UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-38504

EVO Payments, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		82-1304484
State or Other Jurisdiction of Incorporation or Organization		I.R.S. Employer Identification No.

Ten Glenlake Parkway South Tower, Suite 950 Atlanta, Georgia		30328
Address of Principal Executive Offices		Zip Code

(770) ~~709~~336-~~7374~~8463

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	EVOP	Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ⌧ No ◻

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ◻ No ⌧

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐

Non-accelerated filer ☐	Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the registrant’s Class A common stock held by non-affiliates, based on the closing sale price as reported on the Nasdaq Global Market system on June 30, ~~2021~~2022, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $1,~~293~~104,~~189~~291,~~867~~965. As of February 1413, ~~2022~~2023, there were 4748,~~453~~430,~~097~~396 shares of the registrant’s Class A common stock, par value $0.0001 per share, and 3,~~783~~741,074 shares of the registrant’s Class D common stock, par value $0.0001 per share, issued and outstanding. As of February 1413, ~~2022~~2023, there were 32,163,538 common membership interests of EVO Investco, LLC (“Common Units”) issued and outstanding held by Blueapple, Inc., a ~~Delaware~~New York corporation, which is controlled by entities affiliated with the registrant’s founder and Chairman of the board of directors, Rafik R. Sidhom, and which Common Units are subject to Blueapple, Inc.’s right to cause the registrant to use its commercially reasonable best efforts to pursue a public offering of an equivalent number of the registrant’s Class A common stock and use the net proceeds therefrom to purchase such holder’s Common Units. As a result, the registrant believes that these Common Units are most appropriately viewed as equivalent to additional shares of Class A common stock when considering the registrant’s overall capitalization.

DOCUMENTS INCORPORATED BY REFERENCE:

Specifically identified portions of the registrant’s proxy statement for the 2022 annual meeting of stockholders, which will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2021, are incorporated by reference into Part III of this reportNone.

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EVO PAYMENTS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS



Cautionary Note Regarding Forward-Looking Statements			3
Basis of Presentation			45

PART I
	Item 1	Business	56
	Item 1A	Risk Factors	2221
	Item 1B	Unresolved Staff Comments	4950
	Item 2	Properties	50
	Item 3	Legal Proceedings	50
	Item 4	Mine Safety Disclosures	50

PART II
	Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	50
	Item 6	Reserved	52
	Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk	6566
	Item 8	Financial Statements and Supplementary Data	6768
	Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	~~124~~128
	Item 9A	Controls and Procedures	~~124~~128
	Item 9B	Other Information	~~125~~129

PART III
	Item 10	Directors, Executive Officers and Corporate Governance	~~125~~129
	Item 11	Executive Compensation	~~125~~135
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~125~~160
	Item 13	Certain Relationships and Related Transactions and Director Independence	~~126~~164
	Item 14	Principal Accounting Fees and Services	~~126~~173

PART IV
	Item 15	Exhibits and Financial Statement Schedules	~~126~~174
	Item 16	Form 10-K Summary	~~131~~179
		Signatures	~~132~~180

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements about future events and expectations that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current beliefs, assumptions, estimates, and expectations, taking into account the information currently available to us, and are not guarantees of future results or performance. None of the forward-looking statements in this Annual Report on Form 10-K are statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include the following: (1) disruption to our business caused by the ~~continuing~~acquisition ~~uncertainties~~of ~~regarding~~us by Global Payments Inc. (“Global Payments”); (2) our ability to consummate the ~~ultimate~~transaction ~~scope~~with ~~and~~Global ~~trajectory~~Payments ofwithin the ~~COVID-19~~contemplated ~~pandemic~~timeframe, (or at all, including ~~its~~risks ~~variant~~and ~~strains)~~uncertainties onrelated ~~our~~to ~~business~~securing the necessary regulatory approvals and ~~our~~the ~~merchants,~~satisfaction ~~including~~of other closing conditions; (3) the impact ofon ~~social~~our ~~distancing~~stock price, ~~shelter-in-place~~business, ~~shutdowns~~financial condition and results of ~~non-essential~~operations ~~businesses~~if the proposed transaction with Global Payments is not consummated; (4) costs, charges and ~~similar~~expenses ~~measures~~relating ~~imposed~~to orthe ~~undertaken~~proposed bytransaction ~~governments~~with Global Payments; (25) our ability to anticipate and respond to changing industry trends and the needs and preferences of our customers and consumers; (36) the impact of substantial and increasingly intense competition; (47) the impact of changes in the competitive landscape, including disintermediation from other participants in the payments chain; (58) the effects of global economic, political, market, health and other conditions, including the continuing impact of the COVID-19 pandemic; (69) our compliance with governmental regulations and other legal obligations, particularly related to privacy, data protection, information security, and consumer protection laws; (710) our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks; (811) failures in our processing systems, software defects, computer viruses, and development delays; (912) degradation of the quality of the products and services we offer, including support services; (1013) our ability to recruit, retain and develop qualified personnel; (1114) risks associated with our ability to successfully complete, integrate and realize the expected benefits of acquisitions; (1215) continued consolidation in the banking and payment services industries, including the impact of the combination of Banco Popular and Grupo Santander and the related bank branch consolidation; (1316) increased customer, referral partner, or sales partner attrition; (1417) the incurrence of chargebacks; (1518) failure to maintain or collect reimbursements; (1619) fraud by merchants or others; (1720) the failure of our third-party vendors to fulfill their obligations; (1821) failure to maintain merchant and sales relationships or financial institution alliances; (1922) ineffective risk management policies and procedures; (2023) our inability to retain smaller-sized merchants and the impact of economic fluctuations on such merchants, (2124) damage to our reputation, or the reputation of our partners; (2225) seasonality and volatility; (2326) geopolitical and other risks associated with our operations outside of the United States, such as the conflict between Russia and Ukraine; (2427) any decline in the use of cards as a payment mechanism or other adverse developments with respect to the card industry in general; (2528) increases in card network fees; (2629) failure to comply with card networks requirements; (2730) a requirement to purchase the equity interests of our eService subsidiary in Poland held by our JV partner; (2831) changes in foreign currency exchange rates; (2932) future impairment charges; (3033) risks relating to our indebtedness, including our ability to raise additional capital to fund our operations on economized terms or at all and exposure to interest rate risks; (3134) the phase out of LIBOR and the transition to other benchmarks; (3235) restrictions imposed by our credit facilities and outstanding indebtedness; (3336) participation in accelerated funding programs; (3437) failure to enforce and protect our intellectual property rights; (3538) failure to comply with, or changes in, laws, regulations and enforcement activities, including those relating to corruption, anti-money laundering, data privacy, and financial institutions; (3639) impact of new or revised tax regulations; (3740) legal proceedings, including litigation that seeks to prevent the merger with Global Payments from being consummated within the contemplated timeframe, or at all; (3841) our dependence on distributions from EVO, LLC (as defined in “Basis of Presentation”) to pay our taxes and expenses, including certain payments to the Continuing LLC Owners (as defined in “Basis of Presentation”) and, in the event that any tax benefits are disallowed, our inability to be reimbursed for payments made to the Continuing LLC Owners; (3942) our organizational structure, including benefits available to the Continuing LLC Owners that are not available to holders of our Class A common stock to the same extent; (4043) the risk that we could be deemed an investment company under the Investment Company Act of 1940, as amended; (4144) the significant influence the Continuing LLC Owners continue to have over us, including control over decisions that require the approval of stockholders; (4245) certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control; (4346) certain provisions in our organizational documents, including those that provide Delaware as the exclusive forum for litigation matters and that renounce the doctrine of corporate opportunity; (4447) our ability to maintain effective internal control over financial reporting and disclosure controls and procedures; (4548) changes in our stock price, including relating to downgrades, analyst reports, and future sales by us or by existing stockholders; and (4649) the other risks and uncertainties ~~listed~~described ~~under~~in Item 1A “Risk Factors” contained in Part I of this Annual Report on Form 10-K.

Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. We qualify any forward-looking statements entirely by the cautionary factors listed above, among others. Other risks, uncertainties and factors, not listed above, could also cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

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BASIS OF PRESENTATION

As used in this Annual Report on Form 10-K, unless the context otherwise requires, references to:

●

“EVO,” “we,” “us,” “our,” the “Company” and similar references refer (1) on or prior to the completion of the Reorganization Transactions, including our initial public offering, to EVO, LLC and, unless otherwise stated, all of its direct and indirect subsidiaries, and (2) following the consummation of the Reorganization Transactions, including our initial public offering, to EVO, Inc., and, unless otherwise stated, all of its direct and indirect subsidiaries, including EVO, LLC.

●

“EVO, Inc.” refers to EVO Payments, Inc., a Delaware corporation, and, unless otherwise stated, all of its direct and indirect subsidiaries.

●

“EVO, LLC” refers to EVO Investco, LLC, a Delaware limited liability company, and, unless otherwise stated, all of its direct and indirect subsidiaries.

●

“Continuing LLC Owners” refers collectively to the remaining holders of LLC Interests (other than EVO, Inc.), which includes Blueapple, MDP, our executive officers and certain of our current and former employees.

● “EVO LLC Agreement” refers to the second amended and restated limited liability company agreement, dated as of May 22, 2018, by and between EVO, LLC and the Continuing LLC Owners, as amended.

●

“LLC Interests” refers to the single class of common membership interests of EVO, LLC.

● “Blueapple” refers to Blueapple, Inc., a ~~Delaware~~New SYork corporation, which is controlled by entities affiliated with our founder and Chairman of our board of directors, Rafik R. Sidhom.

●

“MDP” refers to entities controlled by Madison Dearborn Partners, LLC.

●

“markets” refers to countries and territories where we are authorized by card networks to acquire transactions. For purposes of determining our markets, territories refers to non-sovereign geographic areas that fall under the authority of another government. As an example, we consider Gibraltar (a territory of the United Kingdom) and the United Kingdom to be two distinct markets as our licensing agreements with the card networks gives us the ability to acquire transactions in both markets.

●

“merchant” refers to an organization that accepts electronic payments, including for-profit, not-for-profit and governmental entities.

●

“Reorganization Transactions” refers to the series of reorganization transactions described herein that were undertaken in connection with our initial public offering to implement our “Up-C” capital structure.

