Greetings, and welcome to the Euronet Worldwide Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Claassen, General Counsel for Euronet Worldwide. Thank you. Mr. Claassen, you may begin.

Thank you. Good morning, and welcome, everyone, to Euronet's quarterly results conference call. We'll present our results for the fourth quarter 2020 and full year 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 the first page of the PowerPoint presentation we'll be making 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 materially from those anticipated in such forward-looking statements as a result of a number of factors that are listed on the first page 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. Mike?

Thank you, Scott, and good morning. Actually, a good morning it is to all of you who have joined us today. As I'm sure most of you would agree, I am sure glad 2020 is behind us. What a year it's been. Who would have thought that a global pandemic would create problems across so many fronts: health, economics, politics, travel, work environments, PPE, on and on and on. To say the least, 2020 was one heck of a year, and I'm sure looking forward to moving on. But before we do move on to 2021, I am very pleased with the performance of Euronet and all 8,000-plus employees to make it through last year. Not just to survive, but to thrive as a company. As the old saying goes, when you're handed lemons, make some lemonade. Well, that's just what our employees did, and not by happenstance, but through hard work, focus, continued investments in the right places and leveraging the vast portfolio of assets we've built over the years. Think for a minute about what you've already likely read in our earnings release. Both our money transfer and epay segments grew double digits in both revenues and operating profit and posted record fourth quarter results, impressive. I think so, for sure, especially when just a couple of years ago, some folks counted epay out. And now in this fourth quarter, epay posted a brilliant 27% quarter-over-quarter growth. Now that's some lemonade. In Ria, they processed an 18% quarter-over-quarter growth in money transferred versus the World Bank's outlook for 2020 at a 20% decline. That might even qualify as Mike's hard lemonade. So after such a challenging year, if you said I'm excited, you're darn right I am. We grew our business in what will surely go down in history as the most difficult year in a century. And on top of that, we are off to a great start in 2021. So let's get right into some more of this excitement. Let's start with the macro. We exceeded the earnings expectations we had set in October, as a result of the significant double-digit growth in our epay and money transfer segments that included record-setting fourth quarter results for revenue and adjusted operating income. As you will see in the review of the quarterly highlights, these results are a testament to our continued digital transaction growth, our flexible and scalable technology and our talented employees who are working harder than ever to drive this business forward. Now maybe with a bit of that Mike's hard lemonade, let's do some fantasy thinking for a minute. Remember, from 2013 through 2019, our EFT segment was a screaming success, delivering, on average, a 30%-plus profit growth every single year. And beginning January and February of 2020, it looked like EFT would do it again. So let's just assume that EFT stayed flat in profits in 2020 versus 2019. Then if you take the epay and money transfer for 2020 fourth quarter results, and add EFT's fourth quarter 2019 results, Euronet would have achieved a pro forma 15% quarter-over-quarter growth in revenue, adjusted operating income and adjusted EBITDA. And this would be without any of the EFT growth we are used to. This is among the reasons why I'm excited. I'm also encouraged in my belief that the travel restrictions caused by the pandemic will eventually end. Vaccines are being deployed and herd immunity is growing. We cannot predict when the pandemic-imposed restrictions will be lifted on travel, but we do know when they are, our EFT business will respond quickly and aggressively based on the clear evidence that we saw during the brief eight weeks when the intra-Europe restrictions were lifted. I am extremely proud of the earnings growth in epay and money transfer and the flexibility of our EFT team to manage our ATMs on such short notice, all of which was made possible by our strong balance sheet. So when the vaccines get rolled out, borders open, planes start to fly again and baggage carousels fill up, we'll be ready to regain our revenue and profit results and blow them right out of the water. So let's move on to Slide number 6. Despite a challenging year and the daily strength of the pandemic, I'm proud to discuss two programs where Euronet stepped up. The first is our partnership with AMBER alerts in Europe. Through this agreement, we enabled the organization to publish alerts about missing persons on our ATM screens. The program actually started in 2019 and expanded to several other countries in 2020. Given the number of ATMs that we have through these countries, the publication of these alerts generated a tremendous amount of exposure for the plight of missing people. In Spain, in 2020, alerts on our ATM screens generated more than 450 phone calls and led to the location of eight missing people; what a fantastic use of our ATM network. In another program, ATMs in the community is what we call it, is filling a void that has been created in recent years as financial institutions have cut their ATMs across Europe. As bank branches close, many rural citizens throughout Europe are left without access to cash, unless they drive to another town. Through this program, we work with the town leaders to locate and maintain an ATM in their city. This program has gained traction throughout 2020 with several ATMs already placed in these rural locations. The response by local citizens has been overwhelmingly positive, as you can see in the video on our website. So again, we have found plenty of ways to deploy our resources in 2020, and I'm really pleased with the way our employees have stepped up and made a difference in the communities where they work and we work and live. And as a reminder, these examples still show that cash is very important. So let's go on to the next slide, Slide number 7. If you joined our third quarter call, you might remember these charts that we have on Slide number 7. Our EFT business started 2020 well ahead of 2019 through February. Our domestic business was 3% above 2019, and our road travel and international markets was up 42% above 2019, and our international air travel market was 15% above 2019. Then COVID hit in Europe, closed for business basically, and tourism came to a screeching halt. Beginning in the second quarter, virtually all European countries closed their borders to all countries around the world. On June 15, the EU agreed to open borders to its own countries beginning July 1, but not for travel from outside of Europe. So during July and August, EFT experienced a nice little rebound before the lockdown started to reemerge in September country by country. Graph number 1 shows that our domestic transactions were about 85% to 95% of last year's transactions in the July-August timeframe. This was significant because we reached these levels without a vaccine and while travel restrictions on restaurants and public gatherings remained in place. Domestic withdrawals rebounded quickly as people began to move around using cash to purchase essentials. Graph number 2 focuses on markets where vacationers are more apt to travel by car. Starting in July, you will see a steady increase in transactions reaching 50% of our prior year's volume in August. In September, the pandemic-related