.0039	(8	)%
Indian rupee	$	0.0155	$	0.0149	4	%	$	0.0142	$	0.0155	(8	)%
Malaysian ringgit	$	0.2550	$	0.2250	13	%	$	0.2445	$	0.2550	(4	)%
New Zealand dollar	$	0.7270	$	0.7113	2	%	$	0.6813	$	0.7270	(6	)%
Polish zloty	$	0.2941	$	0.2467	19	%	$	0.2639	$	0.2941	(10	)%

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, ~~2018~~2019 AND ~~2017~~2018

EFT PROCESSING SEGMENT

The following table presents the results of operations for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 for our EFT Processing Segment:


	Three Months Ended March 31,				Year-over-Year Change				Three Months Ended March 31,				Year-over-Year Change
(dollar amounts in thousands)	2018		2017		Increase Amount		Increase Percent		2019		2018		Increase (Decrease) Amount			Increase Percent
Total revenues	$	135,704	$	105,752	$	29,952	28	%	$	145,703	$	135,704	$	9,999		7	%
Operating expenses:
Direct operating costs	81,837		62,073		19,764		32	%	83,776		81,837		1,939			2	%
Salaries and benefits	17,005		13,746		3,259		24	%	19,431		17,005		2,426			14	%
Selling, general and administrative	9,115		7,186		1,929		27	%	9,086		9,115		(29		)	—	%
Depreciation and amortization	16,200		11,785		4,415		37	%	16,642		16,200		442			3	%
Total operating expenses	124,157		94,790		29,367		31	%	128,935		124,157		4,778			4	%
Operating income	$	11,547	$	10,962	$	585	5	%	$	16,768	$	11,547	$	5,221		45	%
Transactions processed (millions)	622		537		85		16	%	691		622		69			11	%
ATMs as of March 31,	38,358		35,145		3,213		9	%	42,034		38,358		3,676			10	%
Average ATMs	37,651		34,578		3,073		9	%	40,918		37,651		3,267			9	%

Revenues

EFT Processing Segment total revenues for the three months ended March 31, ~~2018~~2019 were ~~$135.7~~$145.7 million, an increase of ~~$30.0~~$10.0 million or ~~28%~~7% as compared to the same period in ~~2017.~~2018. The increase in total revenues for the three months ended March 31, ~~2018~~2019 was primarily due to an increase in the number of ATMs under management in ~~Europe and the impact of the U.S. dollar weakening against key foreign currencies.~~Europe. Specifically, the increase in the number of ATMs contributed to increases in the number of transactions ~~processed,~~processed. The transaction growth includes an increase in value-added transactions on the ATMs and point-of-sale terminals, including ~~dynamic~~DCC, domestic and international surcharge, and foreign currency ~~conversion ("DCC") transactions. The increase~~dispensing. Foreign currency exchange rate movements decreased total revenues by approximately $11.7 million for the first quarter of 2019 as compared to the same period in 2018.

Average monthly revenues per ATM were $1,187 for the three months ended March 31, ~~2018 was also impacted by the recovery from a cash shortage in India due~~2019 compared to the demonetization initiated in the fourth quarter of 2016, which carried over into the first quarter of 2017. In the second half of 2017, the India cash supply returned to near pre-demonetization levels. For$1,201for the three months ended March 31, 2018, revenues were also higher than the same period in the prior year as a result of a higher volume of sales of POS devices in Greece. Foreign currency movements increased total revenues by approximately $14.4 million for the three months ended March 31, 2018 as compared to the same period in 2017. These increases were partly offset by a price reduction granted in December 2017 on a POS processing contract in exchange for a contract extension.

~~Average monthly revenues per ATM were $1,201 for the three months ended March 31, 2018, compared to $1,019 for the three months ended March 31, 2017.~~2018. Revenues per transaction were $0.21 for the first quarter of 2019 compared to $0.22 for the first quarter of 2018 ~~compared to $0.20~~. The decrease in average monthly revenues per ATM for the first quarter of ~~2017. The increases in average monthly revenues and revenue per transaction were~~2019 was primarily the result of the impact of the ~~weakening~~strengthening of the U.S. dollar against key foreign ~~currencies.~~currencies, partly offset by an increase in value-added transactions.

Direct operating costs

EFT Processing Segment direct operating costs were ~~$81.8~~$83.8 million for the three months ended March 31, ~~2018,~~2019, an increase of ~~$19.8~~$1.9 million or ~~32%~~2% as compared to the same period in ~~2017.~~2018. Direct operating costs in the EFT Processing Segment consist primarily of site rental fees, cash delivery costs, cash supply costs, maintenance, insurance, telecommunications, data center operations-related personnel, as well as the processing centers’ facility-related costs and other processing center-related expenses and commissions paid to retail merchants, banks and card processors involved with POS DCC transactions. The increases in direct operating costs for the three months ended March 31, ~~2018~~2019 were primarily due to an increase in the number of ATMs under management, particularly our independent ATM network, ~~which has more seasonal revenue generation and~~partly offset by the impact of the strengthening of the U.S. dollar ~~weakening~~ against key foreign currencies.

Gross profit

Gross profit, which is calculated as revenues less direct operating costs, was $61.9 million for the three months ended March 31, 2019, compared to $53.9 million for the three months ended March 31, ~~2018, compared to $43.7 million for the three months ended March 31, 2017.~~2018. The ~~increase~~increases in gross profit ~~was~~were primarily due to the growth in revenues from ~~the increase~~increases in ATMs under management, DCC transactions, ~~processed~~domestic and ~~the~~international surcharge, and foreign currency dispensing. The net impact of the U.S. dollar ~~weakening~~strengthening against key foreign ~~currencies.~~currencies partly offset the increase in gross profit for the first quarter of 2019. Gross profit as a percentage of revenues (“gross margin”) was 42.5% for the three months ended March 31, 2019, as compared to 39.7% for the three months ended March 31, ~~2018, as compared to 41.3% for~~2018. For the three months ended March 31, ~~2017. The decrease~~2019, the increase in gross margin was primarily due to increased operating costs due to the expansion of our ATM network, which includes fixed costs for our independent ATMs, including a higher number of independent ATMs that were deactivated during the winter season, along with ATM growth in the India market where we earn lower revenue per transaction. The decrease in gross margin was also attributable to ~~the price reduction from the POS contract extension~~increases in DCC transactions, domestic and ~~the~~international surcharge, foreign currency dispensing, and also a higher volume of sales of POS devices in Greece ~~from~~in the first quarter of 2018 on which we ~~earn~~earned a lower margin ~~than many other transactions.~~which did not occur in the current period.

Salaries and benefits

Salaries and benefits expense increased ~~$3.3~~$2.4 million or ~~24%~~14% for the three months ended March 31, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. As a percentage of revenues, these costs increased to 13.3% for the first quarter of 2019, compared to 12.5% for the first quarter of 2018. The ~~increase in salaries and benefits was~~increases were primarily ~~attributable~~due to additional headcount to support an increase in the number of ATMs and POS devices under management and the impact of the U.S. dollar weakening against key foreign currencies. As a percentage of revenues, these costs decreased to 12.5% for the first quarter of 2018, compared to 13.0% for the first quarter of 2017. The decrease was primarily due to the growth in revenues earned from DCC and other value added service transactions on our ATMs under management, which require minimal incremental support costs.management.

Selling, general and administrative

Selling, general and administrative expenses for the three months ended March 31, ~~2018~~2019 were $9.1 million, ~~an increase of $1.9 million or 27% as compared to~~which was consistent with the same period in 2017. The increase in selling, general and administrative expenses was primarily due to an increase in costs to support the growth in the business and the impact of the U.S. dollar weakening against key foreign currencies.2018. As a percentage of revenues, selling, general and administrative expenses were 6.2% for the three months ended March 31, 2019, compared to 6.7% for the three months ended March 31, ~~2018, compared to 6.8% for the three months ended March 31, 2017.~~2018.

