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Euronet Posts Q3 Earnings Beat

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Euronet Worldwide Inc. (EEFT - Free Report) reported third-quarter operating net income of 51 cents per share, beating the Zacks Consensus Estimate of 48 cents by 6.3%. Results also surpassed the year-ago operating net income of 38 cents per share by 31.6%.

Net income of Euronet came in at $47.9 million or 92 cents per share, improving considerably from $14.6 million or 28 cents per share in the prior-year quarter.

The improvement came largely on the back of value-added products and balanced growth in both the U.S. and international markets through continuous network expansion.

Operational Update

Total revenues of Euronet in the reported quarter grossed $360.6 million, surpassing the Zacks Consensus Estimate of $353 million by 2.1%. An improvement of 14% year over year was driven by higher revenues across all the segments.

Total operating expenses of Euronet for the third quarter amounted to $305.3 million, increasing 4.5% year over year. The rise was primarily due to higher operating costs (up 11.7% year over year), salaries and benefits (up 16% year over year) and selling, general and administrative expenses (up 10.7% year over year).

Adjusted operating income for Euronet was $36 million, soaring 49% from $24.2 million in the prior-year period.

Total transactions for Euronet declined 1% year over year to $582 million in the reported quarter.

Segment Details

The EFT Processing Segment reported total revenues of $83.6 million, increasing 29% from the prior-year quarter. Adjusted operating income also surged 74% year over year.

The improved performance resulted from growth in sales of value-added products, improved performance from brown label ATMs in India and ATM network expansion.

Total transactions in the segment were $304 million, flat year over year. Higher contribution from the segment’s operations in Serbia, India, Greece, China, Pakistan, Romania and Poland were offset by termination of the previously announced contract with IDBI Bank in India.

The epay Segment reported total revenues of $182.6 million, increasing 6% from the prior-year quarter. Operating income amounted to $12.1 million in the third quarter, up 20% year over year.

The improvement was owing to higher non-mobile product sales, mainly in Germany, higher prepaid mobile sales in the U.S. and the acquisition of ezi-pay in New Zealand in Nov 2012. The upside was limited by soft performances in Middle-East and Australia and start-up expenses in Russia and Turkey. The segment’s operating income improvement also stemmed from gains from lower intangible amortization expenses.

Total transactions during the reported quarter declined 3% year over year to $269 million.

The Money Transfer Segment’s total revenues improved 19% year over year to $95.3 million in the quarter under review. Operating income surged 21% year over year to $7.5 million in the third quarter of 2013.

A surge in total transactions contributed to the expansion of revenue and operating income. Total transactions increased 11% over the year-ago quarter to 8.9 million. Growth in transactions came from consistent sales success and substantial network expansion.

The company’s Corporate and Other Segment reported total expenses of $8.9 million, increasing 34.8% from the prior-year quarter. The increase was primarily due to short- and long-term incentive compensation expenses.

Financial Position

Euronet’s strong cash balance is reflective of its cash and cash equivalents of $244.5 million as of Sep 30, 2013, which surged 27.5% year over year.

Total assets of Euronet as of Sep 30, 2013 were $1.51 billion, up 2.9% compared with $1.47 billion at the end of Sep 30, 2012.

Long-term debt obligation of Euronet amounted to $235.3 million at the end of the reported quarter, increasing from $78.6 million as of Sep 30, 2012. Shareholders equity totaled $613.5 million improving 7.9% from the period ended Sep 30, 2012.

Debt to capital ratio of Euronet as of Sep 30, 2013 was 28.7%, representing an improvement of 260 basis points over 31.3% reported at the end of the prior-year quarter.


Euronet currently expects fourth-quarter adjusted cash earnings of 57 cents per share with the assumption of constant foreign currency exchange rates.

Zacks Rank

Euronet presently carries a Zacks Rank #3 (Hold). Among others in the space, American Express Company (AXP - Free Report) , with a Zacks Rank #2 (Buy) reported its third quarter net earnings per share of $1.25, surpassing the Zacks Consensus Estimate by 2.4%. FleetCor Technologies Inc. (FLT - Free Report) and Portfolio Recovery Associates Inc. (PRAA - Free Report) , each with a Zacks Rank #2 are expected to report their results soon.

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