●

“transactions processed” refers to the number of transactions we processed during any given period of time and is a meaningful indicator of our business and financial performance, as a significant portion of our revenue is driven by the number of transactions we process. In addition, transactions processed provides a valuable measure of the level of economic activity across our merchant base. In our Americas segment, transactions include acquired Visa and Mastercard credit and signature debit, American Express, Discover, UnionPay, JCB, PIN-debit, electronic benefit transactions, and gift card transactions. In our Europe segment, transactions include acquired Visa and Mastercard credit and signature debit, other card network merchant acquiring transactions, and ATM transactions.

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PART I

ITEM 1. BUSINESS

Our business

Founded in 1989, we are a global merchant acquirer and payment processor servicing more than ~~550~~700,000 merchants and processing approximately 4.29 billion transactions annually. We help enable electronic commerce globally with local operations in 1213 countries and the ability to serve over 50 markets around the world. We differentiate ourselves from our competitors through (1) a highly productive and scaled sales distribution network, including exclusive global financial institution and tech-enabled referral partnerships, (2) our three proprietary, in-house processing platforms that are connected by a single point of integration, and (3) a comprehensive suite of payment and commerce solutions, including integrated software, at the physical point-of-sale (“POS”), eCommerce, and business-to-business (“B2B”) solutions. We believe these points of differentiation allow us to deliver strong organic growth, increase market share, and attract additional relationships with financial institutions, technology companies, and other strategic partners.

We are focused on delivering products and services that provide the most value and convenience to our merchants and their customers. Our payment and commerce solutions consist of our core proprietary products and services, value-added solutions, as well as services that we enable through technical integrations with third-party providers. Our global footprint and ease of integration attract new partner relationships, allowing us to develop a robust integrated solutions partner network and positioning us to stay ahead of major trends in each of our markets.

We operate three proprietary, in-house processing platforms, all connected via our EVO Snap solution and each supporting a different geographic region. EVO Snap provides a technical connection to our regional processing systems and a central point of integration for all third-party product partners. Importantly, our platforms allow us to address the unique needs of specific payments markets and to control the entire customer experience. In-house processing also allows us to directly address merchant and regulatory concerns regarding the flow of cardholder data and other sensitive information. Our proprietary systems provide scale efficiencies which minimize our variable costs as merchant counts and transaction volumes increase.

Due to our broad distribution, diversified product offering, leading tech-enabled solutions, and client service, we are able to build strong relationships with our merchants and referral partners. These merchants rely on our product offerings, including our payment processing, on-boarding, underwriting, technical support, secure infrastructure, and settlement services, and our technology is often heavily embedded in our merchants’ infrastructure.

As an intermediary between merchants and card networks, we collect a series of fees primarily driven by the number, type, and value of transactions processed. These merchant service fees are then split into three components: (1) fees remitted to the financial institution that issued the card (interchange), (2) fees remitted to the card networks, and (3) fees retained by EVO. The allocation of these three components vary greatly based on a number of factors, including merchant size, merchant industry, merchant location, type of card, and type of transaction (e.g., card present and card-not-present). In addition, we generate fees for products and services provided to capture transactions, value-added services and more advanced technology solutions that we provide to our merchants.

~~Our~~On ~~segments~~August 1, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Global Payments Inc. (“Global Payments”) and Falcon Merger Sub, Inc., a wholly-owned subsidiary of Global Payments (“Merger Sub”). Subject to the terms and conditions of the Merger Agreement, Global Payments has agreed to acquire EVO, Inc. in an all-cash transaction for $34.00 per share of Class A common stock. Pursuant to the Merger Agreement, Merger Sub will merge with and into EVO, Inc. (the “Merger”) with EVO, Inc. surviving the Merger as a wholly-owned subsidiary of Global Payments. Upon the consummation of the Merger, EVO, Inc. will cease to be a publicly traded company.

We ~~classify~~have ~~our~~agreed ~~business~~to ~~into~~various ~~two~~customary ~~segments:~~covenants ~~the Americas~~ and ~~Europe.~~agreements, ~~The~~including, ~~alignment~~among ofothers, ~~our~~agreements ~~segments is designed~~ to ~~establish~~conduct ~~lines~~our of business ~~that~~in ~~support~~ the ~~various~~ordinary ~~geographical~~course ~~markets~~during inthe ~~which~~period webetween ~~operate~~the ~~and~~execution ~~make~~of ~~our~~the ~~local~~Merger ~~solutions~~Agreement ~~available~~and ~~across~~the ~~our~~effective ~~entire~~time ~~global~~of ~~footprint. In both segments, we provide our customers with merchant acquiring solutions, including integrated solutions for retail transactions at~~ the ~~physical and virtual POS, as well as B2B transactions~~Merger. ~~These~~We ~~also~~do ~~represent~~not ~~the~~believe ~~operating~~these ~~segments~~restrictions ~~used~~will byprevent ~~our~~us ~~Chief~~from ~~Executive~~meeting ~~Officer for evaluating~~ our ~~performance~~debt ~~and~~service ~~allocating resources. Refer to Note 20~~obligations, ~~“Segment~~ongoing ~~Information,” in the Notes to the Consolidated Financial Statements for financial data pertaining to our segments.~~

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costs of operations, working capital needs, or capital expenditure requirements. The Merger is expected to close in the first quarter of 2023, subject to customary closing conditions.

Our segments

We classify our business into two segments: the Americas and Europe. The alignment of our segments is designed to establish lines of business that support the various geographical markets we operate in and allow us to further globalize our solutions while working seamlessly with our teams across these markets. In both of our segments, we provide our customers with merchant acquiring solutions, including integrated solutions for retail transactions at the physical and virtual POS, as well as B2B transactions. These also represent the operating segments used by our Chief Executive Officer for evaluating our performance and allocating resources. Refer to Note 20, “Segment Information,” in the Notes to the Consolidated Financial Statements for financial data pertaining to our segments.

We believe the changing trends in payment technologies, including the increased adoption of tech-enabled payment solutions and the ongoing cash-to-card conversion, will continue to support growth across our segments.

Americas

Our Americas segment includes our operations in the United States, Canada, Mexico, and Chile. In the United States and Canada, where card penetration rates are among the highest in the world, we are focused on driving growth from the changing trends in payment technologies, including the increased adoption of software at the POS for retail and B2B transactions. In Latin America, overall card penetration is significantly lower than that of the United States and Canada. When coupled with other attributes, including a bank-centric acquiring model, terminal-centric small and medium sized enterprises (“SMEs”) markets, and centralized in-country processing shared among competitors, we see highly attractive and sustainable growth opportunities.

For the year ended December 31, ~~2021~~ 2022, we processed approximately 1.1 billion transactions in the Americas, and segment revenue represented 6159.9 1% of total revenue.

Europe

Our Europe segment includes our operations in Poland, Germany, Ireland, the United Kingdom, Spain, and the Czech Republic, as well as our support of merchants in surrounding markets. The European merchant acquiring market has certain structural characteristics such as accelerating cash-to-card conversion, including regulatory support for digital payment acceptance, increased tech-enabled payments adoption, bank-centric acquiring models, significant penetration of local debit networks, and terminal-centric SME markets, which we believe provide us with future opportunities for growth.

For the year ended December 31, ~~2021~~ 2022, we processed approximately 3.18 billion transactions in Europe, and segment revenue represented 3840.19% of total revenue.

Seasonality

We typically experience seasonal fluctuations in our revenue, which can vary by region. Historically, in both the Americas and Europe, our revenue has been strongest in ~~our~~the fourth quarter and weakest in ~~our~~the first quarter as many of our merchants experience a seasonal lift during the traditional vacation and holiday months.

Our sales and distribution network

Within each segment, we have developed a diverse network of sales distribution channels to drive growth for our merchant portfolio. Leveraging our global direct sales force, we target merchants across a wide variety of countries, industries, and sizes. Strategic investments in new products and distribution channels and the seamless introduction of these capabilities to our global markets are central components of our growth strategy. These sales distribution networks consist of our Tech-enabled division, which includes our independent software vendor (“ISV”), B2B, and eCommerce businesses, as well as our Direct and Traditional divisions.

~~Tech-enabled~~7

Our Tech-enabled division represents our relationships with merchants requiring a technical integration at the POS between us and a third party software solution whereby the third party passes information to our systems to enable payment processing. These merchant acquiring arrangements are supported by our direct sales force as well as partnerships with independent software vendors (“ISVs”), integrated software dealers or resellers, and eCommerce gateway providers. In the United States, our Tech-enabled division also includes our B2B business, through which we provide integrated solutions to enterprise resource planning (“ERP”) software to enable companies utilizing this software to accept digital payment methods from their business customers. Our B2B relationships are supported by our proprietary solutions sold directly to merchants and via ERP software dealers or resellers. We have emerged as a preferred partner for these third-party referral partners because of the ease of integration through our proprietary solutions, high merchant satisfaction levels driven by the quality of our service, and the ease and speed of our boarding systems for new merchants.

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Tech-enabled

Our Tech-enabled division represents our relationships with merchants requiring a technical integration at the POS between us and a third party software solution whereby the third party passes information to our systems to enable payment processing. These merchant acquiring arrangements are supported by our direct sales force as well as partnerships with ISVs, integrated software dealers or resellers, and eCommerce gateway providers. In the United States, our Tech-enabled division also includes our B2B business, through which we provide integrated solutions to enterprise resource planning (“ERP”) software to enable companies utilizing this software to accept digital payment methods from their business customers. Our B2B relationships are supported by our proprietary solutions sold directly to merchants and via ERP software dealers or resellers. We have emerged as a preferred partner for these third-party referral partners because of the ease of integration through our proprietary solutions, high merchant satisfaction levels driven by the quality of our service, and the ease and speed of our boarding systems for new merchants.

Our network of over 1,500 integrated partnerships allows us to target a range of merchants, including SMEs and larger merchants such as corporations and multi-national customers, who desire an integrated software solution for their physical locations, an eCommerce gateway solution for their virtual storefronts, and sophisticated integrations to ERP systems to enable digital payment acceptance for B2B transactions. Our proprietary eCommerce capabilities and eCommerce referral partners, as well as our differentiated B2B product offerings including payment integrations to top-tier and industry-specific ERP systems, enable us to target larger merchants across our domestic and international markets.

