Greetings and welcome to the Euronet Worldwide First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. It's my pleasure to introduce your host Mr. Desmond Acosta, Deputy General Counsel for Euronet Worldwide. Mr. Acosta, you may begin.

Thank you. Good morning, and welcome everyone to Euronet's quarterly results conference call. We'll present our results for the first quarter 2020 on this call. We have Mike Brown our Chairman and CEO; Rick Weller our CFO; and Kevin Caponecchi, the CEO of our epay division on the call. Before we begin, I need to call your attention to the forward-looking statements disclaimer on page two of the PowerPoint presentation we'll be giving today. Statements made on this call that concern Euronet's or its management's intentions, expectations or predictions of future performance are forward-looking statements. Euronet's actual results may vary from those anticipated in such forward-looking statements as a result of a number of factors that are listed on page two of our presentation. Euronet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances. In addition, the PowerPoint presentation includes a reconciliation of the non-GAAP financial measures we'll be using during the call to their most comparable GAAP measures. Now, I'll turn the call over to our CEO, Mike Brown.

Thank you, Desmond, and thank you everyone for being with us today. We hope you and your loved ones are safe and well. I'll start my comments on slide number 5. Two months ago, Euronet was set to deliver another year of double-digit revenue and earnings growth, planning to add 4,500 ATMs to our fleet of 50,000, expand our digital presence in epay and Money Transfer, and grow our brick-and-mortar transfer business at two to three times the market rate. We were also receiving more inquiries regarding our advanced technology through our REN platform and were well-positioned to fulfill these initiatives with over $1 billion in cash and $950 million in available credit. Then, as you know, the world changed due to the COVID-19 pandemic. Borders closed, shelter-in-place orders were enacted, and many businesses closed, leading to a significant increase in unemployment worldwide. It felt like the world changed overnight. Many companies are just trying to survive, and a recent study highlighted that more than two-thirds of businesses have been negatively impacted, Euronet included. However, we consider ourselves fortunate to maintain a strong balance sheet with over $1 billion in cash and no significant debt obligations for the next five years. Essentially, we could sustain payroll for several years with the cash we currently have. Our financial stability allows us to concentrate on expanding our market share, product lines, geographical footprint, and technological advantages rather than just fighting for survival. Looking ahead, we're committed to making the most of this year while preparing for a post-COVID world where we'll be ready to seize opportunities. Reflecting on the future, as Jim Cramer stated on CNBC the other day, predicting earnings amidst COVID-19 is challenging, and it's remarkable anyone attempts to give forecasts. Following this line of thought, Rick and I will address three areas that we think investors want to understand most: First, how will we navigate this challenge? Second, when will it end? And third, what will our business look like when we return to normal, or perhaps a new normal? Let's start with how we're navigating this. A couple of months ago, our primary focus was on the health and safety of our nearly 8,000 employees. Due to our prior investments in our global network and effective cybersecurity and remote access measures, along with the tremendous contributions of our staff, we managed to transition almost all of our employees to remote work within a week without disrupting service for our customers. Remember, Euronet started as an international business, so conference calls, video calls, file sharing, and cloud computing were already part of our daily operations. We didn’t need to adopt new operational strategies. We also drew on our experiences from the 2008 financial crisis to use this time to strengthen our market position across all three segments. During the 2008 crisis, we focused on expanding our geographies, products, and distribution channels, introducing new products and solutions while continuing to invest in our technology. Notably, our market-leading EFTS ATM management software was developed during this period. We made strategic hires, bringing on 400 to 500 additional employees in 2008 and 2009 to seize market opportunities. Our strong balance sheet was recognized by rating agencies then, and they upgraded us accordingly. We emerged as a stronger, more diversified company with expanded market shares, and we plan to repeat much of that approach in this crisis. We are financially conservative, and our balance sheet is stronger now than it was back then, with over $1.2 billion in cash. We have achieved compounded earnings growth of more than 20% for six consecutive years and have further strengthened our treasury with low-cost, long-term fixed-rate debt with no maturities for five years. We are fortunate to be on track to overcome this challenge. As has been said, you create your own luck, and we will continue to do just that by maintaining a fiscally conservative approach. We have implemented a cost reduction plan aimed at saving $130 million in SG&A and third-party costs, with 80% already identified and executed. Importantly, these expense reductions do not compromise our future growth potential. For instance, we have expanded our ATM winterization program to encompass more than 8,500 ATMs, significantly reducing our operational expenses. It is unlikely that