News

Euronet weathers India's ATM woes, keeps revenue growth going

April 27, 2017

IAD and electronic payments provider Euronet Worldwide Inc. reported first quarter 2017 financial results on Tuesday.

Despite a 17 percent decline in EFT revenues resulting largely from the cash shortage at ATMs in India following demonetization of 1,000 rupee and older 500 rupee notes, the company realized an 8 percent increase in revenues for the quarter, or in constant currency, an increase of 10 percent.

Euronet Chairman and CEO Michael J. Brown issued a statement on the company's Q1 returns:

I am pleased that we continued to deliver double-digit consolidated constant currency revenue growth in the first quarter. … ATM deployments continued at a nice pace, money transfers remain strong at double-digit growth rates and we continue to add more non-mobile content in e-pay. All-in-all, we're off to a great start for 2017 and well positioned to deliver another year of double-digit consolidated growth.

The company reported consolidated growth in the first quarter, compared with Q1 2016 as follows (percentages in parentheses are on a constant currency basis):

• revenues of $473.4 million, an 8 percent (10 percent) increase from $437.9 million;
• operating income of $41.3 million, a 1 percent decrease (essentially flat) from $41.9 million;
• adjusted operating income of $42.5 million, a 1 percent (3 percent) increase from $41.9 million;
• adjusted EBITDA of $67.8 million, a 4 percent (7 percent) increase from $64.9 million (7 percent increase on a constant currency basis);
• net income attributable to Euronet of $28.1 million or $0.51 diluted earnings per share, compared with net income of $29.1 million or $0.53 diluted earnings per share;
• adjusted earnings per share of $0.73, a 6 percent increase from $0.69;
• transaction volume of 865 million, a 13 percent increase from 765 million

Euronet reported earnings from its EFT segment as follows:

• revenues of $105.8 million, a 22 percent (24 percent) increase from $86.6 million;
• operating income of $11.0 million, a 17 percent (15 percent) decrease from $13.3 million;
• adjusted ebitda of $22.8 million, a 3 percent (5 percent) increase from $22.1 million;
• transaction volume of 537 million, a 27 percent increase from 424 million;
• 35,145 ATMs operated as of March 31, a 42 percent increase from 24,761 in 2016.

First quarter constant currency revenue and transaction growth came primarily from Europe, India and the acquisition of YourCash in October, the company said. In Q1, the EFT segment added 570 high-value ATMs, primarily in Europe and India and 250 low-margin ATMs in India, and reactivated 351 ATMs in Europe.

The decline in operating income resulted from cash demonetization constraints in the India network and higher Q1 operating costs on recently deployed ATMs.

The effect was more pronounced this year due to increased costs related to the success of deploying approximately 16 percent more high-value ATMs in 2016 compared to prior years.

The impact of these factors to Q1 operating income was approximately $4 million, without which, adjusted EBITDA would have grown in line with revenue growth.

For the first quarter, transaction growth outpaced changes in revenue and operating income as a result of a large number of low-value debit card transactions from low-margin processing agreements signed in India.

Q2 guidance

Euronet expects adjusted earnings per share for the second quarter 2017 of approximately $1.09, assuming that forex rates remain stable through the end of the quarter.