restrictions were put back in place and our transaction volumes began to steadily decline. This graph shows the resilience of our business. It bears repeating that we achieved 50% of our '19 volumes, while the restrictions were lifted with no vaccine and no international travelers at all flying into Europe. If you adjust our numbers to consider the international travel from outside of Europe, which represents approximately a quarter of our business, we would have achieved approximately 70% of 2019 results in July and August in these markets. In Graph 3, we see countries in which air travel brings in most of the tourists. This type of travel requires additional safety precautions, reservations, and generally more time to plan. 20% of 2019 transaction volume was achieved during July and August of 2020, despite the borders being closed for international flights into Europe, which, as I'm reminding you, represents about a quarter of our business. Graph number 4 shows that international travel matches closely with our international transactions. And in fact, our results outpaced the international flight information. So what does all this mean? Our EFT business responded quickly when travel restrictions were eased. Like many across the globe, we see some encouraging signs that the road to recovery has begun with the global deployment of the COVID vaccine. We expect the easing of travel restrictions to follow, and we know that when this happens, people will go on vacation, they go to restaurants, and they'll continue to use cash. Let's move on to Slide number 8. Because of the issues we discussed around the pandemic and tourism, EFT was negatively impacted, obviously. At the same time, we didn't sit around and just wait for things to start happening. We were aggressive in scouting new locations and continued to deploy nearly 4,000 ATMs in areas where we think it makes sense to have them, including many ATMs that were targeted wins from the competition. Additionally, we also divested from nearly the same number of locations, which were not profitable. This mindful growing and pruning of our state of ATMs gives us a higher quality ATM fleet entering into 2021. Beyond individual ATM deployment, our team has had success entering into strategic agreements to get larger blocks of ATMs. Examples of that success include the December acquisition of the Bank of Ireland's fleet of non-branch ATMs. Under the terms of this agreement, we acquired 700 non-branch ATMs, which we will begin transitioning in the first quarter. Additionally, our Dolphin Debit team in the U.S. renewed and expanded its ATM outsourcing agreement with Murphy USA for three years. Murphy operates a chain of retail gas stations that are primarily located in close proximity to Walmart stores. With this deal, we will continue to service the existing 260 ATMs and add more than 450 new ATM locations to our ATM network in the United States. A few more EFT noteworthy events in the quarter include the launch of an independent ATM network in Lithuania, and signed ATM network participation agreements in Romania, Poland, and Spain. The agreement in Spain, for example, includes eight independent banks under these network participation deals, allowing millions of cardholders to access cash from their accounts using Euronet's thousands of ATMs. A recent industry trend shows that banks are closing branches. As banks close these brick-and-mortar locations, Euronet provides an option for banks who want to continue to provide ATM services to their customers but don't want to be burdened with all the high costs of maintaining their own ATMs. The agreements in Spain are one example of Euronet being well-positioned to fill this marketplace need. We ended the quarter with almost 38,000 active ATMs, which is about 8,000 less active ATMs than the prior year. This decrease of 8,000 active ATMs is the result of 2,500 low-value ATMs in India shifting to the in-source operations of an acquiring bank, 2,000 high-value outsourced ATMs that were taken in-house by a bank that operates its own ops center, something we shared with you a couple of quarters ago, and 3,500 additional ATMs that were winterized due to the pandemic-constrained volumes. So they're still there, just waiting to be opened up, increasing our total at the end of the year to nearly 8,000 winterized ATMs. And to avoid confusion, the Murphy's and Bank of Ireland ATMs are not included in these totals but will be added as we deploy in 2021. As we go into 2021, we are cautiously optimistic that we'll add around 5,000 ATMs for the year. And you can see that we essentially have an installation backlog of nearly a quarter of that lined up. Beyond our own ATM network, we signed several contracts and launched many products and services, such as payment processing, switch and card management and pass-through DCC services with banks and fintech companies in Europe and Asia. We were able to successfully launch these products and services by leveraging our REN and REV technology. We signed a deal with China Construction Bank for pass-through or SaaS, or Software-as-a-Service, DCC services on its 80,000 ATMs, and we activated pass-through DCC processing on Mastercard at 10,000 ATMs of Punjab National Bank in India. Finally, we signed an agreement with Vietcombank, one of the largest commercial banks in Vietnam, to provide pass-through DCC services on its over 1,000 ATMs. In closing, there is no doubt that COVID has had a profound impact on our EFT segment in 2020. Looking forward, though, the health of our core EFT business remains intact for several reasons. For starters, we saw our 2020 transaction volumes were on pace for double-digit growth for the month of January and February. Also, the expansion of our business in 2020 and the resiliency of our ATM transactions when the restrictions were lifted in the third quarter underscore that the foundation for post-pandemic growth is in place. So now let's move on to Slide number 9, and we'll talk about epay. I am very excited with epay's double-digit earnings growth and record fourth quarter results driven by the continued growth trends in digital media content and expansion of mobile content in certain markets. This growth came from continued strength in our physical retail network as well as triple-digit transaction growth in the digital channel. Growth in the digital channel resulted from our ability to deliver both mobile and digital media products to a growing list of mobile wallets, internet banks and e-commerce sites, all made possible through our industry-leading REV technology. Our epay segment continues to innovate and grow with the diversity of product offerings and strategic partnerships. In the fourth quarter, we saw strong triple-digit growth in online sales of mobile and digital content in both South America and in Asia. In the last couple of years, we've invested a lot of time and resources to develop a platform for subscription renewal services. These investments are starting to pay off with new multiple contracts and launch services in the fourth quarter. In this quarter, we successfully provide technology to create a promotion bundle featuring recurring Xbox games subscription combined with the hardware purchase for Telstra in Australia and SK Telecom in Korea. We also launched subscription renewal services with the largest tech retailer in Europe for Microsoft and McAfee products. We expect the market for subscription renewal services to continue its growth trajectory, thereby fueling recurring revenue in lockstep with renewals. You can see here that we signed and launched a number of new digital channels, including Piraeus banking in Greece; online marketplace Shopee throughout Asia; Jarir in Saudi Arabia and Flipkart in India, amongst others. The agreement we signed with Piraeus is a five-year exclusive agreement for