we will install the 4,500 ATMs we originally planned for 2020 due to government-mandated lockdowns in many countries, as new ATM installations are not considered essential services. However, as countries, states, and cities begin to reopen their economies, we will expedite our deployment plans. We are prepared because we have locations ready for new ATMs. Additionally, we intend to retain all of our employees. To date, we have not implemented any employee layoffs or salary reductions and have communicated our intention to avoid such measures, allowing our associates to focus on business growth while they work from home. We are keeping our teams actively engaged, introducing new products and solutions such as our REN and REV real-time payment product for central banks. We will continue to explore new markets and channels and diversify our offerings. For example, we acquired U.S.-based ATM outsourcing provider Dolphin to capture significant outsourcing opportunities in the U.S. Now, as for when this crisis will end, we are prepared. While we cannot say when it will end, we know it eventually will. Just three weeks ago, headlines were dominated by closures of cities, states, and countries; now, we are beginning to see encouraging signs from governments worldwide developing plans to reopen their economies. We are also hearing promising news about potential treatments and progress on vaccine development. Therefore, we believe the world will eventually return to some form of normal. What does that mean for our business? Let me pose some questions we considered. Will people stop taking vacations? Will immigration cease? Will people stop seeking entertainment? Will cash disappear? We assert that people will continue to vacation. According to a survey by the International Air Transport Association, once restrictions are lifted, more than 50% of respondents plan to travel soon after. Similarly, a New York Post survey indicated that nearly half of Americans plan to travel immediately after restrictions are lifted. We believe immigration will persist as well. People will continue to engage in entertainment and cash will continue to coexist with credit and digital payments for the foreseeable future. Therefore, this crisis will end, and we believe all three of our core businesses will still be in operation when it does. Within our business segments, we expect the epay segment will recover first as the content we offer is mainly for personal use. We have observed solid sales of this content during the pandemic and anticipate that demand for gaming products, software, and video streaming will continue post-pandemic. We see the money transfer recovery lagging somewhat due to global unemployment. The World Bank has predicted a 20% decline in money remittances in 2020, which raises questions about the impact on our business. While we may experience a delayed recovery until employment rebounds, we have consistently outpaced market growth, and we anticipate that trend will continue. As employment resumes, many individuals will prioritize family support, and many of our larger and smaller competitors are not as financially stable as we are. We believe many smaller competitors may struggle to survive, positioning us to capture their volume due to our successful geographical expansion, network growth, and strong relationships with retail agents, along with our enhanced digital offerings. We will be present for customers seeking to send money, whether through small retailers, large retailers, online, or ATMs. Lastly, we expect the EFT recovery will take the longest and is the hardest to forecast, mainly depending on the pace of travel recovery. We stand ready to maximize transaction volumes as they arise this year. However, we are operating under the assumption that travel and international tourism will not return to significant levels until 2021. Even then, some residual effects of the Coronavirus may be felt, likely keeping tourism levels below 2019's peak. The question remains whether they will reach 70%, 80%, or 90% of 2019 levels, or if pent-up demand will stimulate travel due to missed business trips and vacations. No one knows for certain, but we expect it to be around 80% to 85% of 2019 levels next year. We are not providing a forecast, but offering insight into possible scenarios, which brings us to our expectations for the business post-COVID. Like in 2008, we are preparing to emerge stronger and more competitive from these unprecedented times. We believe the overall market may temporarily shrink, but thanks to our financial strength, we will be able to capture a larger market share. In EFT, we are expanding our presence in both existing and new markets, identifying sites abandoned by competitors who may not survive this pandemic. In the coming months, we will have operations ready in five new markets for ATM installations to capitalize on travel and tourism when they resume. Additionally, we are diversifying our business. Over the past year, we have emphasized our outsourcing pipeline, which, as you may recall, constitutes 50% of our ATM base and is generally less reliant on traffic. In 2019, we added 3,600 outsourcing ATMs through organic expansion and acquiring Dolphin Debit. We've been receiving increased inquiries for these services as banks feel the pressure of the pandemic. The U.S. market has a mere 6% of bank and credit union-owned ATMs outsourced. The acquisition of Dolphin Debit strengthens Euronet’s market-leading technology and provides modern banking options to banks and credit unions without requiring their own investment. Finally, we continue to see nations investing in payment infrastructure to adapt to the evolving payments landscape. With our REN and REV technology, we are well-positioned to