ISV. Our integrated payments solutions are embedded into business management software solutions owned or licensed by our tech-enabled partners, which span numerous industry verticals and geographic markets. We grow our ISV business by enabling digital payments acceptance through business management software solutions for new and existing merchants, leveraging our tech-enabled referral network, and our direct sales force. We have invested and continue to invest in infrastructure that allows software providers, including dealers and resellers, to offer our proprietary integrated payment solutions to merchants across all of our markets. These investments include enhancing our current infrastructure as well as strategic acquisitions of integrated technology solutions. Our EVO Snap platform’s simple yet powerful connection point provides software developers and their partners access to our three processing platforms—thereby allowing merchants to accept various payment methods across all of our geographic markets.

In July 2021, we acquired Anderson Zaks Limited, an omni-channel payment gateway provider in the United Kingdom to expand our tech-enabled capabilities and broaden our ISV network in the U.K. and across Europe for merchants in key retail verticals, including hospitality, pharmacy, venues, ticketing, and general retail, among others.

B2B. We offer B2B solutions, which combine our payment processing capabilities and business automation software through our market-leading PayFabric gateway to simplify digital payments acceptance for our merchants’ business-to-business transactions. We believe that merchants of all sizes are increasingly looking to improve their back office operations by leveraging digital automation and workflow technology. In addition to our processing capabilities, we offer various interchange management solutions, reporting solutions and other business automation tools to merchants, particularly larger companies with complex payment needs. As a result of our strategic acquisitions and internal development, we are able to offer our solutions to Microsoft, Oracle, Sage, Acumatica, and SAP merchants leveraging our certified native integrations, as well as merchants utilizing various industry-specific business management solutions through our custom integrations. Our investments in the development of our B2B PayFabric gateway have also enabled us to offer these merchants proprietary payment solutions for retail eCommerce transactions.

eCommerce. Our eCommerce solutions enable our merchants to securely and seamlessly accept various payment methods in any of our markets. We are able to deploy our proprietary eCommerce gateway solutions to merchants of all sizes across our global footprint through our direct sales force and tech-enabled referral network. In ~~certain~~May ~~instances~~2022, ~~specifically~~we inacquired ~~our~~North49 ~~U.S.~~Business ~~market~~Solutions, ~~third-party gateway providers refer merchants to us for acquiring and processing capabilities utilizing our eCommerce boarding tools~~Inc., Wea ~~will~~certified ~~continue~~Sage todevelopment ~~expand~~partner ~~our~~based ~~eCommerce offering, particularly~~ in ~~our international markets~~Canada, ~~through~~to ~~strategic~~provide ~~acquisitions~~enhanced ~~and~~B2B ~~continued~~integrated ~~investments~~payment ~~in our proprietary and related~~ solutions ~~that~~for ~~align~~Sage ~~with customer preferences and local government requirements~~customers.

eCommerce. Our eCommerce solutions enable our merchants to securely and seamlessly accept various payment methods in any of our markets. We are able to deploy our proprietary eCommerce gateway solutions to merchants of all sizes across our global footprint through our direct sales and tech-enabled referral networks. Currently, we provide proprietary, regionally designated eCommerce gateway solutions across Europe, Latin America, and the U.S. We will continue to expand our eCommerce offering, particularly in our international markets, through strategic acquisitions and continued investments in our proprietary and related solutions that align with customer preferences and local government

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requirements. For example, in August 2022, we acquired certain technology assets that include shopping cart and website design software that expands our proprietary eCommerce capabilities in Mexico and Chile and decreases our reliance on third parties, and in December 2022, we acquired Electronic Data Processing Source S.A., a leading merchant service provider in Greece to enhance tech-enabled capabilities. Additionally, in June 2021, we acquired Pago Fácil, a leading eCommerce payment gateway in Chile that offers an array of digital payment solutions, including acquiring services, eCommerce software integrations, and value-added solutions that we will leverage across Chile and Mexico.

InOur ~~June~~Tech-enabled ~~2021,~~division werepresents ~~acquired~~approximately ~~Pago~~43.2% ~~Fácil,~~of aour ~~leading~~Americas ~~eCommerce~~revenue ~~payment~~and ~~gateway~~approximately in23.3% ~~Chile that offers an array~~ of ~~digital~~our ~~payment~~Europe ~~solutions,~~revenue ~~including~~for ~~acquiring~~the ~~services,~~year ~~eCommerce~~ended ~~software integrations~~December 31, ~~and value-added solutions~~ 2022.

Our Tech-enabled division represents approximately 44% of our Americas revenue and approximately 22% of our Europe revenue for the year ended December 31, 2021.

Direct

Our Direct division primarily represents the direct solicitation of merchants through international bank relationships and certain other referral sources in the U.S. and is supported by our worldwide direct sales force. In our international markets, we have long-term, exclusive referral relationships with leading financial institutions that actively pursue new merchant relationships on our behalf. As part of these relationships, we target large merchants through a coordinated sales approach with our financial institution partners.

7These financial institutions, including Deutsche Bank USA, Deutsche Bank Group, Grupo Santander, PKO Bank Polski, Bank of Ireland, Raiffeisen Bank, Moneta, Citibanamex, Sabadell, Banco de Crédito e Inversiones (“BCI”), and the National Bank of Greece S.A. (“NBG”), among others, often provide us with access to their brands, significantly enhancing our credibility and recognition in the marketplace. In several markets, we operate with more than one financial institution partner. We also have referral arrangements with a limited number of independent sales organizations (“ISO”) that refer merchants to us.

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These financial institutions, including Deutsche Bank USA, Deutsche Bank Group, Grupo Santander, PKO Bank Polski, Bank of Ireland, Raiffeisen Bank, Moneta, Citibanamex, Sabadell, Liberbank, and Banco de Crédito e Inversiones (“BCI”) among others, often provide us with access to their brands, significantly enhancing our credibility and recognition in the marketplace. In several markets, we operate with more than one financial institution partner. We also have referral arrangements with a limited number of independent sales organizations (“ISO”) that refer merchants to us.

In December ~~2021~~2022, we ~~entered~~commenced ~~into~~operations ~~agreements~~in ~~with the National Bank of~~ Greece ~~to acquire a majority of the bank’s merchant acquiring business~~ through ~~the~~our ~~formation of a~~ joint venture and ~~entry~~exclusive ~~into~~referral arelationship ~~long-term~~with ~~commercial alliance. Under~~ the ~~terms of the agreements, the~~ National Bank of Greece ~~will spin off its merchant acquiring business into a new entity and we will acquire a 51% interest in the joint venture~~. The transaction also includes a marketing alliance agreement whereby the National Bank of Greece will exclusively refer customers to the joint venture and EVO will manage the business and provide its card acceptance solutions through its proprietary products and processing platforms. The transaction is expected to be completed in the second half of 2022, subject to regulatory approvals and other customary conditions.

We utilize a dedicated sales team, including outbound telesales, to build and maintain relationships with our merchants, referral partners, and international bank referral network. We have a long history of operating as a direct sales organization and have succeeded by pursuing merchants through our direct sales efforts and retaining merchants by delivering high levels of customer satisfaction. We view our direct sales force as complementary to our financial institution relationships, as our direct sales force generates new merchant opportunities in addition to the referrals we receive from our various partners. As we expand, we will continue to export our direct sales expertise and capabilities into all of the markets in which we operate, using products and sales practices developed over the years in the United States.

A key component of our Direct division is our highly customized lead management, merchant boarding, and risk management software tools. These technologies allow us to quickly and efficiently accept new merchant leads from sales representatives and bank partners, digitally onboard merchants, and manage transaction risks. In both the financial institution referral model and through our direct sales team, we build and maintain a direct relationship with our merchants in order to control our sales, pricing, underwriting, boarding, and support processes.

Our Direct division is our largest division as our international markets are dominated by referrals from our financial institution partners. This division represents approximately 4344.6% of our segment revenue in the Americas and 7876.7% in Europe for the year ended December 31, ~~2021~~2022.

Traditional

Our Traditional division is our heritage United States portfolio and is comprised primarily of dormant commercial relationships with independent sales agents, ISOs, and other partners. Most of these relationships are commercial partnerships; however, in select situations we own an equity stake in a partner as historically, we invested in ISOs in exchange for a processing relationship. While this division is very profitable, the independent sales groups and agents are no longer ~~active~~actively ~~with~~referring ~~the~~merchants ~~Company~~to us, and as such, ~~we expect~~ this business towill decline over time. This division represents approximately 1412.2% of our segment revenue in the Americas for the year ended December 31, ~~2021~~2022.

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Our competitive strengths

Global footprint enables us to serve clients around the world

We have operations in 1213 countries and the ability to service merchants in more than 50 markets around the world. Our customers include large national and multi-national corporations as well as SMEs spanning across most industry verticals. Our global merchant footprint is diversified among retail, restaurants, petroleum, government, and transit industries, among others.

We have investments and partnerships in fast-growing developing and emerging markets with lower penetration rates of electronic payments, such as Mexico, Chile, and Central and Eastern Europe. In addition, we have established sales channels and relationships in large developed economies, such as the United States, Canada, and certain countries in Western Europe, where the penetration of electronic payments is relatively mature.

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channels and relationships in large developed economies, such as the United States, Canada, and certain countries in Western Europe, where the penetration of electronic payments is relatively mature.

We believe our global footprint is a significant competitive advantage as we compete for large, multi-national clients as well as ISVs, integrated software and ERP dealers, and other partners. Large, multi-national merchants choose us because we can act as a single acquirer and processor in the markets in which they operate. Additionally, because of our global footprint, our referral partners can reach new markets by leveraging their connection with us to access our global processing services.

Strategic distribution partnerships with financial institutions and tech-enabled referral partners

Across Europe and Latin America, our exclusive financial institution distribution relationships represent thousands of bank branches, including retail and corporate banking locations. We are highly selective in identifying optimal distribution partners, and we seek to align ourselves with financial institutions that have strong networks, a high-quality client portfolio, and a trusted brand name. After forming these relationships, we introduce our sales and technology capabilities to the local market, identify new merchant recruitment opportunities, and strengthen our relationships with existing merchant clients as our bank partners exclusively refer their existing and new customers to us for acquiring and processing services. We have experienced significant success in our financial institution alliances in attracting new customers on behalf of our bank partners. By providing high quality, focused services to merchants, we enhance the goodwill between our financial institution partners and their merchants which can, in turn, curb attrition. We have demonstrated success in integrating and cross-selling our services to this expanded merchant base as well as generating new banking customers for our partners through our direct sales strategies.