the distribution of epay's digital content, starting with Microsoft, Sony, Blizzard and Twitch on the bank's internet and mobile banking platforms, as well as its POS terminals. We are also successful with new digital content signing and launching new agreements. From coffee and dating with Nespresso and Tinder to gaming and music with Twitch and Sony, we have successfully partnered with these content providers. And as I wrap up epay's outstanding fourth quarter, our pipeline of new launches remains robust as we move into 2021. Now let's move on to Slide 10, and we will talk about money transfer. Slide 10, as I mentioned earlier, I can't wait to discuss money transfer's fourth quarter results. Revenue grew 18%. Operating income grew 38% for the quarter compared to the prior year. These are fantastic results in a year, but during a pandemic, even more impressive. Keep in mind that many of our correspondent locations were closed for part of the year. Excluding the U.S. domestic business, Ria's International Money transfers grew an incredible 24% in the fourth quarter and 16% for the whole year. Bear in mind that the World Bank forecasted global money transfers would decline by 20% this year. So growing 24% was a very impressive achievement. So how did we do it? Really, there are four catalysts driving the growth for money transfer and market share growth: One is our digital product; second is our market-leading position in the independent channel; the third is the breadth of our physical send and receive network; and number four is our industry-leading account deposit network. First, let's discuss our digital performance. We launched our mobile app in the U.K. and Spain during Q4, and we now have digital solutions live in 21 markets as compared to four at the beginning of last year. Our digital transactions were up 131% for the fourth quarter and 103% for the year. 70% of our digital customers are new to our franchise. We achieved triple-digit growth in digital transactions despite entering many of these markets only midway through the year. Following digital is our market-leading position in the independent channel. This channel represents around 60% of all family remittance in the market. The independent channel accounts for Ria's strongest overall gains in absolute transaction numbers and market share. Our independent agents know our customers well. And in fact, many were Ria customers themselves. They were always available to help our customers through the pandemic because they understand their needs, needs that give extra urgency to sending money to families depending on the money who depend on the money for health care, rent, and food. Supporting the network of independent agents is a physical payout network of 464,000 locations, together with an operations team focused on agent and customer success. These are critical factors behind the independent channel growth of 36% during the fourth quarter and 23% for the year. Moreover, these same factors contributed to the 20% growth in principal sent to Mexico last year versus the overall market growth of 11%. We are certainly gaining market share. Now how about our physical send and receive network? It expanded by 17% in 2020 to 464,000 locations. We had one of our most productive years in network development. The team launched 24 new correspondents across 21 countries during the fourth quarter with some of the more significant agreements involving post offices in Botswana, Indonesia, Moldova and Romania. The Romanian post network was exclusive to one of our competitors and will now give our customers better access to the $6 billion remittance market. We also launched payout services with the Indonesian post. Indonesia is a $10 billion market, and our relationship with the post there will give us another 3,500 locations in a market that is critical to serving our customers in Malaysia and the Middle East. Finally, let's discuss our industry-leading account deposit network. It, too, clearly contributes to our growth, while building an industry-leading cash payout network; we were also hard at work constructing the largest, directly integrated account deposit network in the industry, and it too has been fueling our growth. We see this as a critical differentiator and now the tables have been turned with our competitors now chasing us. Over the past 10 years, our account deposit volumes have been growing faster than cash pickup. While total principal transferred during 2020 grew at a very healthy 23%, our account deposit volumes grew at an impressive 36%. We see an outsized demand for bank deposits and mobile money accounts across our customer base as well as our digital customers. Customers prefer the convenience and speed, where the majority of our account deposit transactions are delivered in real-time under five minutes. Today, our account deposit network offers the capability to put funds into 3.7 billion bank accounts in 125 countries. Yes, that's 3.7 billion. And we can land funds into 30 wallets held by over 200 million users in 20 countries. Most of our bank deposits are powered by direct integrations with banks, enabling us to optimize the product features such as speed, account validation and transaction confirmation, something that you do not get using integrators or consolidators. In summary, 2020 was one heck of a year for money transfer, and the business is extremely well positioned to continue its momentum into 2021 and beyond. Let's move on to Slide number 11. Let's talk a little bit about tech here. In this quarter, we'll highlight the REN and REV projects. Euronet implemented a unique pay-as-you-grow services model for Cosmos Bank, the second largest cooperative bank — community bank in India. And this project includes modernizing existing payment systems using our REN platform. Additionally, through REN Connect, we were able to allow the bank to participate in the country's real-time payment network. Previously, we reported to you that we are live with the REN Foundation in Mozambique, in the fourth quarter, we on-boarded the second participant bank to the system. We signed a deal with IndusInd Bank in India for a prepaid card system using our REV Payments Cloud, in another deal, we are going to provide Mastercard, Visa and UPI gateway services through the technologies of the REV Payments Cloud for Razorpay, which is considered a unicorn in India's fintech community. While Euronet has a long history of servicing banks, this deal illustrates again how REN and REV technologies expand beyond banking into the fintech community. Let's go on to the next slide, please. Slide number 12. First, just take a look at the screenshot here on Slide number 12. And using REV, the Amazon Pay and Google Pay wallets in India get access to epay services, including mobile top-ups, bill payments, gaming codes and other similar services. These are real-world examples that demonstrate how REN and REV perform at the speed and scale to serve millions of customers. Before we move on to the results portion of today's call, allow me to emphasize that it's more clear than ever to see how our physical assets and technologies converge to provide added value for the Company and our customers. Think about our money transfer example that enables someone to securely deliver funds from an app to our own global deposit network of 3.7 billion bank accounts and 200 million digital wallet users in real-time without using the traditional card payment rail. This is an amazing accomplishment that can only be delivered by a company that's made a significant investment in technologies, networks and assets. It is also just one of the many advancements we are bringing to life on a regular basis. So take note. Our company is a large player in the international payments industry, and we look forward to 2021. With that, I'll turn it over to Rick.