offer necessary solutions for payment modernization. We are experiencing increased interest in these offerings, and I am confident that we will find success even during this crisis. In epay, we have observed a surge in new users of gaming and streaming services, and we predict these users will maintain their content purchases post-pandemic. Sales of digital codes via digital channels have increased and we expect this trend to continue, along with a resumption of content and physical retail sales once stores reopen. Many brand partners have postponed their advertising expenditures until after COVID, which may translate into additional promotions once the situation improves. Similarly, in epay, we suspect some smaller competitors may lack the financial strength to sustain their operations, allowing us to fulfill their customer needs. In Money Transfer, our largest segment involves cash-based consumers sending money to loved ones in cash economies. We are optimistic about the industry, seeing growth leading up to and during this pandemic. We have invested in our digital platform and anticipate launching our Ria Money Transfer mobile app in 19 new markets in the second quarter, providing self-service transfer convenience during stay-at-home orders and preparing for future digital preferences. As we have noted, about 70% of the global remittance market is made up of smaller independent competitors who may struggle without a strong financial footing and compliant programs. We aim to capture their volume moving forward. Over the years, we have diversified our business toward large retailers. Six years ago, we began working with Walmart, expanding our relationship and offerings within their stores. We are pleased to have renewed the Walmart2Walmart domestic and Walmart2World international agreements for another three years and look forward to continuing to provide exceptional products to Walmart’s customers. We have added two new agreements with post offices in Europe. In Europe, the national post offices account for the majority of remittances, contrasting with the U.S. where most are made at grocery stores or pharmacies. Post offices have historically favored our larger competitors, but they are now taking notice of our value proposition, pricing, customer service, and financial stability. This month, during the peak of COVID and lockdowns, we launched services with bank99 in the Austria post, following our February launch with bpost, the Belgian post office. Our robust balance sheet positions us favorably as large players seek stability for long-term collaborations. In summary, we are well-placed in all the right areas for customers looking to send money, whether through small independents, large retailers, online, or in more locations globally. Now, let’s proceed to slide number eight for a brief technology update. Our advanced technology has allowed us to operate as close to normal as possible during this crisis. We have served our customers without interruptions and even launched new products to help them comply with regulations due to COVID-19. The pandemic has provided us time to dedicate considerable resources and development efforts toward new opportunities. During the quarter, we remained on track with our REN solution installation for the Bank of Mozambique, anticipating user acceptance testing in the second quarter before going live later this year. We also continue to utilize our REV technology to connect physical and digital banking services, allowing Euronet to offer a full suite of payment services through API connections to our REV processing platform for digital banks seeking comprehensive solutions. We’ve already signed agreements with three digital banks, with interest from several more. Now, let’s take a moment to discuss our real-time payment capabilities. Real-time payments promise instantaneous access to funds, immediate confirmation, and rapid processing times. This benefits consumers with quick person-to-person transactions and allows businesses to request payments from customers with instant settlement. The popularity of real-time payments is prompting governments and regulators worldwide to innovate and enhance their payment infrastructures. This shift provides opportunities for banks and non-banks alike to create innovative payment solutions. Think of real-time payments as analogous to the card payment evolution over the last 40 years, except RTP allows greater participation and interfaces directly with bank accounts, resulting in lower fees. Customers can also protect their banking information through proxies or aliases, enhancing security and appeal. Our REN foundation is specifically designed for real-time payments and settlements among network participants, incorporating advanced features such as adaptive routing, two-factor authentication, and a microservices architecture. In summary, with the REN foundation, Euronet is particularly well-positioned to take part in the modernization of legacy payment infrastructure and the global move toward real-time payments. In closing, I want to reaffirm our confidence in our business. While COVID-19 may delay our consistent delivery of double-digit annual results, we are determined to return to that trajectory. Our strong financial standing, extensive cash reserves, exceptional team, prudent expense management, and cutting-edge technology instill great confidence that we will navigate this period successfully. We are leveraging this time to prepare for a post-COVID environment and are excited about the prospects for each segment as we enter 2021. These ongoing efforts to enhance our business and capture market share from competitors will position us to achieve long-term double-digit growth rates. With that, I'll turn it over to Rick.

