Greetings and welcome to the Euronet Worldwide Fourth Quarter and Full Year 2017 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. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Mr. Jeff Newman, Executive Vice President and General Counsel for Euronet Worldwide. Thank you. Mr. Newman, you may begin.

Thank you, Latoya. Good morning and welcome everyone to Euronet's quarterly results conference call. We will present our results for the fourth quarter and full year 2017 on this call. We have Mike Brown, our Chairman and CEO; and Rick Weller, our CFO 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 will be making today. Statements on this call that concern Euronet's or its management's intensions, 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 front 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. Now, I'll turn the call over to our CFO, Rick Weller.

Thank you, Jeff, and good morning and thank you everyone for joining us today. I will begin my comments on slide 5. We finished the year delivering fourth quarter revenue up $604.6 million, adjusted operating income of $73.6 million and adjusted EBITDA of $102.9 million. Our adjusted EPS for the fourth quarter was $1.13, a 14% year-over-year increase, and a penny ahead of the guidance we provided in October. The favorability was largely the result of lower share dilution from our convertible bonds as a result of our share price at the end of the 2017 being lower than it was at the date we provided guidance. Currency changes had virtually no impact on our fourth quarter adjusted EPS versus guidance. Also included in our fourth quarter GAAP results is the impact of the tax reform legislation passed in December 2017. If you recall, we previously told you that we pay virtually no federal tax on our US-based income, because much of our operating income is offset by corporate cost and the balance we have had significant historical net operating losses for which we were not accruing a tax benefit. With the new tax law, we are required to recognize a U.S. taxable income on historic and current foreign earnings which were not distributed to the U.S. As you know our foreign earnings are substantial and significantly greater than our pretax U.S. NOLs of approximately $134 million. The recognition of these foreign earnings creates a current tax liability of $28 million which is payable over 8 years and fully utilizes our U.S. NOL. The remaining difference of about $13 million that was included in the $41.6 million we reported in the press release relates to the re-measurement of our deferred tax assets and liabilities. Slide 6, shows the three year…

Thank you, Rick and welcome everyone. If I reflect back on 2017, I reminded how proud I am to lead such a dedicated hardworking organization. For the fifth consecutive year, we were able to deliver double-digit adjusted EPS growth despite revenue pressure resulting from lower customer pricing in conjunction with the extension of our Walmart agreement and the impact of the demonetization in India. In addition to consolidated double-digit growth, we also produce some other very impressive numbers. We delivered more than $2 billion in revenue. We process more than 3.6 billion transactions. Our global network now reaches nearly 1.5 million devices and location. We added 3300 high value ATMs across Europe and India and we were responsible for $95 billion in cash across our three segments which is 13 % more than in 2016. And these are just the start of our achievements and what was part of another very good year for Euronet. Let's move on to Slide number 19 and we'll talk about the highlights of the EFT segment. Slide 19, as Rick mentioned, the EFT team delivered another phenomenal year led by the deployment of more ATMs as well more products and agreements some of which are included on this slide. In India, we singed a software license agreement with Yes Bank, the fifth largest private bank in India to provide the bank with Euronet's proven transaction switching platform, which has been powering India's national processing infrastructure at the National Payment Corporation of India. Euronet will help the bank migrate all card and network interfaces from a competitor switch. This is a complex migration that is rarely awarded in the region. But our history of proven and secure payment technology gave Yes Bank components that Euronet could successfully complete this project. This is really an important…

Thank you. [Operator Instructions] The first question comes from Andrew Jeffrey of SunTrust. Your line is open.

Hey guys. Good morning. Thanks for taking the question. Appreciate all the color on this DCC topic, Mike. I guess a couple of questions in money transfer, which I still think long-term is the most important growth driver for Euronet. Can you elaborate a little bit on the investments in India and how you're taking share especially in the context of some of these long-term exclusive agent agreements that seem be breaking down a little bit? And I have a follow up on digital.

We mentioned to you that we signed up two or three of the largest cash payout networks for the number one player in the market where they were formally excluded. So we signed those up kind of mid last year and we've been implementing. And we're watching our transactions that India wrap -- ramp up but really strong double-digit rate. And because we needed that cash pay out, we didn't have to pay out before, but as we kind of look at money transfer as a product; our product was inferior to the competition because we had to go through an intermediary to do the cash -- to do the cash payout. Now, that we have a direct relationship if ever a customer has a problem their recipient didn't receive their money or didn't think he did, we can go straight to the source to find out where the money is. When you have an intermediary all this stuff takes time and so you just don't have as an effective competitive product as you would like to have. So now that we have this we're watching these numbers grow significantly really week-on-week almost.