Good morning, everyone. While I can assure you that I did not start my morning with any of Mike's lemonade, I sure believe that we delivered a fantastic quarter, given the tourniquet applied to the travel industry. So as I begin my comments, I think it is well worth pointing out that one of the factors supporting our success in the fourth quarter and all of 2020 was the strength of our balance sheet. We started the year with $1.1 billion in cash and about $950 million available on our revolving line of credit for total accessible capital of a little over $2 billion, and no debt due for about four years. The strength of our capital position gave us confidence that we would not go under. And more than that, it gave us confidence that we could invest in important growth elements of our business. And importantly, keep our most valuable assets on board, our fellow employees. We finished the year with more than $1.4 billion in unrestricted cash and about $700 million available on our revolving line of credit, nicely maintaining and improving more than $2 billion in accessible capital. Despite the COVID-induced challenges, we were able to produce free cash flow and added to our balance sheet strength. So as we go into 2021, our confidence is obviously increasing. I, like Mike and all others on our leadership team, are quite excited about the prospects of 2021. We've got the wind at our back and a long, straight stretch of highway in front of us. Before I turn this page, I'd like to point out that the increase in unrestricted cash is largely from drawdowns on the revolving credit facility shortly before year-end, to facilitate effective cash management for year-end payment and settlement requirements across many currencies, and that draw was fully repaid as we crossed into the new year. Next slide, on Slide 15. For the quarter, we reported revenue of $707 million, operating income of $50 million, adjusted operating income of $51 million and adjusted EBITDA of $92 million. We delivered adjusted EPS of $1.11 compared to $1.63 for the prior year, as a result of the transaction declines in high-value cross-border transactions in our EFT segment, stemming from COVID. Next slide, please. On Slide 16, we show you our three-year transaction trends. EFT transactions increased 11%, driven by increased point-of-sale driving and card processing transactions in Europe, together with payment processing growth for low-value transactions in a customer's bank wallet and e-commerce site, partially offset by fewer transactions in Europe and Asia-Pac related to pandemic-driven government restrictions. Epay transactions grew 61% from increases in Germany and Brazil, as well as very strong contributions from Asia, which included a large volume of low-value in-app mobile top-up transactions. Money transfer transactions grew 9% from strong international outbound money transfer transactions in our largest regions across most channels, offset in part by our U.S. domestic business. Next slide. On Slide 17, we present our results on an as-reported basis, quarter-over-quarter. Most of the major currencies where we operate increased at low to mid-single digit rates. Euro increased 2%, for example. To normalize the impact of currency fluctuations, we have presented our results on a constant currency basis on the next slide. I'm on Slide 18 now. For the fourth quarter, EFT revenue declined 50%. Operating income declined 139%, and adjusted EBITDA declined 98%. Driven by pandemic-induced impacts of lower ATM transactions in Europe and Asia, especially high-value cross-border transactions across Europe, partially offset by more than $20 million in cost savings achieved in the quarter as part of the Company's cost savings initiative for 2020. Epay revenue growth grew 22%. Operating income grew 13% and adjusted EBITDA grew 14%, driven by continued strength in sales of digital media content and mobile sales through digital channels. Epay revenue grew more than operating income because a mobile operator increased retailer commissions from 6% to 9%. This increased our revenue, but not our operating income because the 3% was passed to retailers as required by the mobile operator. Money transfer revenue, adjusted operating income and adjusted EBITDA grew 14%, 30% and 25%, respectively. This growth was driven by a strong double-digit international originated money transfers. Revenue and gross profit per transaction expanded nicely as a result of a shift in transactions from lower-value domestic transactions to higher-value cross-border transactions. It's worth repeating that we are very pleased with the strong double-digit growth rates delivered across the epay and money transfer segments, while the travel restrictions continued to weigh on our EFT business. We will refrain from giving official guidance because the changes to the movement restrictions, border openings and the economic recovery from COVID remains uncertain. However, we do believe it is important to give you a couple of data points to help frame expectations. We would expect first quarter consolidated revenue to grow at the upper single-digit range compared to the prior year first quarter. From these revenue levels and continued careful expense management actions, we expect that the first quarter EBITDA will be in the range of $50 million to $60 million. Now let's go to Slide 20 for a few comments on the full year. For the full year, we reported revenue of $2.5 billion, operating income of $47 million, adjusted operating income of $153 million and adjusted EBITDA of $302 million. As where you likely read in our press release, operating income includes a $107 million impairment charge related to certain entities. This charge has been excluded from our adjusted operating income, adjusted EBITDA and adjusted EPS to facilitate comparisons to the prior year results. We delivered adjusted EPS of $2.82 compared to $7.01 for the prior year. Again, the result of transaction declines stemming from COVID. I am not going to discuss in detail our annual results on Slide 21 through 23, as the full year explanations are very similar to what we have discussed for the quarter. Epay and money transfer had outstanding results while the EFT segment did an admirable job managing through the lockdowns. With that, I'll turn it back over to Mike for any final comments.