We have also established deep relationships with a large network of tech-enabled referral partners including ISVs, integrated software dealers, ERP dealers and integrators, eCommerce providers, and other membership or distribution partners that wish to offer payment processing services to their merchant customers. We believe our expertise in serving tech-enabled referral partners is differentiated and enabled by our three proprietary, in-house processing platforms and service-oriented culture. Through a single, easy integration point, partners gain access to our global processing platform and solutions. Furthermore, our commitment to customer service drives high merchant satisfaction levels and has established our strong reputation as a reliable and trusted partner around the world. In the B2B market, our integrations to ERP systems enable us to sell our B2B solutions through a network of ERP system implementers, resellers, and buying groups. We believe our expertise in serving tech-enabled distribution partners is a competitive advantage and will position us for continued growth.

Comprehensive suite of payment and commerce solutions

We are focused on delivering the products and services that provide optimal value and convenience to our merchants. As such, we continuously survey the competitive landscape and our merchants and leverage our experience in markets throughout the world to develop products, services, pricing, promotions, and partnering strategies for each region that we believe best suits the current and future needs of each market. Our wide-ranging experience serving multi-national merchants in markets around the world, as well as our close relationships with large merchants and various card networks, including Visa, Mastercard, American Express, Discover, UnionPay, JCB, and other card networks, uniquely position us to stay ahead of major trends in each of our markets.

We offer an extensive portfolio of products, services, and pricing solutions with functionality that appeals to a broad range of merchants and that are specifically designed for particular vertical markets. Our extensive product offerings enable us to provide tailored payment solutions to each of our merchants to fit their customized needs.10

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~~proprietary~~We ~~processing~~offer ~~systems~~an extensive portfolio of products, services, and apricing ~~single~~solutions ~~point~~with offunctionality ~~integration~~that ~~for~~appeals ~~technology~~to ~~partners~~a ~~and~~broad range of merchants ~~across~~and ~~all~~that ~~our~~are ~~markets~~specifically ~~and~~designed ~~geographies~~for particular vertical markets. WeOur ~~believe~~extensive ~~this~~product ~~capability~~offerings ~~differentiates~~enable us ~~from~~to provide tailored payment solutions to each of our ~~competitors~~merchants to fit their customized needs.

In addition, because we operate in markets around the world and have a global perspective, we are able to export our strategies and solutions from one market into another. Specifically, EVO Snap provides a technical connection to our proprietary processing systems and a single point of integration for technology partners and merchants across all our markets and geographies. We believe this capability differentiates us from our competitors.

Leading technology and security

As the rate of innovation has increased dramatically, providing payment and commerce solutions to merchants of all types has become increasingly dependent upon a strong foundation of secure and flexible technology. We have designed our technology infrastructure with a singular focus in mind — to provide the products and services our merchants want in the most secure, efficient, and effective manner possible. Underpinning this focus is a worldwide team of professionals from multiple disciplines, dedicated to continuously improving our service levels while expanding our offerings to merchants across the various regions in which we operate.

Our strategy is to leverage EVO-owned technology in our product and service delivery to the greatest extent possible. We believe that this approach allows us to minimize variable expenses in processing transactions and maximize reliability and speed-to-market in delivering the products and services demanded by our merchant customers throughout our global footprint. In many markets, we provide innovative solutions that merchants are unable to obtain from traditional bank acquirers. We endeavor to export products, services, platforms, and applications that enjoy success in any one of our markets to all of our markets, allowing our merchants and referral partners to benefit from our global footprint and providing a consistent experience for our multinational customers. We employ local product and technical expertise in every EVO market and then tailor our products and services from other regions to capture local market opportunities.

Our product lines consist of a collection of integrated solution offerings, which allow tech-enabled partners to connect to our systems via a simple, single integration, giving them access to our platforms. These product lines include (1) an ISV platform that offers merchants a variety of direct connections to software companies through various integrated software dealers, (2) payment integrations to ERP systems to enable card acceptance from business customers as well as complementary accounts receivable-related automation and reconciliation tools, and (3) robust eCommerce gateway solutions that provide comprehensive payment solutions, including proprietary eCommerce solutions that allow online merchants to leverage our global suite of products, including paperless reporting and boarding.

Our EVO Snap platform is fully EMV (Europay, Mastercard, Visa) compliant and provides an extensive menu of advanced features to our current and prospective integrated software partners, including tokenization, point-to-point encryption, and real-time fraud scoring. We believe this platform also allows us to deliver outsized value to our merchants by providing them with access to a broad range of industry-specific third-party business management software tools at the POS (e.g., inventory management, advanced accounting functions, and real-time promotions), even if the software vendor is located in another market.

Uninterrupted services are mission-critical to our merchants and referral partners. As such, we have invested in creating a leading technology infrastructure designed to prioritize both efficiency and security. In addition, everything we bring to market is designed and implemented with security as a primary requirement. Our technology infrastructure is supported by professionals with decades of experience in operating high-volume, real-time processing systems and has been developed around our data centers located in the U.S., Mexico, and Poland. We have also designed our environments with the ability to redirect processing to the most appropriate operating location at any given time. This flexibility enables us to continue to offer processing services during catastrophic events and disasters that would otherwise adversely affect our clients.

In addition, we have implemented a formal information security program, EVO Secure, to address threats to our infrastructure. This multi-layered program, led by a team of dedicated security professionals, ensures that we evaluate, defend, monitor, and react to potential threats in a consistent manner across our global network.

~~Proven management team with strong track record of value-creating acquisitions~~ 11

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~~payments~~Proven ~~company.~~management Asteam wewith ~~have~~strong ~~expanded~~track ~~our~~record ~~international~~of ~~operations, we have invested substantial resources to attract and retain experienced talent with significant in~~value-~~country experience~~creating toacquisitions ~~further develop and support our current and future markets.~~

Our senior leadership team includes highly experienced payment technology professionals based in the Americas and Europe, allowing us to operate successfully in our current markets while also evaluating new markets. Many of our executives previously worked together in the industry and have extensive experience in developing and managing a global payments company. As we have expanded our international operations, we have invested substantial resources to attract and retain experienced talent with significant in-country experience to further develop and support our current and future markets.

Our senior leadership team has also demonstrated exceptional execution capabilities around developing new markets and sales distribution channels, consolidating and insourcing operations, and leading multi-cultural dispersed teams. They have completed numerous migrations of merchants from third party providers to our proprietary platforms. The team has also successfully formed and maintained complex alliance relationships with many large financial institutions, which provide a significant number of merchant referrals to our business.

Our growth strategies

We believe our competitive strengths will continue to generate significant growth opportunities in both existing and new markets. We plan to grow our business by executing the following strategies:

Organically growing existing markets

We believe there is considerable opportunity for growth not only in new markets, but in our existing markets as well. Since 2012, our international operations have grown considerably, accounting for approximately 6065% of our revenue for the year ended December 31, ~~2021~~2022.

Many of our international markets are less mature than the United States with respect to the growth drivers of our business. Specifically, these markets exhibit higher overall consumer expenditure growth, provide more opportunity for cash-to-card conversion, have lower penetration of integrated software and eCommerce solutions, and present growth opportunities with new financial institution partners. Furthermore, as a result of the COVID-19 pandemic, we have seen an acceleration in the adoption of digital payments in these markets resulting in an increase in card penetration and processing volumes.

In the United States, Canada and the U.K., which are relatively more mature than our other international markets, we believe there is significant opportunity for sustained, attractive growth in both the integrated software and the B2B channels. Merchants of all sizes are increasingly migrating from standalone terminals to integrated POS solutions, as software becomes more affordable and more customized based on the industry of the merchant. B2B merchants, who have historically low rates of card acceptance compared to business-to-consumer merchants, are now enjoying significant growth because of interchange incentives from the card schemes which lowers the cost of card acceptance based on the data transmitted with each transaction, coupled with the desire to adopt business automation tools available through ERP payment integrations. We have made and continue to make investments through in-house development and acquisitions that secure market-leading technology solutions for both retail management software and ERP solutions, as the growth rates of these channels are superior to that of traditional POS merchants. We expect these growth trends to continue for the foreseeable future.

To continue growing our merchant base we focus primarily on the following strategies:

●

Supporting our existing portfolio and adding new customers. Our existing distribution partners currently service customers that do not utilize our merchant services, which presents business opportunities to cross-sell our services to these existing relationships.

● Introducing our comprehensive, global set of payment and commerce solutions to our existing markets. With industry leading products and services, such as our proprietary dynamic currency conversion (“DCC”) technology, our state-of-the-art integrated platform, our suite of ERP payments integrations, and our eCommerce gateway solution, we believe we are uniquely positioned to enable our distribution partners to offer their ~~merchants the broadest product offering in the market.~~

● Leveraging our global infrastructure to service multinational and enterprise merchants. As a result of having a proprietary integrated platform, we are able to act as a single acquirer and processor for merchants in multiple12

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~~countries~~merchants the broadest product offering in the market.

●

Leveraging our global infrastructure to service multinational and enterprise merchants. As a result of having a proprietary integrated platform, we are able to act as a single acquirer and processor for merchants in multiple countries.

●

Customizing solutions to meet in-market needs. We design our products and services to meet the needs of our local customers and partners. We also enable our systems to utilize local alternative payment methods that are present in particular markets, such as Blik in Poland, Giropay in Germany, and Codi in Mexico.

By implementing these strategies, we believe we will increase adoption of our payment and commerce solutions, continue to grow our merchant base, and offer merchants the broadest set of solutions in the market.