Depreciation and amortization

Depreciation and amortization expense increased ~~$4.4~~$0.4 million for the three months ended March 31, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. The increase was primarily attributable to the deployment of additional ATMs under management ~~including more expensive cash recycling ATMs,~~ and software ~~assets as well as the impact of the U.S. dollar weakening against key foreign currencies.~~assets. As a percentage of revenues, depreciation and amortization expense was ~~11.9%~~11.4% for the first quarter of ~~2018~~2019, as compared to ~~11.1%~~11.9% for the same period of ~~2017. The increase was mainly due to the increase in the number of ATMs seasonally deactivated for the three months ended March 31, 2018 compared to the same period in 2017.~~2018.

Operating income

EFT Processing Segment operating income for the three months ended March 31, ~~2018~~2019 was ~~$11.5~~$16.8 million, an increase of ~~$0.6~~$5.2 million or 5%45% as compared to the same period in ~~2017.~~2018. EFT Processing Segment operating income for the three months ended March 31, ~~2018~~2019 increased primarily due to increases in the ~~net~~number of DCC transactions, domestic and international surcharge, and foreign currency dispensing as a result of the increased number of ATMs, partly offset by the impact of the strengthening of the U.S. dollar ~~weakening~~ against key foreign currencies.

Operating income as a percentage of revenues (“operating margin”) was 11.5% for the first quarter of 2019 compared to 8.5% for the first quarter of ~~2018 compared~~2018. The increase in operating margin was primarily due to ~~10.4%~~higher operating revenues partially offset by expenses incurred to support the increased revenues and additional ATMs under management. Operating income per transaction was $0.02 for the both the first quarter of 2017. The decrease in operating margin was attributable to additional costs for ATMs added to the network, including fixed costs of ATMs deactivated during the winter season which increased for the first quarter of 2018 compared to the same period in 2017. Operating income per transaction remained at $0.02 for the first quarters of 20182019 and ~~2017.~~2018.

EPAY SEGMENT

The following table presents the results of operations for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 for our epay Segment:


	Three Months Ended March 31,				Year-over-Year Change					Three Months Ended March 31,				Year-over-Year Change
(dollar amounts in thousands)	2018		2017		Increase (Decrease) Amount			Increase (Decrease) Percent		2019		2018		Increase (Decrease) Amount			Increase (Decrease) Percent
Total revenues	$	176,845	$	164,170	$	12,675		8	%	$	176,114	$	176,845	$	(731	)	—	%
Operating expenses:
Direct operating costs	134,922		126,160		8,762			7	%	133,525		134,922		(1,397		)	(1	)%
Salaries and benefits	14,417		12,595		1,822			14	%	14,753		14,417		336			2	%
Selling, general and administrative	8,733		8,960		(227		)	(3	)%	8,052		8,733		(681		)	(8	)%
Depreciation and amortization	1,878		2,533		(655		)	(26	)%	1,785		1,878		(93		)	(5	)%
Total operating expenses	159,950		150,248		9,702			6	%	158,115		159,950		(1,835		)	(1	)%
Operating income	$	16,895	$	13,922	$	2,973		21	%	$	17,999	$	16,895	$	1,104		7	%
Transactions processed (millions)	258		308		(50		)	(16	)%	338		258		80			31	%

Revenues

epay Segment total revenues for the three months ended March 31, ~~2018~~2019 were ~~$176.8~~$176.1 million, ~~an increase~~a decrease of ~~$12.7~~$0.7 million ~~or 8%~~ as compared to the same period in ~~2017. The increases in total revenues were primarily due to the impact of the U.S. dollar weakening against key foreign currencies.~~2018. Foreign currency exchange rate movements ~~increased~~decreased total revenues by approximately ~~$15.0~~$11.8 million for the three months ended March 31, 2018 compared to the same period in 2017. Revenues also increased due to an increase in gifts fulfilled by our cadooz subsidiary and an increase in the number of non-mobile transactions processed in Germany. The increase in total revenues was partially offset by a decrease in prepaid mobile transactions processed in the U.S., the U.K. and Australia due to competitive pressures on prepaid mobile carriers.

~~Revenues per transaction were $0.69~~ for the first quarter of ~~2018~~2019 as compared to ~~$0.53~~the same period in 2018.

Revenues per transaction were $0.52 for the first quarter compared to $0.69 for the same period in ~~2017~~2018. The ~~increase~~decrease in revenues per transaction was primarily ~~due to~~ the ~~net impact~~result of the U.S. dollar weakening against key foreign currencies and revenue growth from non-mobile transactions processed, for which we generally earn higher revenues per transaction than mobile transactions. The increase in ~~revenues per transaction was also favorably impacted by the loss of~~ a high-volume, low-margin ~~customer~~transactions processed in ~~the Middle East.~~India.

Direct operating costs

epay Segment direct operating costs were ~~$134.9~~$133.5 million for the three months ended March 31, ~~2018, an increase~~2019, a decrease of ~~$8.8~~$1.4 million as compared to the same period in ~~2017.~~2018. Direct operating costs in our epay Segment include the commissions we pay to retail merchants for the distribution and sale of prepaid mobile airtime and other prepaid products, expenses incurred to operate POS terminals and the cost of vouchers sold and physical gifts fulfilled. The ~~increase~~decrease in direct operating costs for the first quarter of 2019 was primarily due to the net impact of the U.S. dollar ~~weakening~~strengthening against key foreign ~~currencies. Direct operating costs also increased as a result of an~~currencies partially offset by the increase in ~~non-mobile transactions processed in Germany.~~the commission paid to wholesalers.

Gross profit

Gross profit was $42.6 million for the three months ended March 31, 2019, as compared to $41.9 million for the three months ended March 31, ~~2018, as compared to $38.0 million for the three months ended March 31, 2017.~~2018. The increase ~~in gross profit~~ was primarily due to the ~~net impact of the U.S. dollar weakening against key foreign currencies,~~ growth in ~~non-mobile~~digital media transactions processed, ~~in Germany and an increase in vouchers distributed by our cadooz subsidiary,~~ partly offset by a decrease in prepaid mobile transactions processed in certain ~~markets.~~markets and the net impact of the U.S. dollar strengthening against key foreign currencies.

During the three months ended March 31, ~~2018,~~2019, the gross margin was ~~23.7%~~24.2% for the three months ended March 31, 2019, as compared to ~~23.2%~~23.7% for the same period in ~~2017. The increase in gross margin for the first quarter was primarily~~2018 due to the increase in the percentage of ~~non-mobile~~digital media transactions onprocessed for which we earn a higher gross margin than mobile transactions.

Salaries and benefits

Salaries and benefits expense increased ~~$1.8~~$0.3 million or ~~14%~~2% for the three months ended March 31, ~~2018~~2019, compared to the same period in ~~2017.~~2018. The increase was mainly driven by ~~the impact of the U.S. dollar weakening against key foreign currencies and higher~~increased headcount ~~in an effort~~ to ~~grow~~support growth in the segment. As a percentage of revenues, salaries and benefits were ~~8.2%~~8.4% for the three months ended March 31, ~~2018, as compared to 7.7%~~2019 which was generally consistent with 8.2% for the same period in ~~2017.~~2018.

Selling, general and administrative

Selling, general and administrative expenses were ~~$8.7~~$8.1 million for the three months ended March 31, ~~2018,~~2019, a decrease of 3%8% as compared to the same period in ~~2017.~~2018. The decrease ~~in selling, general and administrative expenses~~for the first quarter of 2019 was mainly due to higher promotional cost ~~control efforts.~~for certain digital media products in 2018 which did not recur in the current period. As a percentage of revenues, selling, general and administrative expenses were ~~4.9%~~4.6% for the three months ended March 31, ~~2018~~2019 compared to ~~5.5%~~4.9% for the same period in ~~2017.~~2018.