Thank you, Rick. Wow, with this crazy year, that was a lot of information to absorb. That said, I think it all explains my excitement at the beginning of this call. We have just exited what is perhaps the most difficult year for business in the history of the U.S. and the world, and yet we have so much momentum to discuss. To recap, our key decisions in early 2020 enabled us to take advantage of opportunities. We did not go ultraconservative in our planning. We did not lay off our people. But we did aggressively look at where we could manage down our expense, especially in the EFT segment to line up with travel restrictions. From the start of the pandemic, we relied on the strength of our balance sheet to grow and invest in our business. And in the end, we pulled together and performed admirably in the face of some very difficult circumstances. It's worth repeating that two of our three segments reported fourth quarter record results. The lemons were turned into lemonade, maybe even my Mike's hard lemonade. So as I close, it truly was my pleasure to spend this time with you today to talk about our performance in 2020. If you sense that this excitement is real, that's exactly what it is. I'm excited for all the reasons we just covered, but especially because we have two segments that have grown double digits, and we know eventually, people will go back to their travel routine, driving around, flying around and spending cash. In the short term, we know we can't do anything about the rolling out of these vaccines. We will leave that to the scientists, the medical community and the government to determine. That said, I know one thing that we can do in the meantime, and that's to execute. We proved it in 2020. And with all this momentum, we have even more confidence that we can deliver on all of our strategies as we move forward. So goodbye to 2020, thank God, and bring in 2021; Euronet is ready. And now, we'll be happy to take questions. Operator, will you please assist?