And I would add to that that you may recall here a couple of years ago, we acquired this IME business out of the Asia-Pac area. Again, with sight on the Indian market which is arguably equal to or the biggest receive market in the world. And that puts us just right in the cross airs of where the most significant volumes are generated that that part of the world. And so having now a pay out network that will complement that kind of fend network asset should really taught us to accelerate our business over there. So we're looking quite forward to the momentum that helps us build in that part of the world.

Okay. That's great. Thanks. And with regard to digital which seems to be taking share very quickly of your overall business. Can you just discuss a little bit the competitive environment especially in the context of expansion into the U.K. where you have at least one very large startup that seems to be going after what has traditionally been bank volume. I mean is this [TAM] [ph] big enough for multiple players. And how do you think your pricing compares with some of these upstarts that may not have as much of a profit imperatives Euronet does ?

That that is a little bit challenging sometimes, but you also got to remember that most of these stars have effectively no volume on top of it. So they're marketing big; they're making a big splash with their press releases, but at the end of the day it comes down to how many transactions you do and whether you have an ongoing and durable business. We believe we have such we continue to grow our digital business along with our bricks and mortar business. Bricks and mortar tends to give you good [indiscernible] both on the receive side and on the send side and the amount of digital transfers that occur worldwide versus bricks and mortar are actually very, very small. So digital is getting a lot of hype because it's digital. And we bought XE and HiFX because we want to play there and we are playing there. And these guys do give us a little bit of a challenge on the digital side. But there is plenty of TAM out there for a lot of people. But understand that most probably 90% of all remittances in the world are still fend cash to cash. So let's not forget that. You're talking about TAM, their TAM is 10% of the big TAM. And as long as we can be strong in the bricks and mortar and digital we are going to win the game because it's the end of the day, it's economies of scale.

Okay. Thanks a lot.

Thank you. The next question is from Laura Foreman of Goldman Sachs. Your line is open.

Hi. Thanks for taking the question. I might have two questions on the ATM business. First, just in terms of the DCC regulation, I thought that was really helpful of kind of different outcomes from the European Commission. When you think about that most likely worst [indiscernible] about those exchange rate disclosures. Seems like you guys are already have good disclosures there. So kind of what's your worst case scenario there in terms of how that might change your business? And then, I think you guys mentioned 3500 high value ATMs for 2018, that acceleration, if I'm talking about that 3000 numbers, so this one gives you the confidence there in terms of being able to accelerate the deployments with those ATMs?

Well, first of all, there is no -- to answer your second question. There's no company on the planet that's growing out ATMs as fast as we are in very highly productive sites. We know what we're doing. We continue to expand. We're in 20 -- either 22 or 23 countries in Europe right now plus India plus we are looking at other countries outside of these core markets. And so we really know what we're doing and we're hiring more and more people to help us achieve those goals. Last year this time our goal was 3000, we hit 3300. This year our goal is 3500, I would like to hit that or beat that. So, we have a lot of confidence that there is still good location out there around the world.

And I think just to embellish on a point Mike made here and that is beyond our core markets that we have historically talked most about and that was Europe and India. We see some very attractive markets out there. And hopefully in the future quarters, we're able to tell you about some of our successes there. But remember, we operate in 40 some different countries around the world in either our ATM business, or our epay business or our money transfer business. So these are not markets that are new to our operating rhythm. Their markets that we are quite familiar with that we have people in that we are excited about going after those. So it is doing all the things that we have done in these other markets it's just expanding that to some more. And as Mike said even if you take a look at the ATMs per population in the markets that we are in and have great success they are still woefully insufficient compared to other more developed economies. So plenty of opportunity and good experience under our belt.