Depreciation and amortization

Depreciation and amortization expense primarily represents depreciation of POS terminals we place in retail stores and the amortization of acquired intangible assets. Depreciation and amortization expense was ~~$1.9~~$1.8 million for the three months ended March 31, 2019, a decrease of ~~26%~~5% as compared to the same period in 2017. The decrease was largely due to certain intangible assets becoming fully amortized in the third quarter of 2017, partly offset by the impact of the U.S. dollar weakening against key foreign currencies.2018. As a percentage of revenues, depreciation and amortization expense was 1.0% for the three months ended March 31, 2019 as compared to 1.1% for the three months ended March 31, ~~2018, and 1.5% for the three months ended March 31, 2017.~~2018.

Operating income

epay Segment operating income for the three months ended March 31, ~~2018~~2019 was ~~$16.9~~$18.0 million, an increase of ~~$3.0~~$1.1 million as compared to the same period in ~~2017.~~2018. Operating income for the three months ended March 31, ~~2018~~2019 improved as a result of the ~~net impact of the U.S. dollar weakening against key foreign currencies and~~ increased gross profit from the distribution of more ~~non-mobile~~digital media products, ~~and vouchers in Germany,~~ along with operating cost controls.

Operating margin increased to ~~9.6%~~10.2% for the three months ended March 31, ~~2018,~~2019 from ~~8.5%~~9.6% for the same period in ~~2017.~~2018. The increase iswas mainly due to an increase in the percentage of ~~non-mobile~~revenues from digital media products which earn a higher margin than mobile transactions. Operating income per transaction ~~increased~~decreased to ~~$0.07~~$0.05 for the three months ended March 31, ~~2018~~2019 from ~~$0.05~~$0.07 for the same period in ~~2017.~~2018. The ~~increase is~~decrease was primarily due to the ~~net impact of the U.S. dollar weakening against key foreign currencies.~~increase in high volume, low margin transactions processed in India.

MONEY TRANSFER SEGMENT

The following table presents the results of operations for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 for the Money Transfer Segment:


	Three Months Ended March 31,				Year-over-Year Change				Three Months Ended March 31,				Year-over-Year Change
(dollar amounts in thousands)	2018		2017		Increase Amount		Increase Percent		2019		2018		Increase (Decrease) Amount			Increase (Decrease) Percent
Total revenues	$	238,836	$	203,973	$	34,863	17	%	$	256,581	$	238,836	$	17,745		7	%
Operating expenses:
Direct operating costs	127,431		108,885		18,546		17	%	137,404		127,431		9,973			8	%
Salaries and benefits	47,357		38,889		8,468		22	%	51,156		47,357		3,799			8	%
Selling, general and administrative	29,699		22,813		6,886		30	%	29,109		29,699		(590		)	(2	)%
Depreciation and amortization	7,895		7,291		604		8	%	8,138		7,895		243			3	%
Total operating expenses	212,382		177,878		34,504		19	%	225,807		212,382		13,425			6	%
Operating income	$	26,454	$	26,095	$	359	1	%	$	30,774	$	26,454	$	4,320		16	%
Transactions processed (millions)	24.3		20.7		3.6		17	%	26.6		24.3		2.3			9	%

Revenues

Money Transfer Segment total revenues for the three months ended March 31, ~~2018~~2019 were ~~$238.8~~$256.6 million, an increase of ~~$34.9~~$17.7 million or ~~17%~~7% as compared to the same period in ~~2017.~~2018. The increase in total revenues for the three months ended March 31, ~~2018~~2019 was primarily due to ~~increases~~an increase in the number of money transfers processed, driven by growth in the U.S. and foreign

agent and correspondent payout networks, and the net impact of the U.S. dollar weakening against key foreign currencies. The increase was partly offset by the reduced rates for our Walmart-2-Walmart product beginning in the second quarter of 2017.networks.

Revenues per transaction decreased to ~~$9.83~~$9.65 for the first quarter of ~~2018 compared to $9.85~~2019, from $9.83 for the same period in ~~2017.~~2018. The decrease was primarily due to the impact of the increase in volume from our Walmart money transfer product, which earns lower revenues per transaction than other money transfer services and reduced rates charged for the Walmart-2-Walmart product beginning in the second quarter of 2017, largely offset by the net impact of the U.S. dollar ~~weakening~~strengthening against key foreign currencies.

Direct operating costs

Money Transfer Segment direct operating costs were ~~$127.4~~$137.4 million for the three months ended March 31, ~~2018,~~2019, an increase of ~~$18.5~~$10.0 million or ~~17%~~8% as compared to the same period in ~~2017.~~2018. Direct operating costs in the Money Transfer Segment primarily consist of commissions paid to agents who originate money transfers on our behalf and correspondent agents who disburse funds to the customers’ destination beneficiaries, together with less significant costs, such as bank depository fees. The increase in direct operating costs for the three months of ~~2018~~2019 was primarily due to growth in the number of money transfer transactions processed in both the U.S. and foreign markets.

Gross profit

Gross profit was $119.2 million for the three months ended March 31, 2019, respectively, as compared to $111.4 million for the three months ended March 31, ~~2018, as compared to $95.1 million for the three months ended March 31, 2017.~~2018. The increase in gross profit was primarily due to growth in the number of money transfer transactions processed in both the U.S. and foreign ~~markets and the impact of the U.S. dollar weakening against key foreign currencies.~~markets.

During the three months ended March 31, ~~2018,~~2019, gross margin remained flat at ~~46.6%~~46.4%, as compared to 46.6% for the ~~same period in the prior year.~~three months ended March 31, 2018.

Salaries and benefits

Salaries and benefits ~~expenses~~expense increased ~~$8.5~~$3.8 million or ~~22%~~8% for the three months ended March 31, ~~2018,~~2019, as compared to the same period in ~~2017.~~2018. The increase in salaries and benefits was primarily due to the expansion of our operations in ~~foreign markets and the net impact of~~ the U.S. ~~dollar weakening against key~~and foreign ~~currencies.~~markets. As a percentage of revenues, salaries and benefits were ~~19.8%~~essentially flat at 19.9% for the three months ended March 31, ~~2018,~~2019, as compared to ~~19.1%~~19.8% for ~~the three months ended March 31,~~ ~~2017. The increase was primarily due to lower first quarter 2018 revenues compared to~~ the same period in ~~2017 as a result the reduced rates for our Walmart-2-Walmart product.~~2018.

Selling, general, and administrative

Selling, general and administrative expenses for the three months ended March 31, ~~2018~~2019 were ~~$29.7~~$29.1 million, ~~an increase~~a decrease of ~~$6.9~~$0.6 million or ~~30%~~2%, as compared to the same period in ~~2017.~~2018. The ~~increase~~decrease was primarily due to a decrease in the impact of the U.S. dollar strengthening against key foreign currencies partially offset by expenses incurred to support the growth of our money transfer services ~~and the expansion of new products~~ in both the U.S. and foreign ~~markets along with the net impact of the U.S. dollar weakening against key foreign currencies.~~markets.

As a percentage of revenues, selling, general and administrative expenses ~~increased to 12.4%~~were 11.3% for the three months ended March 31, ~~2018,~~2019, as compared to ~~11.2%~~12.4% for the same period in ~~2017. This increase~~2018. For the first quarter of 2019, the decrease was primarily due to the ~~growth rate of support costs exceeding~~increase in the ~~growth rate~~number of money ~~transfer revenues as we develop and promote expanded payout locations and new products.~~transfers processed, which did not require similar increases in support costs.

Depreciation and amortization

Depreciation and amortization primarily represents amortization of acquired intangible assets and depreciation of money transfer terminals, computers and software, leasehold improvements and office equipment. Depreciation and amortization expense increased ~~$0.6~~$0.2 million or ~~8%,~~3% for the three months ended March 31, ~~2018~~2019, as compared to the same period in ~~2017,~~2018, largely due to the ~~impact~~increased capital additions as a result of ~~the U.S. dollar weakening against key foreign currencies.~~business growth.