Thank you. Your first response is from Darrin Peller of Wolfe Research. Please go ahead.

All right. You did a great job navigating what was a challenging year for everyone. When we consider the trends in the EFT segment, there have been numerous announcements regarding the Spanish banks and significant developments in Asia as well. Mike, we’ve discussed this previously, but from a structural standpoint, the reduction of bank branches should create more opportunities for you. I believe you mentioned this as well. Looking ahead, you mentioned an additional 5,000 for this year. When we consider 2022 or the medium term, do you see a possibility to exceed the previous run rate based on the updates from the Spanish banks and what you observe in the industry? Additionally, could you provide more insight into what is driving the Spanish bank announcements made yesterday, as well as the other announcements in Asia?

In Europe, banks are increasingly closing unprofitable branches, which has led to weakened balance sheets. To manage their costs, they're shutting down branches and, consequently, ATMs, leaving customers without easy access to cash. This has led to partnerships with us, such as our agreement with ING Bank, a major digital bank in Spain, two years ago. The need for cash remains, so customers can use our ATMs as if they were customers of those local banks through these agreements. This approach helps banks maintain customer satisfaction while reducing their physical presence. The trend of branch closures is expected to continue; in fact, in 2019, it was estimated that 25% of bank branches in Europe would close in three years. The impact of COVID-19 on this trend is uncertain, but the likelihood of further closures seems high, creating more opportunities for us. As I expand my network, I become the top choice since no other independent network compares to ours in these countries.

I'd add to that, as you just take a look at the ATM penetration around the world, the farther east you go, the lighter it gets. And the farther east you go, the heavier the concentration of cash-based economies. And when you take a look at our network, we're principally in Europe going east. And so I think that that adds yet to the opportunity for us to deploy as well as pick up ATMs that essentially are being vacated by the banks because they've got the fintech competition and things like that.

And to add to that, you didn't ask it, but this also drives more outsourcing opportunities for us. We've seen them in Asia. We're going to start to see more of them elsewhere, but these banks are trying to rationalize their cost structures and we can do it cheaper than they can.

So, do you think we are still on track to reach the levels we saw in 2022, assuming the pandemic hadn't happened?

Yes. So 2019, we added 4,200 ATMs; we're projecting about 5,000 this year. So, we're already off to the race, as you might say, and that could definitely increase, particularly as we open up more new countries.

We added about 4,000 ATMs and removed a similar number. With lighter traffic, we eliminated some marginal or underperforming ATMs. Therefore, we are starting this year with a higher quality portfolio. We still added nearly 4,000 or 5,000 ATMs this year while taking out some low performers. I believe we are in a better and stronger position going into the year because of the pruning we did last year.