Hi. Thank you, Mike, and thank you, everyone who has joined us today. Unlike previous earnings reports, I will begin my comments with the balance sheet on slide 10 rather than the income statement. As Mike mentioned, the first quarter earnings are not the type of results we are accustomed to reporting, but the strength of our balance sheet will help to see us through this crisis. As you can see here, we finished the quarter with $709 million in unrestricted cash on hand. The decrease in cash from December 31st was a result of cash generated from operations offset by capital expenditures and $240 million in share repurchases, which we curtailed upon seeing the significance of COVID-19 impacts on our business. While we believe this $709 million cash balance is more than sufficient to sustain the business through the difficult times brought about by the pandemic, the company also has approximately $560 million cash in ATMs at the end of the quarter, which could be redeployed to operations giving the company more than $1.2 billion of cash with no significant debt service obligations for five years. Our total indebtedness was $1.1 billion as of March 31st, largely unchanged since the end of the year and with the first maturity date of March 2025. Next slide please. On slide 11, for the quarter, we delivered revenue of $584 million, operating income of $31.6 million, and adjusted EBITDA of $68.7 million. We delivered adjusted EPS of $0.55, a 35% decline versus the prior year as a result of the transaction declines from COVID-19 Mike mentioned during his comments. Next slide please. I’m on slide 12. EFT transactions in the quarter grew 13% driven by strength in Asia Pacific and U.S. markets in the quarter, partially offset by lower European ATM transactions especially high-margin cross-border transactions impacted by COVID-19. Epay transaction increases were from the growth in Europe and very strong contributions from India, which included a large volume of low-margin mobile top-up transactions. Money Transfer transactions grew 3% from continued strong double-digit growth in international remittances and digital initiated transactions, partially offset by declines in U.S. domestic transactions and transactions initiated in certain brick-and-mortar stores. So despite the strong start to the year in each of the three segments transactions that drove the year-over-year transaction growth just reviewed. As border closures and shelter-in-place orders have spanned the globe over the last several weeks, the company has seen transaction declines in the EFT segment's ATM business ranging from minimal declines to as much as 95% with the most significant declines in the cross-border transactions. In the Money Transfer business, the company has seen both increases in certain transactions and declines in others. The increases being more concentrated in the digital channels with decreases approximately 25% in the brick-and-mortar channels. The epay business as well saw both increases and decreases in transaction categories with very strong transaction increases across the digitally initiated transactions as well as content oriented to self-use and declines in transactions traditionally processed out of retail-based merchants. While the epay segment has been experiencing very strong digitally initiated transactions, the majority of those transactions have been low-margin transactions out of India. Overall, as the first quarter came to a close and we entered into the second quarter, on average, the EFT segment transactions trends were down approximately 40% over similar weeks of the prior year. The Money Transfer segment transactions were down