And with respect to your first question about outcomes with European Commission look at that. It's nice that the European Commission have these technocrats that look at these -- at the subject matter. And these guys are actually pretty smart. And so when they look at this they've already recognized that this is a very complex issue. And the idea that either one choice or the other should have predominance is something that they don't like. They like competition. As you know the European Union is not particularly thrilled with what's happened in the banking community and how bank sometimes take advantage of customers and so forth. So what that does is, it positions us very well kind of an equal kind of treatment and because we really believe we're out there showing exchange rates in total cost and what you get and what is debited out of your account are put on your card. We are the transparent ones; they need to work on the other folks. So, as far as what they'll do, we don't, we think it would be highly unlikely that DCC would be forbidden, because they were the ones who forced these to all DCC at ATMs when it was, when it was done. So, we don't see it going away, we welcome more transparency and we'd love to have our competitor banks have to do what we do. Because, at the end of the day people just, when you just use your bank you have no idea, if you don't choose DCC you have no idea what the outcome is going to be and sometimes you just get screwed. So, we're kind of cautiously optimistic that everything will work out really well there because, we are the standard. There have been bad players particularly on the POS side who would opt you in, whether you choose that or not. I would like to have healthy fines levied against people these bad actors who do that, because we certainly do not. So, I think there is plenty of things I can do means which might actually help us.

Thank you. The next question is from Mike Grondahl of Northland Securities. Your line is open.

Hey Mike and Rick, just a follow-up on the DCC side, did you say that DCC revenue barely reaches double-digit of total company revenue?

Yes.

Got it, thanks. Secondly, your net cash position is around $350 million, what do you kind of thinking with that balance and then if you could also kind of comment trade accounts receivable seem to jump quite a bit, how you think about that and kind of the timing on DSOs and what not?

Well the last one is pretty easy, trade receivables yes, it really is lot to do with just the day of the week that the month ends, because our business is generally collecting and moving money more on a weekly kind of basis and so that kind of influences. So there is nothing there that is changed in any kind of significant way on DSOs, you would also see a similar kind of increments in the payment flow on the other side of the balance sheet. So all of that's just pretty consistent with what our normal rhythm is Mike. As it relates to our cash accumulation, well as Mike said, people often ask us even about the MoneyGram acquisition. So, there we are acquisitive, we complete acquisitions routinely and so that would be our first interest to be able to continue to supplement the growth of our business through acquisitions and because, we operate in so many different countries around the world we have plenty of things to look at, there are several that are on the observation table now, but you can just never say when one will come out, because of whether its valuation maybe bad things you find during diligence, et cetera. So, that would be the first one, the second one would be we will as we have done in the past, selectively repurchased shares especially if there is some price dislocations some things like that, so that could be a possibility and then finally, we continue to grow our ATM state and let's say to the extent that we could find an attractive place around the world and deploy ATMs. It might be wise to use that cash to accelerate that growth. So, those are the kinds of things that probably come top of mind for me Mike.

Got it. Lastly, just real quick on XE, how are you feeling about that and HiFX going into 2018?

I think, honestly I think the end of 2016 and the beginning of the 2017 were weaker than what we'd liked. We've seen a lot, we've got new management there, we've seen a lot of changes in how we approach and how we're using big data to try to figure out better ways to do what we do. So, we are - we're kind of optimistic about that whole digital piece of our business as we move into 2018.

As we said, our accounts increased to 18% that was, nice numbers and I think it starts to show you the value of having access to 60 million apps and more than 200 unique visitors to that site and as Mike said, we - last year as we turned 16 into 17, we were going through the conversion from the competitor platform. We wanted to try to make sure we did that without breaking customers. We got through that in a successful way and now we've got more focus on growing the business and we're starting to see that show up in this 18% number here. So, we're quite excited about what we have in front of us and look forward to this being a year that we can really leverage at.

Great, thanks guys.

Thank you. The next question is from Rayna Kumar of Evercore ISI. Your line is open.

Good morning Mike and Rick.

Good morning.

Could you discuss your constant currency revenue growth expectations by segment for 2018 and specifically do you expect money transfer top-line to grow double-digits return to double-digit growth in 2018?

Yes. That yes, no question.

Right, thank you for the second part of the question.