All right. And just a very quick follow-up, Rick, on the margin side. I know you guys were calling for a sequential decrease in margins somewhat. But you're still in the upper teens range for money transfer. And then even epay, when we look at the margins there, 15%, I think we're up there among the higher margins. So, any color on sustainability there? And what the thought process is on margins for first quarter? It just seems a little conservative to us. Thanks, guys.

Well, I think it's always hard to guess what happens in the competitive marketplace out there, but what we've seen is a number of things here on both the epay and on the money transfer business. We've been able to target channels that have good margin opportunities in them. That's given us the ability to continue to shift our mix more favorably to the better margin products. And we continue to add, as Mike pointed out, like in epay, more prospects on the drawing board to bring in. If you think about epay in some respects, what we're really doing is we're depositing payment and we're processing deposits into accounts and payments out of accounts. And whether you're talking about online purchasing, which really is a delivery of a physical product, we're really dealing with it in the digital format of getting the money into the account and then processing payments on the other side, depending on what brand we're working with. So, I think we've continued to see those opportunities to take advantage of channels where there's better margin. We were certainly helped in the money transfer business by the fewer domestic transactions because they're lower-priced, lower value. We're replacing those with more cross-border transactions, higher price, higher value. So, I think we'll continue to see strength in that area. I know we had a great expansion this quarter. It's always hard to outdo those quarter-after-quarter, but the money transfer team has done a great job in that regard.

Thank you. Your next response is from Andrew Schmidt of Citi. Please go ahead.

Thanks for taking my question and good job on the continued resiliency here. So starting up with a question on the EFT segment, wondering if you could help us walk through kind of the quarterly cadence of EFT EBITDA? I know it's a little bit still unclear with the travel recovery. But obviously, you have some pretty easy comps, given the trough in the second quarter. So any commentary, just help us think about the quarterly cadence and particularly it pertains to the second quarter recovery of that easier year-over-year compare would be helpful?

So a couple of things to remember, and that's one of the reasons our Q1 is compared to last year is a little on the weak side because don't forget, we started out EFT last year in January, February; we were off to a screaming good start. And then it just got shut down by March. So we're not going to have that all three months of this first quarter. So that puts some pressure on it. But our typical cadence is that we have about 65% of the EBITDA that's generated, and EFT is generated in the second and the third quarters combined. And that other 35% is split between four and one. Is that about right, Rick?

Well, one is quite weak compared to four. So it seems like the momentum we gained follows the order of one, four, two, three.

Okay, got it. That's helpful. And then just on REV Payments cloud. I think your capabilities in supporting fintechs, whether it's PSPs or digital wallets. I'm not sure that's quite well understood. Maybe just briefly walk us through kind of the key things that you're providing to fintechs, whether it's a real-time deposit, whether it's an issuance processing, acquiring? There's a wide range of services. Can you just help us understand kind of your positioning with faster growth fintech? That would be helpful.

Yes. Andrew, this is Kevin. So basically, we do transaction processing, and we provide all of our products from Euronet through a set of APIs to these interested parties. And so if you think about it, really, it's about providing the services from our net and the products from Euronet, all through a set of APIs that can be easily digested either by banks or by financial institutions.

Fintechs.

One of the significant advantages of the technological crossover is that we are not relying on outdated methods. For instance, if someone wants to implement multifactor authentication, we can achieve this through traditional methods like text messages or through biometric options. Our technology is designed to accommodate these capabilities. Additionally, we can integrate this with our products. This means that a party can not only have their transactions processed but also receive the product and profit from it. In many cases, especially given the millions of transactions we handle, we are providing both a technological payment processing solution and including products, which efficiently reduces costs and enhances profitability on the product side.

I believe I agree with Andrew. As more people start to understand our capabilities, the industry's interest in our REV Payments Cloud continues to grow.

Well, and customers are coming our way because they recognize that we have modern technology and that we really have the only modern technology of a modern payments company. And so, people are coming our way because it's quick and easy to connect and quick and easy solutions.

Thank you. Your next response is from Chris Shutler of William Blair. Please go ahead.

Could you provide more detail on your expectations by segment for the first quarter, at least at a high level? Additionally, regarding epay, you mentioned $10 million of pass-through revenue. How should we consider the profitability of epay transitioning from Q4, which is typically strong, into Q1?