As a percentage of revenues, depreciation and amortization expense was ~~3.3%~~3.2% for the first quarter of ~~2018~~2019 as compared to ~~3.6%~~3.3% for the same period of ~~2017.~~2018. The decrease was primarily due to certain intangible assets becoming fully amortized.

Operating income

Money Transfer Segment operating income for the three months ended March 31, ~~2018~~2019 was ~~$26.5~~$30.8 million, an increase of ~~$0.4~~$4.3 million or 1%16% as compared to the same period of ~~2017.~~2018. Operating income for the three months ended March 31, ~~2018~~2019 increased primarily due to ~~the net impact of the U.S. dollar weakening against key foreign currencies. The increase was also affected by~~ the growth in the number of money transfers processed partly offset by the additional salaries and benefits ~~and other~~ costs ~~incurred and the reduced rates for Walmart-2-Walmart transfer services.~~

incurred.

As a percentage of revenues, operating margin was ~~11.1%~~12.0% for the three months ended March 31, ~~2018~~2019, as compared to ~~12.8%~~11.1% for the same period in ~~2017.~~2018. Operating income per transaction ~~decreased~~increased to ~~$1.09~~$1.16 for the ~~first quarter of 2018~~three months ended March 31, 2019, from ~~$1.26~~$1.09 for the same period in ~~2017. Operating~~2018. The increase in operating margin and operating income per transaction ~~decreased~~was primarily due to the ~~decrease in margin realized with the renewal of the Walmart-2-Walmart agreement and the additional salaries and benefits and other costs incurred to support the~~ growth in the ~~business. The decrease~~number of money transfers processed which did not require similar increases in ~~operating income per transaction was partly offset by the net impact of the U.S. dollar weakening against key foreign currencies.~~support costs.

CORPORATE SERVICES

The following table presents the operating expenses for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 for Corporate Services:


	Three Months Ended March 31,				Year-over-Year Change					Three Months Ended March 31,				Year-over-Year Change
(dollar amounts in thousands)	2018		2017		Increase (Decrease) Amount			Increase (Decrease) Percent		2019		2018		Increase (Decrease) Amount			Increase (Decrease) Percent
Salaries and benefits	$	6,927	$	6,633	$	294		4	%	$	7,455	$	6,927	$	528		8	%
Selling, general and administrative	2,468		3,032		(564		)	(19	)%	1,917		2,468		(551		)	(22	)%
Depreciation and amortization	29		28		1			4	%	75		29		46			159	%
Total operating expenses	$	9,424	$	9,693	$	(269	)	(3	)%	$	9,447	$	9,424	$	23		—	%

Corporate operating expenses

Overall, operating expenses for Corporate Services were $9.4 million for the three months ended March 31, ~~2018, a decrease of 3% as~~2019, which were consistent when compared to the same period in ~~2017.~~2018. The ~~increase in salaries and benefits~~operating expenses for the ~~first~~ three months ~~of 2018 was primarily due to~~ended March 31, 2019 included an increase in share-based ~~compensation. The decrease in selling, general and administrative expenses was primarily attributable to~~compensation, largely offset by a decrease in professional services ~~and other costs incurred in connection with the proposed acquisition of MoneyGram International, Inc. that occurred in the prior year but not in the current period.~~fees.

OTHER INCOME (EXPENSE), NET


	Three Months Ended March 31,						Year-over-Year Change					Three Months Ended March 31,						Year-over-Year Change
(dollar amounts in thousands)	2018			2017			Increase (Decrease) Amount			Increase (Decrease) Percent		2019			2018			Increase (Decrease) Amount			Increase (Decrease) Percent
Interest income	$	296		$	1,170		$	(874	)	(75	)%	$	343		$	296		$	47		16	%
Interest expense	(7,606		)	(7,148		)	(458		)	6	%	(8,199		)	(7,606		)	(593		)	8	%
Loss from unconsolidated affiliates	(117		)	—			(117		)	n/m		—			(117		)	117			n/m
Foreign currency exchange gain, net	1,935			1,715			220			13	%
Other gains	31			17			14			82	%
Foreign currency exchange (loss) gain, net												3,208			1,935			1,273			n/m
Loss on early extinguishment of debt												(928		)	—			(928		)	n/m
Other (loss) gains												25			31			(6		)	n/m
Other expense, net	$	(5,461	)	$	(4,246	)	$	(1,215	)	29	%	$	(5,551	)	$	(5,461	)	$	(90	)	n/m

________________

n/m — Not meaningful

Interest income

The ~~decrease~~increase in interest income for the ~~three months ended~~first quarter of March 31, ~~2018~~2019 was consistent compared to the same period in ~~2017 was primarily due to the interest earned on a tax refund received in India in the first quarter of 2017 which did not occur in the current period.~~2018.

Interest expense

The increase in interest expense for the three months ended March 31, ~~2018~~2019 compared to the same period in ~~2017~~2018 was primarily related to ~~higher interest rates and additional borrowings~~the issuance of the Convertible Notes partially offset by a decrease in the Credit Facility as the Company used the proceeds from the Convertible Notes to repay revolving credit loans under the Credit ~~Facility throughout the quarter to fund the operating cash for our Independent ATM Deployed (“IAD”) networks.~~

Facility.

Foreign currency exchange gain, net

Foreign currency exchange activity includes gains and losses on certain foreign currency exchange derivative contracts and the impact of remeasurement of assets and liabilities denominated in foreign currencies. Assets and liabilities denominated in currencies other than the local currency of each of our subsidiaries give rise to foreign currency exchange gains and losses. Foreign currency exchange gains and losses that result from remeasurement of these assets and liabilities are recorded in net income. The majority of our foreign currency exchange gains or losses are due to the remeasurement of intercompany loans which are not considered a long-term investment in nature and are in a currency other than the functional currency of one of the parties to the loan. For example, we make intercompany loans based in euros from our corporate division, which is composed of U.S. dollar functional currency entities, to certain European entities that use the euro as the functional currency. As the U.S. dollar strengthens against the euro, foreign currency exchange losses are recognized by our corporate entities because the number of euros to be received in settlement of the loans decreases in U.S. dollar terms. Conversely, in this example, in periods where the U.S. dollar weakens, our corporate entities will record foreign currency exchange gains.

We recorded net foreign currency exchange gains of $~~1.9~~3.2 million ~~and $1.7 million~~ for the three months ended March 31, ~~2018 and 2017, respectively.~~2019, as compared to net foreign currency exchange gains of $1.9 million for the same period in 2018. These realized and unrealized foreign currency exchange losses and gains reflect the fluctuation in the value of the U.S. dollar against the currencies of the countries in which we operated during the respective periods.

INCOME TAX EXPENSE

The Company's effective income tax rate was 31.6% and 34.2% for the three months ended March 31, ~~2018~~2019~~, as compared to 24.2% for the same period in 2017.~~ and 2018, respectively. The Company's effective income tax rate for the three months ended March 31, 2017 was less than the applicable statutory income tax rate of 35% primarily as a result of the Company's U.S. income tax position. The Company had significant U.S. federal tax net operating loss carryforwards with no recent history of significant U.S. taxable income; therefore, the Company had recorded a valuation allowance against its net U.S. deferred tax assets. Accordingly, in instances when the Company generated pre-tax U.S. GAAP income, no income tax expense was recognized to the extent there2019 and 2018 were ~~net operating loss carryforwards to offset the income. The Company's effective income tax rate for the three months ended March 31, 2018 was~~ higher than the applicable statutory income tax rate of 21% as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (the "Act") and its impact on the Company's U.S. income tax positions at the end of 2017. The most significant provisions of the Act are the transition tax on previously undistributedcertain foreign earnings of ~~foreign subsidiaries,~~ the ~~reduction in the U.S. corporate~~Company being subject to higher local statutory income tax ~~rate from 35%~~rates and the application to ~~21% beginning on January 1, 2018, and new taxes on certain foreign sourced earnings. As stated above,~~ the Company ~~had recorded a valuation allowance against its net U.S. deferred tax assets. After enactment~~ of the ~~Act,~~U.S. global intangible low-taxed income ("GILTI") tax provision. The GILTI provision subjects the ~~Company expected~~Company's current foreign earnings to ~~utilize its~~ U.S. ~~federal net operating losses to partially offset the transition tax and released the associated valuation allowance in the prior year. This change has created~~taxation creating additional U.S. tax ~~expense as the Company will now recognize income tax expense on its pre-tax U.S. GAAP income. In addition, the Act's GILTI provision has created additional U.S. tax expense on foreign earnings.~~expense. The ~~increase~~decrease in the effective tax rate for the first quarter of ~~2018~~2019 compared to the same period in ~~2017~~2018 is largely due to the ~~Act's impact on the Company's U.S. income~~ tax ~~positions. See Note 10 to the financial statements included~~effects of stock based compensation activity in ~~Part I, Item 1 of this report for additional information related to income taxes.~~2019.