Expanding our global footprint

Our partnership strategy has been a source of significant growth, and we believe it will continue to facilitate growth in the future. Since 2012, we have established bank alliances with leading financial institutions around the world, many of which are exclusive and long-term. For example, aswe ~~previously~~completed ~~announced in December 2021,~~ our ~~pending~~previously ~~joint~~announced ~~venture~~transaction ~~and exclusive referral relationship~~ with the National Bank of Greece isand ~~expected~~commenced tooperations bein ~~completed~~Greece in ~~the~~December ~~second~~2022 ~~half~~through ofa ~~2022,~~joint ~~subject~~venture toand ~~regulatory~~exclusive ~~approvals~~referral ~~and~~relationship ~~other~~with ~~customary~~the ~~conditions~~bank. While we have made meaningful headway in penetrating new markets, we believe considerable opportunities remain in both establishing additional bank alliances in our current markets, as well as new markets around the world.

In determining which markets to enter, we evaluate a wide range of factors, including the reputation of our potential bank partner, the size and characteristics of the bank’s existing merchant portfolio, the size and stability of the domestic economy, the stability of the government, card usage penetration, growth prospects, profitability, commerce and technology trends, regulatory and other risks, required investments, management resources, and the likely return on investment. This strategy drives us to expand into select international markets that we believe present attractive investment opportunities for long-term, sustainable merchant growth, as supported by factors such as:

●

low penetration of cards-per capita among consumers;

●

high volume growth supported by cash-to-card conversion;

●

regulatory initiatives implemented with an aim to accelerate card acceptance among merchants;

●

less differentiated competitive landscape, given the prevalence of bank-owned acquiring businesses;

●

increased adoption of integrated POS, eCommerce, and integrated technologies;

●

embedded distribution through partner retail and corporate branch footprint; and

●

ability to launch our product suite and customer-centric services to accelerate end-market growth and acceptance penetration.

We enter new markets by creating distribution relationships with leading, in-market financial institutions that possess a high degree of market knowledge, brand recognition, large distribution networks, and, in many instances, an existing merchant portfolio. These distribution agreements enable us to access a diverse group of merchants, expand the reach of our products and services, and form the basis for future investment in sales and infrastructure.

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Broadening our distribution network

We aim to grow our business and broaden our global reach by generating new distribution relationships that add merchants to our portfolio. We reach new merchants primarily through our direct sales force and referral relationships. Our focus is to build these relationships across all channels, including financial institutions, software vendors, POS dealers, gateway providers, and agents. In addition to developing these growth channels, we are able to leverage our infrastructure both in servicing our existing markets and in expanding to new markets. For example, we have implemented EVO Snap into our European operations, extending the ability for our merchants to access EVO Snap as a single, global integration platform. Through EVO Snap, we also have the ability to support integrated software dealers and distributors in multiple geographic markets. We plan to continue to broaden our distribution network by identifying and securing new distribution opportunities within both our existing and future markets.

Growing and enhancing our innovative payments and commerce solutions

We believe our innovative payments and commerce solutions represent one of our competitive advantages. We have made significant investments internally and through strategic acquisitions in both technology and personnel to propel our product innovation forward. In order to continue to expand, we believe we must continue to offer our customers leading products and services. Through a combination of building products organically, partnering with leading technology innovators, and selectively pursuing acquisitions, we are constantly driving innovation to enhance our products and services.

Through acquisitions and internal development, we have invested heavily in supporting a diverse network of integrated POS providers, ISVs, and integrated software and ERP dealers. These investments have strengthened our ability to support the software community in the markets where we operate, including POS, mobile, and eCommerce developers, by providing these developers with the tools necessary to develop a broader suite of multi-channel, multi-service solutions for merchants. This distribution-centric strategy has created our key global technology solution, in which software developers can integrate to our proprietary processing platforms and we can sign up tech-enabled solutions providers as strategic distribution partners.

Capitalizing on our operating leverage

Our focus on cost optimization is a key consideration of any new investment opportunity. The deep industry and operating expertise of our management team enables us to identify opportunities to improve the operating efficiencies of our technology, product, and operations infrastructure. With in-house processing solutions and proprietary internal systems in our Americas and Europe segments, we have the ability to generate significant operating leverage as we grow overall volumes and transactions. With each newly acquired business, we utilize this infrastructure to optimize costs and efficiencies. Through the support and reporting capabilities of our global systems, we eliminate redundancies and improve operating efficiencies post-acquisition.

Our products and services

We offer a comprehensive portfolio of card-present and card-not-present payment solutions for a variety of industry types and business sizes to facilitate merchants accepting credit, debit, prepaid, digital wallets, and other alternative payment methods. Our portfolio of solutions includes EMV, chip and signature enabled POS terminals, virtual POS terminals for desktops, mobile acceptance and mobile point-of-sale (“mPOS”) solutions for mobile devices and tablets, software-based POS solutions, online hosted payments, and integrated payment service provider (“PSP”) solutions for card-not-present bankcard, direct debit, and alternative payment scheme processing. We also offer value-added solutions such as gateway solutions, online hosted payments page capabilities, mobile-based short message service (“SMS”) integrated payment collection services, security tokenization and encryption solutions at the physical and virtual POS, ~~dynamic currency conversion (“~~DCC”), ACH, Level 2 and Level 3 data processing, management reporting solutions, loyalty programs, and Visa Direct, among other ancillary solutions. Other industry-specific processing capabilities are also in our product suite, such as recurring billing, multi-currency authorization, and cross-border processing and settlement.

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Our solutions enable merchants of all sizes to accept digital payments, including credit and debit cards, closed loop gift cards, pre-paid cards, ACH, and other alternative payment methods. This spectrum of solutions includes:

●

EMV chip, magnetic swipe readers, contactless, chip and signature, chip debit, and gift services for hardware terminals;

●

our mPOS solutions and services including mobile SMS payments solutions;

● software-based POS solutions for enabling payment acceptance through regular smart phones;

●

integrations to various ERP systems to provide accounts receivable departments with B2B payments options and automated reconciliations;

●

a variety of eCommerce solutions including gateway and PSP products, online hosted payments pages, payment links, shopping cart-plug-ins, and virtual terminals;

● income collection solutions for education, insurance and other sectors heavily reliant on invoices;

● buy-now-pay-later (“BNPL”) installment solutions available through card payment networks;

●

comprehensive real-time digital and signatureless merchant boarding systems (from application to merchant processing);

●

market-specific business models for partners, including PSP and referral programs; and

●

online reporting systems for partners, integrators, and merchants providing access to our platforms worldwide.

In addition, as a merchant acquirer, we provide in-house customer service utilizing in-market call centers, as we believe customers need to be served locally in market. We also have developed a consolidated shared services operational capability for back-office services, including credit underwriting, risk, chargebacks, and terminal deployment and repair. Our capabilities also include a regionally-based merchant boarding system, risk management, and ISV technology development centers, supporting the Americas and Europe.

Our diverse offerings are supported by our two unique underlying global products, EVO Snap and our proprietary customer relationship management (“CRM”) solutions. EVO Snap is a highly customized, EMV compliant technology platform that allows merchants to easily access our key POS-related products in all of our markets with one single integration, including core processing and value-added services (e.g., ACH, Level 3 processing, DCC). Our merchants and partners benefit from a single global certification and common interface in the Americas and Europe, a key feature for retail and eCommerce merchants and referral partners with a global customer base. This common application programming interface (“API”) allows ISVs and developers to seamlessly integrate to EVO Snap and access all of its new features.

Our global, state-of-the-art CRM solutions enable all merchants, whether they are recruited through our financial institutions, direct sales, or partner channels, to be seamlessly managed throughout the merchant lifecycle. We provide all partners and agents access to these tools to ensure effective digital customer lifecycle management by streamlining the boarding and management of merchants and supporting our digital payment product and service solutions.

Our markets

Americas

Latin America. We believe that the merchant acquiring market in Mexico represents a very attractive growth opportunity, as overall card penetration is significantly lower than that of the United States. As card penetration continues to increase, we expect to enjoy outsized benefits as the only scaled independent acquirer in the market. In July 2019, we acquired the payment technology assets of SF Systems in Mexico, enhancing our ability to offer integrated payment solutions to mid-sized and large merchants within the region. Additionally, we are introducing our tech-enabled solutions, particularly integrated payments and eCommerce, in order to develop those aspects of the market. We see significant opportunity to differentiate from our competitors, principally financial institutions who view acquiring as a tertiary product necessary to attract core banking business.

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~~acquired~~The ~~the~~merchant ~~payment~~acquiring ~~technology~~market ~~assets~~in ofChile SFclosely ~~Systems~~mirrors inthat of Mexico, ~~enhancing~~with ~~our~~relatively ~~ability~~low card penetration among both consumers and merchants and very little competition for acquiring services. For years the acquiring and processing markets have been serviced only by a bank-owned monopoly. Today, only two financial institutions have migrated from the historical structure to offer ~~integrated~~proprietary solutions, and our bank partner BCI is the only financial institution that has partnered with an independent acquirer. To augment our local product offerings, we acquired Pago Fácil, a payment ~~solutions~~gateway headquartered in Santiago, in 2021. We have further enhanced Pago Fácil to ~~mid-sized~~meet ~~and~~the ~~large~~needs of our Mexican merchants ~~within~~and will further leverage the platform in additional markets in the region as we enter them. ~~Additionally~~In addition, in 2022, we ~~are~~acquired ~~introducing~~certain ~~our~~technology ~~tech-enabled~~assets ~~solutions,~~that ~~particularly~~include ~~integrated~~shopping ~~payments~~cart and website design software that expands our proprietary eCommerce, capabilities in ~~order~~Mexico toand ~~develop~~Chile ~~those~~and ~~aspects~~decreases ofour ~~the~~reliance ~~market~~on third parties. We ~~see~~are ~~significant~~focused ~~opportunity~~on tosupplementing ~~differentiate from~~ our ~~competitors,~~bank ~~principally~~partner’s ~~financial~~distribution ~~institutions~~network ~~who~~with ~~view~~EVO’s ~~acquiring~~proprietary assales astrategies ~~tertiary~~and product ~~necessary~~offerings, toincluding ~~attract~~through ~~core~~new ~~banking~~and ~~business~~existing ISV and eCommerce referral partnerships.

The merchant acquiring market in Chile closely mirrors that of Mexico, with relatively low card penetration among both consumers and merchants and very little competition for acquiring services. For years the acquiring and processing markets have been serviced only by a bank-owned monopoly. Today, only two financial institutions have migrated from the historical structure to offer proprietary solutions, and our bank partner BCI is the only financial institution that has partnered with an independent acquirer. To augment our local product offerings, we acquired Pago Fácil, a payment gateway headquartered in Santiago, in 2021. We have further enhanced Pago Fácil to meet the needs of our Mexican merchants and will further leverage the platform in additional markets in the region as we enter them. We are focused on supplementing our bank partner’s distribution network with EVO’s proprietary sales strategies and product offerings, including through new and existing ISV and eCommerce referral partnerships.