approximately 35% over similar weeks of the prior year and epay transactions were up approximately 40% over similar weeks of the prior year, again heavily influenced by low-margin India-based transactions. Next slide please. On slide 13, we present our results on an as-reported basis. Year-over-year most of the major currencies where we operate declined at low to mid single-digit rates. To normalize the impact of currency fluctuations, we have presented our results adjusted for currency on the next slide. Here on slide 14, you can see for the first quarter EFT revenue grew 3% driven by growth in Asia Pacific and the United States markets, partially offset by the COVID-19-induced impacts of lower European ATM transactions, especially high-margin cross-border European transactions. Operating income and adjusted EBITDA declines were the direct result of fewer ATM transactions, especially high-margin cross-border transactions. While measures to reduce certain costs were initiated in the latter part of the quarter, little benefit of those initiatives were realized by quarter end. Epay revenue grew 1% driven by continued digital media growth. Digital product offerings played a key role in offsetting the decline in retail-based transactions stemming from customer movement restrictions. Operating income and adjusted EBITDA declines were the result of SG&A investments made throughout 2019 to support future growth, which was unfortunately blunted by the impacts of the virus. Money Transfer revenue growth was driven by strong double-digit contributions from U.S. originated international remittances and growth in XE stimulated by currency volatility, partially offset by year-over-year decreases in intra U.S. transfer business. Operating income and adjusted EBITDA were further impacted by additional charges taken to cover anticipated agent receivable defaults as a result of ordered business closures required to manage the pandemic. In wrapping up, it is needless to say that the COVID-19 pandemic has had a profound impact on our business in the first quarter and we expect the second quarter impact to be even greater. Like Mike said earlier, we will refrain from giving guidance because none of us know when the COVID-19 crisis will end or how quickly the economies will recover. But due to these extraordinary circumstances, we believe it is important to give you a couple of data points to frame expectations. We would expect consolidated second quarter year-over-year revenue including impacts of FX to be in the range of 70% of prior year with EFT revenue in the range of 40% of prior year, epay revenue in the 90% range of prior year and Money Transfer to be in the 80% range of prior year. From these adjusted revenue levels despite cost reductions and careful expense management actions, we expect the second quarter adjusted EBITDA will be nearly breakeven. And after interest taxes and a two-thirds reduction in capital expenditures, the business will likely consume approximately $25 million of its approximate $1.2 billion cash. Again, this is not guidance, but rather a macro view of how to frame expectations given these rather unpredictable unprecedented times. Mike's comments earlier bear repeating. We are very fortunate to have a strong balance sheet with plenty of cash to see us through this crisis. We will continue to be fiscally responsible while we take advantage of opportunities made available to us by this crisis. And we will continue to remain confident that our business has very strong long-term growth prospects which we are fostering even during these closures. With that, I'll turn it back over to Mike for final closing comments.