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

Noncontrolling interests represents the elimination of net income or loss attributable to the minority shareholders’ portion of the following consolidated subsidiaries that are not wholly owned:



Subsidiary	Percent Owned	Segment - Country
Movilcarga	95%	epay - Spain
Euronet China	85%	EFT - China
Euronet Pakistan	70%	EFT - Pakistan
~~Universal Solution Providers (1)~~Euronet Infinitium Solutions	~~100%~~65%	EFT - ~~UAE~~India

~~______________~~

~~(1) The Company purchased the 49% noncontrolling interest during the three months ended September 30, 2017.~~

NET INCOME ATTRIBUTABLE TO EURONET

Net income attributable to Euronet was $~~26.4~~34.5 million for the three months ended March 31, ~~2018, a decrease~~2019, an increase of ~~$1.7~~$8.1 million as compared to the same period in ~~2017.~~2018. The ~~decrease~~increase in net income for the first quarter of 2019 was primarily due to an increase in operating income of $10.6 million and a ~~$4.7~~$1.3 million increase in net foreign currency exchange gain, partly offset by a $2.3 million increase in income tax expense, ~~a decrease~~an increase in ~~interest income~~loss on early extinguishment on debt of $0.9 million, and an increase in interest expense of ~~$0.5 million, partly offset by an increase in operating income of $4.2 million and a $0.2 million increase in net foreign currency exchange gains.~~$0.6 million.

LIQUIDITY AND CAPITAL RESOURCES

Working capital

As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we had working capital, which is calculated as the difference between total current assets and total current liabilities, of ~~$551.6~~$491.1 million and ~~$482.5~~$709.2 million, respectively. Our ratio of current assets to current liabilities at March 31, ~~2018~~2019 and December 31, ~~2017~~2018 was ~~1.42~~1.28 and ~~1.34,~~1.51, respectively. The decrease in the ratio was primarily driven by the Existing Convertible Notes and the current portion of operating lease liabilities being classified as current liabilities as of March 31, 2019.

We require substantial working capital to finance operations. In the Money Transfer Segment, we fund the payout of the majority of our consumer-to-consumer money transfer services before receiving the benefit of amounts collected from customers by agents. Working capital needs increase due to weekends, domestic and international banking holidays. As a result, we may report more or less working capital for the Money Transfer Segment based solely upon the day on which the reporting period ends. The epay Segment produces positive working capital, but much of it is restricted in connection with the administration of its customer collection and vendor remittance activities. In our EFT Processing Segment, we obtain a significant portion of the cash required to operate our ATMs through various cash supply arrangements, the amount of which is not recorded on Euronet's Consolidated Balance Sheets. However, in certain countries, we fund the cash required to operate our ATM network from borrowings under our revolving credit facilities and cash flows from operations. As of March 31, ~~2018,~~2019, we had approximately ~~$485~~$526 million of our own cash in use or designated for use in our ATM network, which is recorded in cash and cash equivalents and trade accounts receivable, for ATM withdrawals pending settlement, on the Consolidated Balance Sheet.

We had cash and cash equivalents of ~~$885.6~~$1,216 million at March 31, ~~2018,~~2019, of which ~~$708.9~~$882 million was held outside of the United States and is expected to be indefinitely reinvested for continued use in foreign operations. Repatriation of these assets to the U.S. could have negative tax consequences.

The following table identifies cash and cash equivalents provided by/(used in) our operating, investing and financing activities for the three month periods ended March 31, ~~2018~~2019 and ~~2017~~2018 (in thousands):


	Three Months Ended March 31,						Three Months Ended March 31,
Liquidity	2018			2017			2019			2018
Cash and cash equivalents and restricted cash provided by (used in):
Operating activities	$	27,828		$	70,803		$	12,961		$	27,828
Investing activities	(33,279		)	(23,913		)	(32,986		)	(33,279		)
Financing activities	41,896			(6,361		)	192,702			41,896
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash	12,525			10,962			(12,387		)	12,525
Increase in cash and cash equivalents and restricted cash	$	48,970		$	51,491		$	160,290		$	48,970

Operating activity cash flow

Cash flows provided by operating activities were ~~$27.8~~$13.0 million for the first quarter of ~~2018~~2019 compared to ~~$70.8~~$27.8 million for the first quarter of ~~2017.~~2018. The decrease is primarily due to fluctuations in working capital mainly associated with the timing of the settlement processes with content providers in the epay Segment and with correspondents in the Money Transfer Segment, partly offset by improved operating results.

Investing activity cash flow

Cash flows used in investing activities were ~~$33.3~~$33.0 million for the first quarter of ~~2018~~2019 compared to ~~$23.9~~$33.3 million for the first quarter of ~~2017. The increase is primarily due to an acquisition and increased capital expenditures mainly related to our ATM network expansion.~~2018. During the first quarter of 2018, we used $7.3 million for a business acquisition. ~~During~~There was no material acquisition in the first quarter of ~~2018, we~~2019. We used ~~$24.4~~$31.4 million for purchases of property and equipment ~~compared to $22.7 million during~~for the first quarter of ~~2017.~~2019 compared to $24.4 million for the first quarter of 2018. Cash used for software development and other investing activities totaled $1.6 million ~~and $1.3 million~~ for both the first quarter of ~~2018~~2019 and ~~2017, respectively.~~

2018.

Financing activity cash flow

Cash flows provided by financing activities were ~~$41.9~~$192.7 million for the first quarter of ~~2018~~2019 compared to ~~cash used of~~ ~~$6.4~~$41.9 million for the first quarter of ~~2017.~~2018. Our financing activities for the first quarter of ~~2018~~2019 consisted of net borrowings of ~~$168.0~~$203.1 million compared to net ~~debt repayments~~borrowings of ~~$5.4~~$168.0 million for the first quarter of ~~2017.~~2018. The increase in net borrowings for the first ~~three months~~quarter of ~~2018~~2019 compared to the same period of ~~2017~~2018 was the result of ~~additional borrowings under~~ the ~~credit facilities~~issuance of $525.0 million of new convertible notes to fund the operating cash of our IAD ~~networks. Additionally, we used $1.8~~networks, repay revolving credit facility borrowings and repurchase a portion of existing convertible notes. We repurchased $2.3 million and ~~$1.2 million during the first quarter of 2018 and 2017, respectively, for capital lease repayments. We repurchased~~ $126.6 ~~million and $2.2~~ million of our stock during the first quarter of ~~2018~~2019 and ~~2017,~~2018, respectively. During the first quarter of 2018, we repurchased ~~$125.0~~$126.6 million of our shares and paid $1.6 million for the amount of payroll taxes represented by the common stock withheld on restricted stock vestings and stock option exercises compared to ~~$2.2~~$2.3 million for the same period of ~~2017.~~2019. We received proceeds from stock option exercises of ~~$2.3~~$5.2 million and ~~$2.1~~$2.3 million for the first quarter of 2019 and 2018, ~~and 2017,~~ respectively.