U.S. and Canada. Card penetration in the United States and Canada is among the highest in the world. The largest growth opportunity in these markets is arising from the adoption of business management software with embedded payment processing functionalities as merchants are making an effort to enhance the payments experience for their customers. The cost of these solutions has declined sufficiently to make them affordable for merchants of all sizes, which is causing these solutions to displace standalone terminals at the POS. Examples of this trend include integrated solutions at the physical POS, ERP integrations for B2B digital payment acceptance, and eCommerce platforms. Merchant acquirers are capitalizing on this trend by entering into referral arrangements with technology companies and integrating acquiring services into their software. We have been particularly active in this market, preferring to partner with technology and software providers rather than acquire them in order to leverage our partners' software development expertise and to avoid channel conflicts. Additionally, our EVO Snap platform allows us to provide our partners integrated solutions with a single connection point that is fully integrated with our front-end authorization systems across all transaction types, including card-present, card-not-present, and mobile. EVO Snap, along with other innovations in our integrated products, has been accretive to our growth in the Americas. Through the acquisition of Sterling in 2017, we gained a significant number of new integrated relationships, and we have continued to make acquisitions, as well as investments in our proprietary capabilities, to broaden our tech-enabled offering.

Europe

Across most of our European markets, we believe there is significant opportunity for growth as overall card penetration is relatively immature compared to countries such as the United States, Canada and the United Kingdom. Additionally, the trends in payment technologies are changing across our markets due to the evolving payment industry reforms in Europe, ongoing cash-to-card conversion, and increased adoption of tech-enabled payments solutions. We believe that these trends coupled with our positioning across Europe provide significant opportunities to launch new products and services at the early stage of merchant adoption of market innovations, such as gateway integrations and integrated solutions, enhance our market share and growth in existing markets, and capitalize on future investment opportunities in adjacent countries.

Under the European Payment Services Directive of 2015 (“PSD2”), we hold Payments Institution (“PI”) licenses, which enable non-financial institutions to participate in the payments industry subject to stringent regulatory requirements. We currently hold PI licenses in three markets: Germany, Poland and Spain, which enable us to operate as a direct member of the payment card networks. In some markets outside the European Union (the “EU”), applicable regulations and the local and international networks generally require non-financial institutions similar to us to be sponsored by a bank to become an acquirer. The ability to participate in the EU payments industry with direct licenses and without the requirement for third-party sponsorship provides us with greater flexibility and control of our Europe business at a lower cost.

Our competition

We compete with a variety of merchant acquirers that have different business models, go-to-market strategies, and technical capabilities in the markets in which we operate. Our competitors range in both size and geographic reach. In the United States and Canada, we primarily compete with independent merchant acquirers including Fiserv, Inc. (“Fiserv”), Global Payments, Inc. (“Global Payments”), and Fidelity National Information Services, Inc. (“FIS”), in addition to the merchant acquiring and processing divisions of certain financial institutions, including Chase Paymentech Solutions, LLC and Elavon, Inc. (“Elavon”), a subsidiary of U.S. Bancorp. In certain instances we may also compete with smaller U.S.-

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United States and Canada, we primarily compete with independent merchant acquirers including Fiserv, Inc. (“Fiserv”), Global Payments, Inc. (“Global Payments”), and Fidelity National Information Services, Inc. (“FIS”), in addition to the merchant acquiring and processing divisions of certain financial institutions, including Chase Paymentech Solutions, LLC and Elavon, Inc. (“Elavon”), a subsidiary of U.S. Bancorp. In certain instances we may also compete with smaller U.S.-based financial technology companies, including vertically focused organizations. In Europe, we compete primarily with Barclaycard, a subsidiary of Barclays PLC, Elavon, Global Payments, FIS, Fiserv, Nexi S.p.A. (“Nexi”), Worldline SA, and Polskie ePłatności, a subsidiary of Nexi, in addition to in-market financial institutions. In Mexico, financial institutions remain the primary providers of payment processing services to merchants.

Our broad and differentiated product offerings, service proposition, pricing, and distribution strategies in our geographically diverse markets drive our ability to compete effectively through the acceptance and use of our payment and commerce solutions by merchants. We specifically focus on the primary customer needs of speed, reliability, and reconciliation, ensuring that, at a minimum, our systems, solutions, products, and service models prioritize these and other customer expectations.

Our intellectual property

Our products and services utilize a combination of proprietary software and hardware that we own and license from third parties. Our owned intellectual property is protected by federal patent, trademark, trade secret, and copyright law, as well as state trade secret laws, as appropriate. We generally control access to, and use of, our proprietary software and other confidential information through the use of internal and external controls, including entering into non-disclosure and confidentiality agreements with both our employees and third parties.

As of December 31, ~~2021~~2022, we had two pending patent applications covering certain aspects of our proprietary technology, including our EVO Snap product, and new integrated product innovations. In addition, we own a portfolio of trademarks in multiple jurisdictions around the world, including for our primary mark, EVO.

Our regulatory environment

Various aspects of our service areas are subject to U.S. federal, state and local regulation, as well as regulation outside the United States. Certain of our services also are subject to rules promulgated by various card networks and banking and other authorities as more fully described below.

Financial services regulations

As a result of the implementation of the Payment Services Directive of 2007 in the EU, a number of our subsidiaries in our Europe segment hold a PI license which allows them to operate in the EU member states in which such subsidiaries and their branches do business. As a PI, we are subject to regulation and oversight in the applicable EU member states, which includes, among other obligations, a requirement to maintain specified regulatory capital and adhere to certain rules regarding the conduct of our business. In July 2013, the European Commission proposed legislation in two parts, covering a wide range of proposed regulatory reforms affecting the payments industry across the EU. The first part was an EU-wide regulation on interchange fees for card-based payment transactions (the “Interchange Fee Regulation”). The Interchange Fee Regulation (2015/751) went into effect in June 2015. The second part, PSD2, was a recasting of the Payment Services Directive of 2007. PSD2 went into effect in January 2016 and was later transposed to national law across EU member states. PSD2 contains a number of additional regulatory provisions, including provisions relating to enhanced governance requirements (including stronger focus on risk management), new consumer-centric transparency regulations and Strong Customer Authentication (“SCA”) principles, which increased the security of electronic payments by requiring multi-factor user authentication and required industry-wide systems upgrades. The EU has also enacted regulations relating to the offering of DCC services which require additional disclosures to consumers in connection with our DCC product offerings in a number of markets. Further, several of our international subsidiaries provide services that make them subject to regulation by local banking agencies and other regulatory authorities. As a result of the United Kingdom’s withdrawal from the European Union (“Brexit”), we ~~have~~successfully ~~submitted~~completed an application for a stand-alone PI license which was granted in early 2023. We are currently ~~operating~~focused ~~under~~on ~~the~~finalizing ~~U.K.’s~~license ~~temporary~~requirements ~~permissions~~with ~~regime,~~the ~~which~~relevant ~~allows~~card usschemes toand ~~continue~~transitioning toEVO’s ~~operate~~current inU.K. ~~that~~operations, ~~market~~which ~~under~~is ~~our~~currently ~~current~~being ~~regulatory~~conducted ~~permissions~~under ~~for~~the aU.K.’s ~~period~~temporary ofpermissions upregime, to 3the ~~years.~~newly licensed entity.

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Association and network rules

We are subject to the rules of Mastercard, Visa, and other credit and debit networks. In order to provide processing services, a number of our subsidiaries are registered with Visa or Mastercard as service providers for member institutions. Various subsidiaries of ours are also processor level members of numerous debit and electronic benefits transaction networks or are otherwise subject to various network rules in connection with processing services and other services we provide. As such, we are subject to applicable network rules and to a variety of fines or penalties that may be administered by the card networks. Although these rules are not government regulations, any failure to comply with the networks’ requirements or to pay the fines they impose could cause the termination of our registration and require us to stop providing payment processing services. For example, “EMV” is a credit and debit card authentication methodology that the card networks are requiring processors, issuers, and acquirers to implement. Compliance deadlines for EMV mandates vary by country and by payment network. In addition, card networks and their member financial institutions regularly update, and generally expand, security expectations and requirements related to the security of cardholder data and environments. We are also subject to network operating rules promulgated by the National Automated Clearing House (“ACH”) Association relating to payment transactions processed by us using the ACH Network and to various state federal and foreign laws regarding such operations, including laws pertaining to electronic benefits transactions.

The Dodd-Frank Act

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) was signed into law in the United States. The Dodd-Frank Act resulted in significant structural and other changes to the regulation of the financial services industry. Among other things, Title X of the Dodd-Frank Act established the Consumer Financial Protection Bureau (the “CFPB”) to regulate consumer financial products and services. The CFPB enforces prohibitions against unfair, deceptive or abusive acts or practices under the Dodd-Frank Act and may have authority over us as a provider of services to regulated financial institutions in connection with consumer financial products.

Separately, under the Dodd-Frank Act, debit interchange transaction fees are regulated by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and must be “reasonable and proportional” to the cost incurred by the card issuer in authorizing, clearing, and settling the transaction. The Dodd-Frank Act also contains provisions that ban debit card networks from entering into exclusivity arrangements, prohibit card issuers and card networks from imposing transaction routing requirements, and require card issuers to enable at least two unaffiliated networks on each debit card.

In addition, the Dodd-Frank Act permits merchants to set minimum dollar amounts for the acceptance of a credit card (while federal governmental entities and institutions of higher education may set maximum amounts for the acceptance of credit cards), and to provide discounts or incentives to consumers who pay with alternative payment methods, such as cash, checks or debit cards.