Thank you, Rick. As I conclude, I want to take a moment to reflect on our journey. There’s a picture on page 16 from Greece that I’d like you to look at. We recently celebrated our 25th anniversary, and many members of our management team have been with us for most of those years. We have faced numerous challenges together, including recessions, regulatory rate cuts, and demonetization. We've relied on these past experiences to navigate through the crisis. We hope that what we've shared gives you confidence in the long-term growth potential we believe in. This picture from Greece represents one of our key markets that is working towards recovery from the pandemic. Like you, we are eager for things to return to normal in our daily lives and business. Until we can all reunite on a beach in Greece, please stay safe. Now, operator, we're ready to take questions.

Thank you. Our first question comes from the line of Rayna Kumar with Evercore. Your line is open.

Good morning. Thanks for taking my question. You gave some really good details on recent transaction trends and a framework for revenue. Could you help us better understand the impact on all three segments on EBITDA for the second quarter?

Can you restate that Rayna?

Yes. Could you help us understand how to evaluate segment EBITDA for the second quarter and beyond?

Well, I won't go out on the limb on beyond but on there I think that you should anticipate that the EBITDA numbers for the EFT business will be negative and they will remain positive for the epay and Money Transfer segments.

Got it. That's very helpful. Could you quantify how many ATMs you expect to winterize in the second quarter and the expected cost savings? Separately, do you foresee any problems with your ATM supply chain through Diebold or NCR?

So far, we have around 8,500 ATMs that are currently winterized, which we used to refer to as winterized but are now more accurately described as COVID-ized. We plan to bring more of those into winterization soon. However, we've faced challenges as we're unable to send people to visit our ATMs for the winterization process. For example, in closed airports, there's no reason to maintain an ATM and incur additional fees. We estimate we might winterize about another 1,500 ATMs, but we don't have an exact figure yet. We're closely observing the situation, especially as there have been numerous articles recently discussing Europe's efforts to revive its tourism sector, which is crucial for many Southern Mediterranean economies where tourism constitutes a significant portion of GDP. The EU recognizes the importance of reopening tourism to avoid severe economic fallout. Regarding the ATM supply chain, we have several orders in progress, and everything was running smoothly until the end of February. We expect some short interruptions in supply from Diebold and NCR, possibly lasting about a month, but we can manage without those ATMs for now. We're also continuing our process of removing underperforming ATMs, which will then be available for redeployment in relevant markets. I don't foresee any major disruptions in the supply chain, and we're actively searching for new sites, which is part of our regular operations.

I want to emphasize that our technology allows us to operate any ATM in our network without being tied to a specific brand. This flexibility is a significant advantage and adds value to our offerings. We can even utilize refurbished ATMs and various brands, so we don’t see that as an obstacle to our growth.

Yes. We actually don't use the software that comes with most people's purchase of ATMs. We have our own native ATM software called EFTS, which we developed during the last recession. This software allows us to treat each of our ATMs as if they are simply an IP device connected to our network, making everything easier.

It's really good detail. It's also good to see that you've renewed both your Walmart contracts domestic and the cross border. What are the terms of the new contract? Did you have to take any new pricing concession?

They're substantially similar. We didn't do anything on the revenue side, but we will work together with Walmart on some promotional activity but it's substantially similar.

Got it. Thank you.

Thank you. Our next question comes from the line of Andrew Jeffrey with SunTrust. Your line is open.

Hey. Mike and Rick, good morning. Thanks for the effusive confidence. As usual Mike, I think you're absolutely right. Question for you on Money Transfer in particular. Clearly digital commerce of all kinds stands to gain from the pandemic. And I just wonder if you could, sort of, frame for us how confident you are with Euronet's digital Money Transfer footprint today? I know the business still has a lot of sort of cash on the counter remittance. Are there things you can do to accelerate your digital share? And do you feel like you're far enough ahead of the curve to continue to grow as you said 2 times to 3 times faster than the market as measured by the World Bank in the long run?

Yes, we do have that confidence. Over the last ten years, we've been growing nearly three times faster than the market, and there's no indication that this will slow down. Our value proposition is well-received, and we have the second-largest payout network globally, allowing us to engage with more people. We also offer a superior value proposition for both customers and agents. Regarding our digital initiatives, we're set to launch a new app in 18 new markets this quarter, with five rolling out in the coming weeks and another 13 shortly after. One of the main challenges of establishing a significant digital presence is the ability to send money in various local languages across different markets while having the necessary licenses. We've largely addressed that. You'll notice an increased focus on this area. Additionally, we have connections to over three billion bank accounts worldwide, making us the largest bank payout network globally. In the past, we struggled with cash payouts due to exclusive agreements held by larger competitors, but we've successfully entered numerous markets to connect to their banking systems. This has facilitated our access to bank account payouts. We're also enhancing our connections to wallet payouts, as announced last quarter. Overall, we are optimistic about achieving strong growth in the digital sector.