Other sources of capital

Credit Facility - ~~As of March 31,~~On October 17, 2018, ~~we had~~the Company entered into a ~~$675 million senior secured~~$1.0 billion unsecured credit ~~facility that matures on April 9, 2019~~agreement (the "Credit Facility") consisting of a $590 million revolving credit facility, a $10 million India revolving credit facility and a $75 million term loan ("Term Loan A"), which has been reduced to $48.8 million through principal amortization payments.that expires on October 17, 2023. The ~~revolving credit facility~~Credit Facility allows for borrowings in ~~U.S. dollars, euros,~~Australian Dollars, British ~~pounds, Australian dollars and/or Indian rupees~~Pounds Sterling, Canadian Dollars, Czech Koruna, Danish Krone, Euros, Hungarian Forints, Japanese Yen, New Zealand Dollars, Norwegian Krone, Polish Zlotys, Swedish Krona, Swiss Francs, and contains a $200 million sublimit for the issuance of letters of credit and a $25 million sublimit for swingline loans. We use the revolving credit facility primarily to fund working capital requirements which are expected to increase as we expand the Money Transfer business and our independent ATM network. Based on our current projected working capital requirements, we anticipate that our revolving credit facility will be sufficient to fund our working capital needs.US Dollars.

As of March 31, ~~2018,~~2019, fees and interest on borrowings ~~varied~~are based upon the Company's ~~consolidated total leverage ratio~~corporate credit rating (as defined in the Credit Facility) and are based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over ~~LIBOR~~the London InterBank Offered Rate ("LIBOR") or a margin over the base rate, as selected by us, with the applicable margin ranging from ~~1.375%~~1.125% to ~~2.375% for LIBOR loans and 0.375%~~2.0% (or 0.175% to ~~1.375%~~1.0% for base rate ~~loans.~~loans).

As of March 31, ~~2018, we had~~2019, there were no borrowings ~~of $48.8 million~~ outstanding under the ~~term loan. We had $171.8 million of borrowings~~Credit Facility and ~~$56.8~~$46.2 million of stand-by letters of credit outstanding under the ~~revolving credit facility as of March 31, 2018.~~Credit Facility. The remaining ~~$371.4~~$953.8 million under the ~~revolving credit facility~~Credit Facility was available for ~~borrowing. As of March 31, 2018,~~borrowing based upon the ~~weighted average interest rates under the revolving credit facility~~borrowing base and ~~Term Loan A were 3.14% and 3.25%, respectively, excluding amortization of deferred financing costs.~~

~~The Credit Facility expires~~financial covenants in April 2019 and we are in the process of evaluating replacement arrangements. While we cannot provide assurances that we will be able to obtain a favorable replacement for the Credit Facility, based on consultations to date, we believe that we will be able to obtain a replacement arrangement on terms similar to the currentour Credit Facility.

Convertible debt - ~~We have $402.5~~On March 18, 2019, we completed the sale of $525.0 million in principal amount of Convertible Senior Notes due ~~2044~~2049 (“Convertible Notes”). The Convertible Notes were issued pursuant to an indenture, dated as of March 18, 2019 (the "Indenture"), by and between the Company and U.S. Bank National Association , as trustee. The Convertible Notes have an interest rate of ~~1.5%~~0.75% per annum payable semi-annually in ~~April~~March and ~~October,~~September, and are convertible into shares of Euronet Common Stock at a conversion price of approximately ~~$72.18~~$188.73 per share if certain conditions are met (relating to the closing prices of Euronet Common Stock exceeding certain thresholds for specified periods). ~~No conversion conditions are currently~~The Company used $94.2 million of the new debt to repurchase $49.0 million aggregate principal amount of the Company's outstanding 1.5% Convertible Senior Notes due 2044 (the "Existing Convertible Notes") from a limited number of holders in ~~effect.~~privately negotiated transactions. Additionally, some of the proceeds were used to payoff the revolving credit facility borrowings. The Company expects to use the remainder of the net proceeds for general corporate purposes, which may include redeeming the remaining Existing Convertible Notes, share repurchases or acquisitions.

The ~~Convertible~~Company may not redeem the Notes ~~were convertible during the fourth quarter of 2017, but no holders exercised their conversion rights. We believe this was primarily due~~prior to ~~the fair value~~September 20, 2022. The Company may redeem for cash all or any portion of the Convertible Notes, ~~exceeding their~~at its option, (i) on or after September 20, 2022 if the closing sale price of the Company's Common Stock has been at least 130% of the conversion ~~value. Should~~price then in effect for at least 20 trading days (whether or not consecutive) during any ~~conversion~~30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption and (ii) on or after March 20, 2025 and prior to the maturity date, regardless of the foregoing sale price condition, ~~become effective and should any holders exercise their conversion rights, we believe our capital resources are sufficient~~in each case at a redemption price equal to ~~satisfy any conversion.~~

~~Additionally, holders~~100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes.

Additionally, holders have the ~~option~~right to require usthe Company to ~~purchase~~repurchase for cash all or part of their ~~notes~~Convertible Notes on each of March 15, 2025, March 15, 2029, March 15, 2034, March 15, 2039 and March 15, 2044 at ~~par on October 1, 2020, and have additional options~~a repurchase price equal to ~~require us to purchase their notes at par on October 1, 2024, 2029, 2034, and 2039, or upon a change in control~~100% of the ~~Company. In connection with the issuance~~principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the relevant repurchase date. In addition, if a fundamental change, as defined in the Indenture, occurs prior to the maturity date, holders may require the Company to repurchase for cash all or part of their Convertible Notes ~~we recorded $10.7 million in debt issuance costs, which are being amortized through October 1, 2020.~~at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Other debt obligations - Certain of our subsidiaries also have available credit lines and overdraft facilities to generally supplement short-term working capital requirements. As of March 31, ~~2018,~~2019, there was ~~$33.1~~$26.8 million outstanding under these other obligation arrangements. Short-term debt obligations, ~~excluding the ATM facility,~~ as of March 31, ~~2018~~2019 were primarily comprised of ~~$32.0 million due in the next twelve months under these other obligation arrangements and $15.0~~$333.9 million of ~~payments due~~Existing Convertible Notes which we announced on March 18, 2019 that we would fully redeem on May 28, 2019. Holders of the Existing Convertible Notes may surrender their notes for conversion into shares of the Company's common stock at any time prior to the close of business on the business day immediately preceding the Redemption Date. In accordance with the Existing Indenture, the Company has the right to settle the redemption in cash and shares or all shares. The Company intends to meet its redemption obligation on May 28, 2019 through the ~~next twelve months~~use of available cash and/or available borrowing capacity under its Credit Facility for the ~~Term Loan A.~~remaining $352.5 million principal amount of the Existing Convertible Notes together with the issuance of approximately 2.4 million shares of its Common Stock, subject to changes and its volume weighted average common stock trading price through May 22, 2019.

Other uses of capital

Capital expenditures and needs - Total capital expenditures, including capital lease expenditures, for the first quarter of ~~2018~~2019 were ~~$26.7~~$35 million. These capital expenditures were made primarily for the purchase of ATMs to expand our independent ATM network in Europe, the purchase and installation of ATMs in key under-penetrated markets, the purchase of POS terminals for the epay and Money Transfer Segments, and office, data center and company store computer equipment and software. Total capital expenditures for ~~2018~~2019 are currently estimated to range from approximately ~~$95~~$130 million to ~~$115~~$140 million.

At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts available under our ~~revolving credit facility~~Credit Facility and other existing and potential future financing sources, will be sufficient to meet our debt, leasing and capital expenditure obligations. If our capital resources are not sufficient to meet these obligations, we will seek to refinance our debt and/or issue additional equity under terms acceptable to us. However, we can offer no assurances that we will be able to obtain favorable terms for the refinancing of any of our debt or other obligations or for the issuance of additional equity.

Inflation and functional currencies

Generally, the countries in which we operate have experienced low and stable inflation in recent years. Therefore, the local currency in each of these markets is the functional currency. Currently, we do not believe that inflation will have a significant effect on our results of operations or financial position. We continually review inflation and the functional currency in each of the countries where we operate.