Privacy and information security regulations

We provide services that may be subject to various state, federal, and foreign privacy laws and regulations, including, among others, the Financial Services Modernization Act of 1999 (the “Gramm-Leach-Bliley Act”), PSD2, the General Data Protection Directive (“GDPR”), the California Consumer Privacy Act of 2018 (the “CCPA”), and the Personal Information Protection and Electronic Documents Act in Canada. These laws and their implementing regulations generally restrict certain collection, processing, storage, use, and disclosure of personal information, require notice to individuals of privacy practices, and provide individuals with certain rights to prevent use and disclosure of protected information. These laws also impose requirements for the safeguarding and proper destruction of personal information through the issuance of data security standards. Certain federal, state, and foreign laws and regulations impose similar privacy obligations and, in certain circumstances, obligations to notify affected individuals, state officers or other governmental authorities, the public, and consumer reporting agencies, as well as businesses and governmental agencies, of security breaches affecting personal information. In addition, there are state and foreign laws restricting the ability to collect and utilize certain types of information such as social security and driver’s license numbers. In July 2016, the European Parliament adopted an EU-wide directive on security of network and information systems (the “NIS Directive”). The NIS Directive provides legal measures intended to boost the overall level of cybersecurity in the EU and required that EU member states enact related national laws to enforce certain cybersecurity obligations.

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The CCPA became effective on January 1, 2020 and established strict data privacy and data protection requirements for the data of California residents. The CCPA has been amended and it is likely that further amendments will be proposed to this legislation. As such, it remains unclear how certain provisions of the CCPA will be interpreted and enforced.

As a processor of personal data of EU data subjects, we are subject to regulation and oversight in the applicable EU member states with regard to data protection legislation. GDPR contains various obligations on the processing of personal data in the EU, including restrictions on transferring personal data outside of the EU. Post-Brexit, the UK has implemented GDPR into domestic law through the Data Protection Act and the UK GDPR.

GDPR contains additional obligations on data controllers and data processors operating in the EU. GDPR also provides significant enhancements with regard to the rights of data subjects (which include the right to be forgotten and the right of data portability), stricter regulation on obtaining consent to processing of personal data and sensitive personal data, stricter obligations with regard to the information in privacy notices, and significant enhanced requirements with regard to compliance, including a regime of “accountability” for processors and controllers and a requirement to adopt appropriate policies and practices. GDPR includes enhanced data security obligations (to run in parallel to those contained in NIS regulations), requiring data processors and controllers to take appropriate technical and organizational measures to protect the data they process and their systems. Organizations that process significant amounts of data may be required to appoint a data protection officer to oversee and manage compliance with GDPR. We have appointed data protection officers in several of our businesses. There are significant fines and other sanctions under GDPR for failing to comply with the core principles of the GDPR or failing to secure data.

Unfair trade practice regulations

We and our clients are subject to various federal, state, and international laws prohibiting unfair or deceptive trade practices, such as Section 5 of the Federal Trade Commission Act. Various regulatory agencies, including the Federal Trade Commission, various consumer protection agencies in Europe and other international markets, the CFPB, and state attorneys general, have authority to take action against parties that engage in unfair or deceptive trade practices or violate other laws, rules, and regulations. To the extent we are processing payments for a client that may be in violation of these regulations, we may be subject to enforcement actions by those agencies and may incur losses that impact our business.

Anti-money laundering, anti-bribery, sanctions, and counter-terrorist regulations

We are subject to anti-money laundering laws and regulations, including certain sections of the USA PATRIOT Act of 2001. We are also subject to anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other laws, that prohibit the making or offering of improper payments to foreign government officials and political figures and include anti-bribery provisions enforced by the Department of Justice and accounting provisions enforced by the Securities and Exchange Commission (the “SEC”). The FCPA has a broad reach and requires maintenance of appropriate records and adequate internal controls to prevent and detect possible FCPA violations. Many other jurisdictions where we conduct business also have similar anti-corruption laws and regulations. We have policies, procedures, systems, and controls designed to identify and address potentially impermissible transactions under such laws and regulations.

We are also subject to certain economic and trade sanctions programs that are administered by the Office of Foreign Assets Control (“OFAC”), which prohibit or restrict transactions to or from, or dealings with, specified countries, their governments and, in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations. We may be subject to additional local sanctions requirements in other relevant jurisdictions.

Similar anti-money laundering, counter terrorist financing and proceeds of crime laws apply to electronic currency transactions and to dealings with persons specified in lists maintained by the country equivalents to OFAC lists in certain other countries. These laws require specific data retention obligations to be observed by intermediaries in the payment process and our businesses in those jurisdictions are subject to such data retention obligations. For example, in the EU, our businesses are subject to requirements under the Fifth Money Laundering Directive ((EU) 2018/843) which has now been implemented in all European jurisdictions in which EVO operates.

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Our employees

As of December 31, ~~2021~~2022, we employed approximately 2,~~200~~400 employees in 1213 countries with the majority of employees in the United States, ~~Poland,~~ Mexico, and ~~Ireland~~Poland. None of our employees in the United States are represented by a labor union or covered by a collective bargaining agreement.

We recognize that the talents and efforts of our employees are integral to our success as a company. EVO’s GET. GROW. KEEP. (“GGK”) culture represents a cornerstone of our talent strategy, which uses people-focused programs supported by human resources technology to attract (GET), develop (GROW) and retain (KEEP) the talent necessary to drive our growth and success. For our existing employees, we utilize our global People Development Portal (“Global PDP”) to implement our talent management programs, including (i) our annual performance evaluation process and goal setting, and (ii) mandatory training and development curriculum for our employees.

Our global onboarding and recruiting technology platform allows us to attract and reach more candidates through multiple recruiting avenues and to improve our overall recruitment process. This platform engages new employees at onboarding and introduces them to our GGK culture including our five core values of integrity, service, teamwork, ownership and diversity. We believe that our culture creates a diverse, collaborative, respectful and safe workplace. To strengthen this culture, we recognize our colleagues whose behaviors and actions demonstrate the GGK culture and our values through multiple recognition programs.

Our executive management team and Human Resources department regularly review and update our talent strategy, monitoring a variety of data, including turnover, compensation and benefits benchmarking, diversity, and employee engagement, to design and implement effective reward/recognition, training, development, succession, and benefit programs to meet the needs of our businesses and our employees.

Available information

We maintain a website with the address www.evopayments.com. We are not including the information contained in our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available, free of charge through our website, our filings with the SEC, including our annual proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

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information about our EXECUTIVE OFFICERS

The following table sets forth information regarding our executive officers as of December 31, 2021:

Name	Age	Position(s)
James G. Kelly	59	Chief Executive Officer and Director
Brendan F. Tansill	43	President, the Americas
Darren Wilson	54	President, International
Thomas E. Panther	53	Executive Vice President, Chief Financial Officer
Kelli E. Sterrett	42	Executive Vice President, General Counsel and Secretary
Michael L. Reidenbach	59	Executive Vice President, Worldwide Chief Information Officer

Catherine E. Lafiandra	59	Executive Vice President, Chief Human Resources Officer

David L. Goldman	39	Executive Vice President, Business Development and Strategy

Anthony J. Radesca	52	Senior Vice President, Chief Accounting Officer

James G. Kelly has served as EVO’s Chief Executive Officer since its formation, as a member of our board of directors since May 2018, and as Chief Executive Officer and a member of the board of managers of EVO, LLC since January 2012. Before joining EVO, Mr. Kelly served as President of Global Payments Inc., as Senior Executive Vice President of Global Payments Inc. and as Chief Financial Officer of Global Payments Inc. Prior to that, Mr. Kelly served as a managing director of Alvarez & Marsal, a global professional services firm, and as manager of Ernst & Young’s mergers and acquisitions and audit groups. Mr. Kelly is a graduate of the University of Massachusetts, Amherst.

Brendan F. Tansill has served as EVO’s President, the Americas, since its formation, and as President, the Americas, of EVO, LLC since January 2016. Prior to his current role, Mr. Tansill served as Executive Vice President, Business Development and Strategy of EVO, LLC from April 2012 until December 2015, where he was responsible for EVO’s global mergers and acquisitions activity and corporate strategy. Before joining EVO, Mr. Tansill was an investment professional at CCMP Capital Advisors. Mr. Tansill received his Masters of Business Administration from the Kellogg School of Management at Northwestern University and his Bachelor of Arts from the University of Virginia.

Darren Wilson has served as EVO’s President, International, since its formation, and as President, International, of EVO, LLC since April 2014. Before joining EVO, Mr. Wilson served as Managing Director of Streamline (a Worldpay company) and as CEO/President of Global Payments’ Western European business. Mr. Wilson has also held various positions at HSBC Bank. Mr. Wilson has the Associate of the Chartered Institute of Bankers degree and has studied at Birmingham and Warwick Universities.

Thomas E. Panther has served as EVO’s Executive Vice President and Chief Financial Officer since November 2019. Before joining EVO, Mr. Panther worked for over 19 years at SunTrust Banks, Inc., where he served in numerous leadership roles including Chief Accounting Officer, Corporate Controller, Director of Corporate Finance and Head of Capital Planning & Analysis. Mr. Panther began his career at Arthur Andersen, delivering accounting and advisory services to financial institutions for nine years. Mr. Panther is a certified public accountant and earned his bachelor’s degree from the University of Richmond.

Kelli E. Sterrett has served as EVO’s Executive Vice President, General Counsel and Secretary since July 2021. Ms. Sterrett joined EVO in 2018 as Senior Vice President and Deputy General Counsel. Prior to joining EVO, Ms. Sterrett served as Vice President and Deputy General Counsel of Scientific Games Corporation. Ms. Sterrett began her career as a corporate attorney with the law firm Gibson, Dunn & Crutcher LLP in New York. Ms. Sterrett received her Juris Doctorate from Columbia Law School and her Bachelor of Arts from Colgate University.

Michael L. Reidenbach has served as EVO’s Executive Vice President, Chief Information Officer since its formation, and as Executive Vice President, Chief Information Officer of EVO, LLC since March 2013. Before joining EVO,

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Mr. Reidenbach served as Executive Vice President, Chief Information Officer of Global Payments Inc. Mr. Reidenbach is a former U.S. Air Force instructor pilot and aircraft commander. Mr. Reidenbach received his Master in Business Administration/Finance and his Master in Management Information Systems from Georgia College and his Bachelor of Science from the U.S. Air Force Academy.