Thank you for that insight. I appreciate it. I would like to ask about the REN ecosystem, particularly in relation to the REV payments cloud, but also in a broader sense. Are you concerned about the health of neo-banks? There was news this morning about a significant drop in app downloads for some UK neo-banks. Additionally, how is the pipeline looking? Is this still a market where you can continue to sell, or has the selling cycle come to a halt?

This situation may compel many neo-banks to carefully evaluate their features and capabilities compared to their competitors. Connecting to the REV payment cloud will provide them with a competitive edge. Although we've noticed a slight slowdown, all these institutions need to sustain themselves, and what we offer is quite valuable. Our goal is to ensure their success. The largest players in the market are our clients. For instance, Xoom was our first customer to utilize the REV cloud, followed by Remitly, and we are currently engaging with several other neo-banks. We've also established connections with ING Bank in Spain, which has three million accounts using our ATMs. This support extends beyond digital services to include physical access for their customers.

And as Mike said in his comments, we've had a lot of discussion with people about real-time payment networks. These are not a neo-bank that's starting up. It's a whole country that's shifting over to a real-time, real settlement kind of a network. So you have to again take a look at the completeness of the REN and REV platforms. It's not targeted at any one particular thing. The beauty of it is the simplicity of the API connection process, the richness of the product, and the features that's within it. And at a time, when the world is changing and changing to real-time payment, real-time settlement structures whether that's with a neo-bank or a Central Bank of any country.

Let me add to that. Kevin Caponecchi runs epay and also oversees the Asia Pacific region. He has observed significant movement in these markets as they feel the need to modernize. Consequently, they are strongly pushing for real-time payments. I'll let Kevin provide more details on what we are doing there, as it is truly exciting. I strongly believe that our REN and REV solutions could become a significant part of our business in the coming years.

This is Kevin. One of the most interesting developments in Asia is the emergence of various digital wallets. The primary challenge these wallets face is how to connect to consumers' sources of funds. What's intriguing about the real-time payment networks is that they allow for an API connection. Wallet issuers can link to the real-time payment network to access all the bank accounts within that country. Essentially, the real-time payment network acts as a catalyst for the growth of these wallets. These wallets are particularly appealing to Euronet because we can leverage our wide range of products and services. We can not only connect the wallet to our country's real-time payment network but also integrate epay content and provide white label solutions for our money transfer services. This creates an ideal ecosystem for Euronet to operate within.

Appreciated. Thanks.

Thank you. Our next question comes from the line of Andrew Schmidt with Citi. Your line is open.

Thank you for taking my questions. I hope everyone is doing well in this environment. There isn't much clarity or visibility at the moment, but I think it’s important to provide a framework, especially as we move into the second half of the year. If current trends continue into the third quarter, should we expect similar impacts as those outlined for the second quarter? DCC is a significant factor, but any insights on that would be appreciated. Thank you.

We are not aiming to provide extensive guidance, but let's consider how we structured the second quarter. We've found a significant amount of cost savings that we are actively working on. However, as you can understand, it's not possible to realize all of those savings as quickly as we might prefer. Therefore, not all of the savings have been factored into the second quarter figures. Based on your scenario, if the situation doesn't change much through the third quarter, I would expect to see some stability on the cost side, as we will keep implementing those cost strategies and begin to see improved cash flow from them, assuming transaction levels stay relatively constant as you suggested. On the other hand, if we start to see countries reopening, airports resuming operations, and travel beginning again, that will contribute positively. We did not try to anticipate when that might occur in the second quarter. Ideally, we will see improvement from this point onwards, but we are being cautious about how much we project.

We currently have ATMs in around 130 airports, which are typically very busy locations. However, they aren't busy at the moment.