OFF BALANCE SHEET ARRANGEMENTS

On occasion, we grant guarantees of the obligations of our subsidiaries and we sometimes enter into agreements with unaffiliated third parties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. Our liability under such indemnification provisions may be subject to time and materiality limitations, monetary caps and other conditions and defenses. As of March 31, ~~2018~~2019, there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018. To date, we are not aware of any significant claims made by the indemnified parties or parties to whom we have provided guarantees on behalf of our subsidiaries and, accordingly, no liabilities have been recorded as of March 31, ~~2018~~2019. See also Note ~~11,~~12, Commitments, to the unaudited consolidated financial statements included elsewhere in this report.

CONTRACTUAL OBLIGATIONS

As of March 31, ~~2018,~~2019, there have been no material changes outside the ordinary course of business in our future contractual obligations ~~have not changed significantly~~ from the amounts reported within our ~~2017~~Annual Report on Form 10-K for the year ended December 31, 2018, other than those resulting from changes in the amount of debt outstanding ~~debt~~ discussed in the Liquidity and Capital Resources section.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

As of March 31, ~~2018~~2019, our total debt outstanding was ~~$625.7~~$786.7 million. Of this amount, ~~$372.1~~$759.8 million, net of debt discounts, or ~~59%~~97% of our total debt obligations, relates to our Convertible Notes and Existing Convertible Notes that have a fixed coupon rate. ~~Our $402.5 million~~The $352.5 aggregate principal amount of the Existing Convertible Notes, ~~issued in October 2014,~~ accrue cash interest at a rate of 1.5% of the principal amount per annum. Based on quoted market prices, as of March 31, ~~2018~~2019, the fair value of our fixed rate Existing Convertible Notes was ~~$495.1~~$660.8 million, compared to a carrying value of ~~$372.1~~$333.9 million. Interest expense for these notes, including accretion and amortization of deferred debt issuance costs, has a weighted average interest rate of 4.7% annually. ~~Additionally, $220.6~~The $525 million ~~or 35%~~aggregate principal amount of ~~our total debt obligations, relates~~the Convertible Notes issued on March 18, 2019, accrue cash interest at a rate of 0.75% of the principal amount per annum. The fair value of the fixed rate Convertible Notes was $581.0 million as of March 31, 2019 based on quoted market prices, compared to ~~debt borrowings under our Credit Facility.~~a carrying value of $425.9 million. If we were to maximize the potential borrowings available under the ~~revolving credit facility~~Credit Facility and maintain these borrowings for one year, a 1% (100 basis points) increase in the applicable interest rate would result in additional annual interest expense to the Company of approximately ~~$5.9~~$9.5 million.

The remaining ~~$33.1~~$26.8 million, or 5%3%, of our total debt obligations as of March 31, 2019, is related to borrowings by certain subsidiaries to fund, from time to time, working capital requirements. These arrangements generally are due within one year and accrue interest at variable rates.

~~Additionally, as of March 31, 2018, we had approximately $14.9 million of capitalized leases with fixed payment and interest terms that expire between 2018 and 2022.~~

Our excess cash is invested in instruments with original maturities of three months or less or in certificates of deposit that may be withdrawn at any time without penalty; therefore, as investments mature and are reinvested, the amount we earn will increase or decrease with changes in the underlying short-term interest rates.

Foreign currency exchange rate risk

For the first quarter of ~~2018,~~2019, approximately ~~69%~~70% of our revenues were generated in non-U.S. dollar countries and we expect to continue generating a significant portion of our revenues in countries with currencies other than the U.S. dollar.

We are particularly vulnerable to fluctuations in exchange rates of the U.S. dollar to the currencies of countries in which we have significant operations, primarily the euro, British pound, Australian dollar, Polish zloty, Indian rupee, New Zealand dollar, Malaysian ringgit and Hungarian forint. As of March 31, ~~2018~~2019, we estimate that a 10% fluctuation in these foreign currency exchange rates would have the combined annualized effect on reported net income and working capital of approximately ~~$100~~$120 million to ~~$110~~$125 million. This effect is estimated by applying a 10% adjustment factor to our non-U.S. dollar results from operations, intercompany loans that generate foreign currency exchange gains or losses and working capital balances that require translation from the respective functional currency to the U.S. dollar reporting currency.

Additionally, we have other non-current, non-U.S. dollar assets and liabilities on our balance sheet that are translated to the U.S. dollar during consolidation. These items primarily represent goodwill and intangible assets recorded in connection with acquisitions in countries other than the U.S. We estimate that a 10% fluctuation in foreign currency exchange rates would have a non-cash impact on total comprehensive income of approximately ~~$105~~$132 million to ~~$110~~$137 million as a result of the change in value of these items during translation to the U.S. dollar. For the fluctuations described above, a strengthening U.S. dollar produces a financial loss, while a weakening U.S. dollar produces a financial gain.

We believe this quantitative measure has inherent limitations and does not take into account any governmental actions or changes in either customer purchasing patterns or our financing or operating strategies. Because a majority of our revenues and expenses is incurred in the functional currencies of our international operating entities, the profits we earn in foreign currencies are positively impacted by a weakening of the U.S. dollar and negatively impacted by a strengthening of the U.S. dollar. Additionally, our debt obligations are primarily in U.S. dollars; therefore, as foreign currency exchange rates fluctuate, the amount available for repayment of debt will also increase or decrease.

We use derivatives to minimize our exposures related to changes in foreign currency exchange rates and to facilitate foreign currency risk management services by writing derivatives to customers. Derivatives are used to manage the overall market risk associated with foreign currency exchange rates; however, we do not perform the extensive record-keeping required to account for the derivative transactions as hedges. Due to the relatively short duration of the derivative contracts, we use the derivatives primarily as economic hedges. Since we do not designate foreign currency derivatives as hedging instruments pursuant to the accounting standards, we record gains and losses on foreign exchange derivatives in earnings in the period of change.

A majority of our consumer-to-consumer money transfer operations involves receiving and disbursing different currencies, in which we earn a foreign currency spread based on the difference between buying currency at wholesale exchange rates and selling the currency to consumers at retail exchange rates. We enter into foreign currency forward and cross-currency swap contracts to minimize exposure related to fluctuations in foreign currency exchange rates. The changes in fair value related to these contracts are recorded in ~~foreign~~Foreign currency exchange (loss) gain, net on the Consolidated Statements of Income. As of March 31, ~~2018,~~2019, we had foreign currency derivative contracts outstanding with a notional value of ~~$301~~$338 million, primarily in Australian dollars, British pounds, Canadian dollars, euros and Mexican pesos, that were not designated as hedges and mature within a few days.

For derivative instruments our HiFX operations write for customers, we aggregate the foreign currency exposure arising from customer contracts, and hedge the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties as part of a broader foreign currency portfolio. The changes in fair value related to the total portfolio of positions are recorded in Revenues on the Consolidated Statements of Income. As of March 31, ~~2018,~~2019, we held foreign currency derivative contracts outstanding with a notional value of $1.3 billion, primarily in U.S. dollars, euros, British pounds, Australian dollars and New Zealand dollars, that were not designated as hedges and for which the majority mature within the next twelve months.

We use longer-term foreign currency forward contracts to mitigate risks associated with changes in foreign currency exchange rates on certain foreign currency denominated other asset and liability positions. As of March 31, ~~2018,~~2019, the Company had foreign currency forward contracts outstanding with a notional value of ~~$132~~$166 million, primarily in ~~British pounds,~~ euros and Polish zloty.

See Note 7,8, Derivative Instruments and Hedging Activities, to our Consolidated Financial Statements for additional information.

ITEM 4. CONTROLS AND PROCEDURES

Our executive management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of March 31, ~~2018~~2019. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of these disclosure controls and procedures were effective as of such date to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Change in Internal Controls

There have not been any changes in internal control over financial reporting during the three months ended March 31, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Effective January 1, 2019, the Company implemented certain new internal controls related to the required adoption of the new lease accounting standard Topic 842.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is, from time to time, a party to legal or regulatory proceedings arising in the ordinary course of its business.

