Euronet Worldwide Inc. (NASDAQ:EEFT) filed Quarterly Report for the period ended 2010-03-31.
Euronet Worldwide Inc. has a market cap of $792.2 million; its shares were traded at around $15.56 with a P/E ratio of 12.3 and P/S ratio of 0.8. EEFT is in the portfolios of RS Investment Management, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:MasterCard and Visa Europe recently announced reductions in fees paid for ATM interchange in Poland beginning in the second quarter of 2010. Our results are affected by these reductions both directly (because we receive the interchange fees for card transactions on our ATM networks in certain circumstances) and indirectly (because pricing established in our ATM outsourcing agreements has historically been based on the level of the interchange fee). It is difficult to predict with certainty the overall impact of these direct and indirect effects over time, but we expect these fee reductions to significantly adversely affect the EFT Processing Segments operating income. For 2010, the reduction to operating income of the MasterCard interchange fee reduction is expected to be approximately $1.2 million and the effect of the Visa Europe interchange fee reduction is expected to be approximately $5.6 million. The amounts are net of anticipated cost savings from renegotiated vendor service contracts and, to a lesser extent, additional ATM transactions processed as a result of lower interchange fees charged to cardholders.
Average monthly revenue per ATM was $1,586 for the first quarter of 2010, compared to $1,639 for the first quarter of 2009 and revenues per transaction was $0.26 for the first quarter of 2010 compared to $0.30 for the first quarter of 2009. The decreases in revenue per ATM and per transaction are generally the result of the non-recurring contract termination fees in the first quarter of 2009 discussed above and the addition of ATMs in India where revenue per ATM and transaction have been historically lower than Central and Eastern Europe, generally due to lower labor costs. Partly offsetting these decreases are the impact of the weaker U.S. dollar and the increase in transaction fees in Germany which have contributed approximately $2.0 million in incremental revenues. We were able to increase transaction fees in Germany beginning in mid-2009, but we are uncertain if we will be able to maintain the current rates.
Gross profit, which is calculated as revenues less direct operating costs, decreased to $24.6 million for the first quarter of 2010 from $27.3 million for the first quarter of 2009. This decrease is mainly attributable to the contract termination fee revenues during the first quarter of 2009, partly offset by the increased ATM fees in Germany, contributions from the card and ATM processing business we acquired in Serbia during the fourth quarter of 2009 and the impact of the weaker U.S. dollar. Other than the impact of the weaker U.S. dollar, these items resulted in a decrease in gross profit as a percentage of revenues (gross margin) to 51% for the first quarter of 2010 compared to 59% for the first quarter of 2009.
The decrease in operating income is primarily due to the contract termination fees and greater software license revenues during the first quarter of 2009, partly offset by the increased ATMs fees in Germany and the impact of the weaker U.S. dollar. Operating income as a percentage of revenues for the first quarter of 2010 was 20%, compared to 26% for the first quarter of 2009, and operating income per transaction was $0.05 for the first quarter of 2010, compared to $0.08 per transaction for the first quarter of 2009.
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