Yes. Got it. That's super helpful guys. And just on the expense savings front, is it fair to think about that $100 million as the addressable pie, or is there more to do there? And then, it sounds like the majority of the cost savings will start layering in the third quarter. Just some comments I guess, just magnitude the opportunity and timing would be helpful, if it pertains to cost savings?

Well we've got already identified and anticipated in our second quarter about half of those numbers, okay? So we would anticipate to continue to gain momentum for more. And when I say half of it, if you think of that as being a number for the year, you divide that by three, and you look at what's in there we got about half of that one-third, if you will in there. And like I say, we would expect to increase that number as we go into the third quarter.

Got it. Thank you for that. And the last question, you guys did a good job of articulating the fact that you've been very opportunistic during these types of cycles. As it relates to the M&A pipeline, obviously, it's important to get better visibility before making larger moves. Could you talk about just the M&A pipeline as it stands today? And then if you were to be opportunistic should we think about targets being more complementary to existing segments, or would you look to add sort of a different flavor in terms of just area to grow into?

As mentioned in previous calls, our primary approach is to maximize our existing resources, whether through small acquisitions or by introducing a new product or entering a new market where we can create significant value. We've expressed concerns on our last eight calls about the inflated valuations companies are seeking, which has led to fewer acquisitions. In the past, we typically pursued two to three acquisitions a year, but we've only completed one in the last two years. We hope that as the COVID crisis unfolds, the opportunities we're considering become more reasonably priced. If they do, we'll closely assess them, and if we see substantial benefits, we'll explore how to finance these acquisitions. In the past, our strategy has involved financing with cash, but we're focused on maintaining a strong balance sheet to ensure our long-term sustainability. This approach will enable us to compete effectively once the situation stabilizes. As a result, we may increasingly utilize stock or equity-based strategies for acquisitions instead of cash payments. Additionally, I'm receiving inquiries from contacts I spoke to a year or two ago, who previously demanded exorbitant prices and are now reaching out to check on our status. This suggests they recognize their valuations have decreased and they’re seeking potential buyers.

Got it, that's helpful. Thank you, guys.

Thank you. Our next question comes from the line of Mayank Tandon with Needham. Your line is open.

Thank you, guys and good morning. Mike, this may compel consumers to maybe not use cash as much going forward. I'm just wondering on your thought process as you get forward in terms of beyond the crisis. How does that sort of play into your EFT expectations? Do you think EFT will then operate at a lower growth and profitability level once we come out of this crisis, given the potential shift away from cash by consumers?

Here's what I've been saying for a long, long time. Consumers are going to use more non-cash than cash payments when you look at the big picture. But like we say, when you're a traveler or you're a vacationer. And you're in a foreign country, you're always going to want some cash in your pocket. You're going to pay for most things with a card, whether that's the hotel or an expensive souvenir or whatever. But you always like to have some cash. Our focus is just give people make it very easy for them to have access to the cash they need, while they're traveling. So, I don't see a lot of impact. We might get some impact, particularly in the domestic markets, like we've seen the transaction numbers in the U.K. go down just through the crisis. But when we pop out the other end, I don't expect to see a lot.

And I think to add to Mike's comments, as we have seen, there's certain other people that aren't necessarily going to be as survivable through this. So, as some players maybe go off the map. And as some of the banks as Mike said in his comments are dialing us up having some discussion about whether or not there's an opportunity we could have a bigger role in their ATM processing. So, it might very well be that you could see some contraction in the pie. But we're getting a bigger and bigger slice of the pie. So more opportunity, there's still many more places out there to deploy ATMs. We've already started picking up some good spots in which the competitors have failed in. And so I think when it's done we'll end up with a bigger piece of the pie.

I think it's 9 o'clock now, so we'll have to end this call. I want to thank everyone for listening. There's a lot happening, and I look forward to talking to you again in about a quarter.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.