The discussion regarding contingencies in Part I, Item 1 — Financial Statements (unaudited), Note ~~12,~~13, Litigation and Contingencies, to the unaudited consolidated financial statements in this report is incorporated herein by reference.

Currently, there are no legal or regulatory proceedings that management believes, either individually or in the aggregate, would have a material adverse effect on the Company's consolidated financial condition or results of operations. In accordance with U.S. GAAP, we record a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These liabilities are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case or proceeding.

ITEM 1A. RISK FACTORS

Except as otherwise described herein, there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, as filed with the SEC.

~~Tightening of regulations may adversely affect our results.~~

~~The evolving regulatory environment may change the competitive landscape across various jurisdictions~~In accepting Visa and ~~adversely affect our financial results. If governments implement new laws or regulations, or organizations such as~~Mastercard logo’d cards, we are required to comply with rules issued by Visa and MasterCard ~~issue new~~that may be interpreted and applied in ways that are unfavorable to us.

Visa and Mastercard have each established rules for the acceptance of cards bearing their logos on ATM networks. Among other things, those rules set the fees paid by card issuers for ATM transactions on their cards (referred to as “interchange fees”) and determine whether and where we can charge cardholders direct access fees (sometimes referred to as a “surcharge”) or offer DCC transactions for cash withdrawals. Visa and Mastercard have a stated interest in reducing the amount of cash in circulation in order to promote card transactions and we believe they promote the interests of card issuers over acquirers of transactions such as ATM networks. Visa's and Mastercard’s rules are sometimes unclear, vary from country to country and are frequently modified, including in ways that ~~effectively limit~~are unfavorable to ATM networks such as ours. These rules negatively impact our business; for example, by limiting the levels of interchange fees we receive, prohibiting direct access fees in many markets and limiting our ability to ~~provide~~offer DCC ~~or set~~transactions. Visa has recently adopted a rule, applicable in July 2019, that would prohibit direct access fees on euro denominated cards in the eurozone. If Visa and/or ~~foreign currency exchange spreads, then~~Mastercard were to adopt more unfavorable rules or interpretations of rules that are harmful to our business, financial condition and results of operations could be materially and adversely affected. In addition, changes in regulatory interpretations or practices could increase the risk of regulatory enforcement actions, fines and penalties and such changes may be replicated across multiple jurisdictions.

In October, 2017, the E.U. conducted a consultation on various cross-border payment practices, including DCC. Following that that consultation, in March 2018, the E.U. Commission issued proposed regulations that are the beginning of a legislative process to regulate DCC. The proposed regulations themselves do not include any specific DCC regulation but they would authorize the European Banking Authority ("EBA") to formulate regulations that would include reinforced consumer disclosure (“transparency”) guidelines for DCC and a cap on DCC margins during a transition period while those guidelines are implemented. The timeline for adoption of any final DCC regulation and the amount of any cap depend on the E.U. legislative process, which is uncertain, but it involves several successive steps. First, the regulations proposed in March 2018 must be adopted by the E.U. Parliament in the final form, which could happen late in 2018 or early 2019. That adoption would start the timeline on the EBA's consideration of the transparency guidelines and the cap. Under the proposed regulations, the EBA is being given six months to formulate its guidelines and those guidelines then need to be adopted through the E.U. legislative process. We believe this would result in the adoption of the guidelines and the cap sometime in mid-to-late 2019. Final implementation of the DCC regulations is targeted for 36 months after the adoption of the proposed regulations, which would be in 2022 at the earliest. As indicated above, the timeline described above is uncertain and could be affected at any time by developments in the E.U. Commission, the E.U. Council and the E.U. Parliament. Any regulation of DCC that may be adopted, including the margin cap and transparency regulations, could materially and adversely impact our financial results, by reducing the number of DCC transactions performed over our networks and the level of profit we generate from such transactions.

The E.U. has passed a new regulation called the GDPR that establishes stringent requirements for the collection and processing of personal information of individuals within the E.U. The GDPR establishes certain rights of individuals regarding personal information processed by companies as well as requirements for information security, and imposes significant fines that may be revenue-based for violation of its requirements. The GDPR will come into effect across the E.U. on May 25, 2018. The GDPR will apply to transfers of personal information from the E.U. to U.S.-based companies. Any failure on our part to meet the requirements of the GDPR could result in the imposition of fines and penalties that could materially and adversely affect our ~~financial results.~~business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to shares of the Company's Common Stock that were purchased by the Company during the three months ended March 31, ~~2018.~~2019.

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (in thousands) (1)
January 1 - January 31, 2018 714,732
$ 93.42
714,732
$ 183,228
February 1 - February 28, 2018 704,163
82.69
704,163
250,000
March 1 - March 31, 2018 —
—
—
250,000
Total 1,418,895
$ 88.10
1,418,895



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (in thousands) (1)
January 1 - January 31, 2019	—	$	—	—	$	200,000
February 1 - February 28, 2019	—	—		—	$	200,000
March 1 - March 31, 2019	—	—		—	$	320,000
Total	—	$	—	—

(1) ~~Amount remaining to be repurchased at the end of the period. In June 2016, the~~The Board of Directors has authorized a stock repurchase program ("Repurchase Program") allowing Euronet to repurchase up to $125 million in value or 3.0 million shares of its common stock through June 14, 2018. In December 2017, the Board of Directors amended the Repurchase Program, allowing Euronet to repurchase up to $250 million in value or 6.0 million shares of its common stock through December 31, 2019. On February 27, 2018, the Repurchase Program was further amended to increase the amount of common stock that may be purchase to an aggregate of $375 million in value or 10.0 million shares of stock ~~and extending the expiration date of the Repurchase Program to~~through March 31, 2020. ~~Repurchases~~Euronet has repurchased $175 million of stock under the Repurchase ~~Program~~Program. On March 11, 2019, in connection with the issuance of the 2049 Convertible Notes, the Board of Directors authorized an additional repurchase program of $120 million in value of Euronet’s common stock through March 11, 2021. Repurchases under either program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan.

ITEM 6. EXHIBITS



Exhibit		Description

12.1*4.1		~~Computation~~Indenture, dated March 18, 2019, between the Company and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on March 18, 2019 (File No. 001-31648) and incorporated herein by reference.
4.2		Form of ~~Ratio of Earnings~~0.75% Convertible Senior Note due 2049 (included as Exhibit A to ~~Fixed Charges~~Exhibit 4.1 above)
31.1*		Section 302 — Certification of Chief Executive Officer
31.2*		Section 302 — Certification of Chief Financial Officer
32.1**		Section 906 — Certification of Chief Executive Officer
32.2**		Section 906 — Certification of Chief Financial Officer
101*		The following materials from Euronet Worldwide, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2018,~~2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2018 (unaudited) and December 31, ~~2017,~~2018, (ii) Consolidated Statements of Income (unaudited) for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three ended March 31, 2019 and 2018, (iv) Consolidated Statements of Changes in Equity (unaudited) for the three months ended March 31, 2019 and 2018 ~~and 2017, (iv)~~(v) Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2019 and 2018, and ~~2017, and (v)~~(vi) Notes to the Unaudited Consolidated Financial Statements.

_________________________

* Filed herewith.

** Pursuant to Item 601(b)(32) of Regulation S-K, this Exhibit is furnished rather than filed with this Form 10-Q.

PLEASE NOTE: Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed or incorporated by reference the agreements referenced above as exhibits to this Quarterly Report on Form 10-Q. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in ~~confidential~~ disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

May ~~10, 2018~~7, 2019

Euronet Worldwide, Inc.



By:	/s/ MICHAEL J. BROWN
	Michael J. Brown
	Chief Executive Officer


By:	/s/ RICK L. WELLER
	Rick L. Weller
	Chief Financial Officer

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