Well, Chris, first of all, similar to EFT, all of our segments experience the quietest quarter in the first quarter. We usually see a decline from the fourth quarter in the epay segment you mentioned, as we benefit from retail seasonality during the holiday period. Thanksgiving, Christmas, and New Year spur additional volume, but then there’s a bit of a slump afterward as people have already taken care of their holiday needs. However, as Mike noted and we've discussed before, we have an expanding range of products, such as those involving recurring payments, which shift from one-time software purchases to monthly subscriptions. This transition helps provide more stability. Yet, like in previous years, we anticipate similar trends in the epay business from the fourth quarter to the first quarter.

Make sense. Okay. And then just a couple of real quick follow-ups, just on epay, the recurring subscription kind of piece or recurring piece of epay. How big is that as part of overall revenue at this point? And then on the EFT segment, I noticed that the ATM deal with China Construction Bank for DCC pass-through, really big number of ATMs. Just can you help us think through the economics of the pass-through DCC business again?

Well, in the pass-through, what we do is we share a percentage of those transactions with the bank. In the case of this one in China, you're right, 80,000 ATMs is an impressive number. And as you can fully understand, the travel lockdowns to China are in place just like all the other countries. So, we'll have to see kind of how they emerge back out of that, but it's a huge state of ATMs. I would tell you that the lion's share of the economics of that go to the bank as opposed to us. So in the analogy of building a building, this isn't another wall in the building; it's another brick in the wall. So, we think it will be a nice piece of business as they come out of the pandemic and start traveling. But again, it's another addition, another layer into the story.

We have over 200,000 ATMs owned by banks set up in a similar way as that big bank in China. So again, it's their ATMs, it's their footfall. They get the lion's share of the DCC profits, but we get a nice little chunk ourselves for getting this organized.

This product operates like a SaaS model. We integrate it with our software, which incurs no additional costs. Regarding the question about the mix of recurring payments, it currently represents a small portion of our business. We began exploring this area a couple of years ago and saw more success last year. One of our earlier initiatives was collaborating with Microsoft on an annual subscription service. Another significant partnership was with AppleCare in Target stores. This year, we've combined efforts in gaming, mobile, and data, and while these recurring payments still make up a small segment, they are steadily increasing each year, similar to how digital and non-mobile segments began in the past.

Chris, this is Kevin. We have a pretty nice pipeline of opportunities that we'll be launching through 2021, all related to this recurring payment solution.

Yes. Probably, there's at least 7, maybe 10 different new markets, something like that. So operator, I apologize to everybody that it's already on the hour. We'll allow one more question and then we'll have to break and let you get back to your jobs.

Okay, thank you. Your next response is from Rayna Kumar of Evercore. Please go ahead.

Good morning, Mike and Rick. Thanks for taking my question. In October, you announced two big money transfer wins, Kroger's Fiesta Mart. Could you help us understand how those rollouts are going what type of trends you're seeing in transactions at both those retailers? And then second, you had a competitor who recently announced a new relationship with Walmart. Do you expect any impact from that relationship towards your relationship with Walmart?

Okay. So, we're not quite sure what to expect with the Walmart announcement. We do know that Western Union and MoneyGram are kind of similar in their approach to the market and their pricing. Ours tends to be a little bit better. So, I don't know if they'll be making life more difficult for us or for the other incumbent. So, I just don't know quite yet, and I don't even think that's quite live yet. Or maybe it is, but just barely. But we've been growing every week at Walmart, which is good. On Kroger, we just basically started. They're just even putting their signs up in their stores, announcing us as a money transfer solution because they've had Western Union for a decade or more. And those signs are going up, I don't know, within a week of now or maybe it was last week. So, it's just starting. We don't have any significant addition to our P&L yet.

And Rayna, I would like to add that regarding Walmart, our competitors are focusing on the international aspect. You might remember that we recently announced our entry into that market, but then COVID affected our plans. Consequently, we didn't expand much internationally through Walmart. If we didn't gain much in that space, we are likely not going to lose much either, so the impact may be less than expected.

Very helpful. And if I can just have one last question in there. So, with the rent ecosystem, you made some real headway with Mozambique. Could you help us understand what kind of pipeline you could potentially see for adding rent to additional central banks in 2021?

So remember, there are two ways that REN can operate. We can provide real-time payments for the central bank, or we may not be able to if they have around 45 to 50 countries currently using a real-time payment system. However, very few banks are connected because it requires different types of connections and the traditional ISO8583 connections. This is where REN Connect comes into play. We are actively signing those deals now, and we will have more announcements about them next quarter. In the short term, a significant opportunity for us is to return to the countries that already have an RTP and facilitate connections for banks. That summarizes our current position. With that, I'd like to conclude the call and thank everyone for their time today. We look forward to reconnecting in about 90 days.

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