It's good to hear you ask could we get…

Rayna we don't discuss DCC by segment, but what we would tell you is that substantially all in our EFT segment, okay. And we would expect that DCC would grow at a rate similar to what that segment would grow and as you know we have grown that segment quite nicely in the strong double-digit category. The one thing I would tell you that is that we would probably expect more of our growth especially on the DCC front to be stimulated outside of the European theatre, because we don't talk a great deal about it, but we offer DCC around the world and when they talk about this DCC matter in Europe, that's really just for the EU piece of it. And then it gets a little bit more complicated because, there is other markets around the world that have some more attractive, let's just call them interchange rates which make the international customer more attractive. And so all that kind of fits into our strategy as Mike said to grow and to have a few more ATMs on our target to grow next year. So, we don't specifically talk about growth rate, but I wouldn't expect it to be disproportionate to our overall segment growth rate.

That's very helpful. Actually I was asking about your revenue growth expectations by segment for 2018, and specifically if you expect money transfer to return to double-digit top-line growth?

Yes well, I mean again, if you take a look at money transfer and you just do some real simple pro forma math that and it did grow year-over-year in a double-digit fashion and just within the fourth quarter it didn't grow double-digit, but on a pro forma basis, if you - you even account for a little bit of the rate decrease that was afforded to the Walmart, Walmart customers, you can see that that quickly gets you into the double-digit zone. We had 14% transaction growth year-over-year there and so, I think as we said in our comments, those if you do some pro forma calculations the revenue in transaction numbers come much more in line. So with the success we're seeing on the XE, in the digital platform with the Indian rollout that we've had out there, with attention really around the world we expect that business to continue as Mike said real quickly to continue to grow at a double-digit pace.

And also plus, the Walmart transactions themselves have been quite strong and that's how we're getting to the point where we're going to lap them and probably by the second quarter we're producing more profits than we did in the second quarter of last year took us the year to kind of makeup that difference, because there was a significant discount afforded to the customers, but they have they've spoken with their fees and their money and they are actually doing those transactions and growing that piece of our business.

If we are to talk about the growth rates and I would probably be more focused on the bottom-line and the top-line, I would expect the top-line to be growing little bit than the bottom-line there. But in the epay business, we probably, we go into this year with the expectation that's probably a low to mid single digit operating income growth line, I would like to see, I'd have a chance this year to break out of that with the digital being a more prominent part of, I mean our digital, but the non-mobile being more prominent part of that segment. And so I think that we have a chance to be a little bit more productive there, but again I'd probably be in that low, mid to, lower-to-mid single digit number. On the EFT business gosh it, our team is just continued to find great success that rolling out ATMs and as Mike said, we're seeing some stronger interest in outsourcing. Just as Mike also said in this thing here we, we were selected by Yes Bank to replace their software platform with a very, that's a very substantial bank in India and all of the folks in that part of the country and elsewhere have some really important decisions to make on their ATM driving infrastructure, because of sunset by certain competitors. And that's resulted enough selling more software and doing more outsourcing. So, we think that business will continue, when Mike said, yes we'll see double-digit on the money transfer, we'll see stronger double-digit out of the EFT. I would be an finance guy, I would probably I'm less reluctant to throw the number out there, this year again we were in the plus 20% range.

We'll only say this, one that would be nice if we can do that again.

Yes. So again, we'll see double-digit on money transfer, we'll see stronger double-digit on EFT and we'll be kind of in the middle singles on the epay business.

Very helpful detail. What are you seeing out there for cross-border money transfer pricing for the quarter and then your expectations for 2018?

You know what was, I'd say for the most part let's say call it down the fairway as I looked out across all of our different countries, I saw a few where we had some overall averages that were less than the same period last year, but then I saw an equal number that were greater than the last year. So, I think as we've said before, we always see different pockets of competition out there. It could be in a particular corridor, a particular country, where we're seeing some greater competition, but I would say as we finish the fourth quarter it was not a lot different when there were some a little bit down, some a little bit up, but on average kind of pretty much down the fairway Rayna.

Got it. And if I can just sneak in one last question. Are you seeing any difference in the economics between the cardless ATM transactions your doing in Poland versus the card transactions and could you expand that technology to other countries?

Certainly, we could and we see the banks may wish to do so, but we don't have any really economic difference at all, if anything a little bit more positive to it.

Thank you.

Thank you. And we have gone past the end of the hour. I would now like to turn the call back over to Mike Brown for closing remarks.

I just want to thank everybody for taking the time to bear with us. We went a little over time this quarter, but thank you and I look forward to talking to everybody in little less than 90 days. Thank you very much.

Thank you. Ladies and gentlemen, thank you for joining today's conference. This concludes the program. You may now disconnect. Good day, everyone.