Catherine E. Lafiandra has served as EVO’s Chief Human Resources Officer since its formation, and as Chief Human Resources Officer of EVO, LLC since March 2016. Before joining EVO, Ms. Lafiandra served as Vice President of Human Resources of Beazer Homes USA, Inc. from October 2014 to March 2016 and as Senior Vice President of Human Resources of PRGX Global, Inc. from March 2010 to March 2014. Ms. Lafiandra received her Juris Doctorate from the University of Virginia School of Law and her Bachelor of Arts from Southern Methodist University.

David L. Goldman has served as EVO’s Executive Vice President of Business Development and Strategy since its formation, and as Executive Vice President of Business Development and Strategy of EVO, LLC since June 2016. Before joining EVO, Mr. Goldman served as Managing Director of PointState Capital LP from January 2011 to April 2014 and as Vice President of Duquesne Capital Management, LLC from April 2007 to December 2010. Prior to that, Mr. Goldman served as an Associate at TPG Capital, L.P. and as an investment banking analyst at Morgan Stanley. Mr. Goldman received his Bachelor of Business Administration from the University of Michigan.

Anthony J. Radesca has served as EVO’s Senior Vice President and Chief Accounting Officer since April 2019. Before joining EVO, Mr. Radesca served as the Senior Vice President and Chief Accounting Officer of CA Technologies, a global technology company that designs and develops infrastructure software solutions, from May 2016 until February 2019. Prior to that, he served as Vice President of Accounting of CA Technologies. Mr. Radesca received his Bachelor of Business Administration, Public Accounting, from Hofstra University and his Juris Doctorate from Saint John's University School of Law. Mr. Radesca is a Certified Public Accountant.

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ITEM 1A. RISK FACTORS

The risks summarized and detailed below are not the only risks facing us. Please be aware that additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also materially and adversely affect our business, results of operations, financial condition, cash flows, or prospects. You should also refer to the other information contained in our periodic reports, including the Cautionary Note Regarding Forward-Looking Statements, our consolidated financial statements and the related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations for a further discussion of the risks, uncertainties, and assumptions relating to our business.

Risk Factors Summary

Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to:

Risks related to our business and industry

● The continuing impact of the global COVID-19 pandemic on our business;

●

Our ability to anticipate and respond to changing industry trends, changes in the competitive landscape, and the needs and preferences of our merchants and consumers;

● The effect of global economic, political, market, health and other conditions, including the impact of the COVID-19 pandemic, on our merchants and on consumer, business, and government spending;

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Our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks;

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Failures in our processing systems due to software defects, undetected errors, computer viruses, and development delays;

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Degradation of the quality of the products and services we offer, including support services;

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Our ability to recruit, retain, and develop qualified personnel;

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Risks created by acquisitions;

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Continued consolidation and other transactions in the banking industry;

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Increased customer, referral partner, or sales partner attrition;

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Any increase in chargebacks not paid by our merchants;

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Failure to maintain or collect reimbursements from our financial institution referral partners;

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Fraud by merchants or other counterparties or partners;

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Failures by third-party vendors that we rely on to provide products and services;

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Our ability to maintain our merchant relationships and strategic relationships with various financial institutions and referral partners;

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Seasonality and volatility resulting in fluctuations in our quarterly revenues and operating results;

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Geopolitical and other risks associated with operations outside of the United States;

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A decline in the use of cards as a payment mechanism for consumers or other adverse developments with respect to the card industry in general;

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Increases in card network fees and other changes to fee arrangements;

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Failure by us, our merchants or our sales partners to comply with the applicable requirements of card networks resulting in fines or penalties;

Risks related to the Merger

●

Disruption to our business caused by the pending acquisition of us by Global Payments;

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Our ability to consummate the transaction with Global Payments within the contemplated timeframe, or at all;

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Any failure to consummate the Merger will adversely affect the market price of our common stock and could adversely affect our business, results of operations and financial condition;

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The impact on our stock price, business, financial condition and results of operations if the proposed transaction with Global Payments is not consummated;

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Costs, charges and expenses relating to the proposed transaction with Global Payments;

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Risks related to our financial results and indebtedness

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The effect of foreign currency exchange rates;

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The possibility of impairment of a significant portion of the goodwill and intangible assets on our balance sheet;

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The impact on our results of operations if we were required to establish a valuation allowance against our deferred tax assets;

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The effect of our indebtedness on our ability to raise capital, react to changes in the economy or our industry, or meet our debt obligations;

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The risk that we could be required to purchase the remainder of our eService subsidiary in Poland;

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Restrictions imposed by our Senior Secured Credit Facilities and our other outstanding indebtedness;

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Accelerated funding programs, which increase our working capital requirements and expose us to incremental credit risk;

Risks related to legal and regulatory requirements

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Failure to comply with, or changes in, laws and regulations, including those specific to the payments industry and those relating to anti-corruption, anti-money laundering, privacy, data protection, financial reporting, and information security, and consumer protection;

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Failure to enforce and defend our intellectual property rights;

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Risks associated with new or revised tax regulations or their interpretations, or becoming subject to additional foreign or U.S. federal, state, or local taxes;

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Various legal proceedings in the course of our business;

Risks related to our organizational structure

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The fact that our principal asset is our interest in EVO, LLC;

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Risks related to the TRA (as defined below), including substantial cash payments to the Continuing LLC Owners;

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Benefits conferred upon the Continuing LLC Owners as a result of our organizational structure that do not benefit holders of our Class A common stock to the same extent that they benefit the Continuing LLC Owners;

Risks related to our Series A Convertible Preferred Stock and the ownership interest of our Continuing LLC Owners

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Our Series A Preferred Stock could adversely affect our liquidity and financial condition, and could in the future substantially dilute the ownership interest of holders of our common stock;

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Continuing LLC Owners and holders of the Series A Preferred Stock may exercise influence over us;

General risks

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The long-term macroeconomic effects of the global COVID-19 pandemic;

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Certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control.

~~Risks related to our business and industry~~22

The global COVID-19 pandemic has disrupted, and may continue to disrupt, our business.

The ongoing effects of the global COVID-19 pandemic and measures taken in response have had a significant impact on global economic conditions and may negatively impact certain aspects of our business and results of operations in the future. Although certain economic conditions improved throughout fiscal 2021, the continued impacts of the pandemic on our business operations, including as a result of more contagious variants of the virus, and the duration of such impacts are uncertain, constantly evolving, and difficult to quantify. We and our merchants have experienced, and may continue to experience, significant disruption in our business, including volatility in transaction volume and the number of transactions processed. In addition, certain of our merchants have been forced to temporarily or permanently close their businesses as a result of the pandemic which has resulted, and could continue to result, in additional chargeback or merchant receivable losses. The pandemic continues to evolve, as recently experienced with the rapid spread of the Delta variant, and certain of the impacts of the pandemic may continue to affect our results in the future, including due to: inflationary pressures arising from supply chain disruptions, depressed transaction activity, and reimpositions of travel restrictions due to the development of the Omicron variant which may reduce cross-border transactions. Continued or future shutdowns, partial reopenings, or the re-imposition of previously lifted restrictions could directly or indirectly impact transaction volumes and negatively impact our operating results. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—COVID-19” for further information on the impact of the COVID-19 pandemic on transaction volumes to date.

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InRisks ~~addition, there have been worldwide disruptions to supply chains, caused in part by the pandemic and~~ related ~~effects. Certain of our vendors have indicated that they may be exposed~~ to ~~potential incidents of supply chain disruption, constraint, or other difficulties, including as it relates to their ability to meet the POS terminal delivery needs for~~ our ~~merchants. While~~business weand are seeking to mitigate the impact of any such potential incidents, including, in some cases, by entering into terminal purchase agreements with vendors which provide us with prioritized allocation of their available supply, disruption in the delivery of POS terminals in the future could impact our ability to service our merchants or add new merchants.industry

The extent of the continued impact of the COVID-19 pandemic on our business remains highly uncertain and difficult to predict, as information continues to evolve rapidly. Factors such as the duration and spread of the outbreak (including whether there are additional periods of increases in the number of COVID-19 cases in future periods), its severity, the evolution of new variants of the virus, such as the Delta variant and the Omicron variant, the effectiveness of government actions to contain the virus or treat its impact, the length of government restrictions, the distribution and effectiveness of the vaccines, and how quickly and to what extent normal economic and operating conditions resume, will affect how we are impacted by the pandemic. A prolonged disruption in economic activity could adversely impact our business and financial performance, including the potential impairment of certain assets.

In addition to government restrictions, consumer fears regarding the virus have reduced and may continue to reduce traffic to our merchants for an extended period of time. Consumer spending may also be negatively impacted by general macroeconomic conditions, including a rise in unemployment, and decreased consumer confidence resulting from the COVID-19 pandemic. Any significant reduction in consumer visits to, or spending at, our merchants, would result in a loss of revenue to us. In addition, certain of our merchants have been forced to temporarily or permanently close their businesses as a result of the pandemic which has resulted, and could continue to result, in additional chargeback or merchant receivable losses.

Even after the COVID-19 pandemic subsides, we may continue to experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future. The COVID-19 pandemic could also exacerbate the other risks we face that are described in this section.

Our ability to anticipate and respond to changing industry trends, changes in the competitive landscape, and the needs and preferences of our merchants and consumers may adversely affect our competitiveness or the demand for our products and services.

The financial services and payment technology industries are highly competitive and subject to rapid technological advancements, resulting in new products and services, including mobile payment applications and customized integrated software payment solutions, and an evolving competitive landscape, as well as changing industry standards and merchant and consumer needs and preferences. Our payment services and solutions compete against various financial services and payment systems, including cash and checks, and electronic, mobile, eCommerce, integrated, and B2B payment platforms. If we are unable to differentiate ourselves from our competitors and drive value for our merchants, we may not be able to compete effectively.

Furthermore, we are facing increasing competition from nontraditional competitors, including new entrant technology companies who offer certain innovations in payment methods. Some of these competitors utilize proprietary software and service solutions. Some of these nontraditional competitors have significant financial resources and robust networks and are highly regarded by consumers. These competitors may compete in ways that minimize or remove the role of traditional card networks, acquirers, issuers and processors in the electronic payments process. If these nontraditional competitors gain a greater share of total electronic payments transactions, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We expect that new services and technologies applicable to the financial services and payment technology industries will continue to emerge and that our merchants and consumers will continue to adopt new technology for business and personal uses. Our competitive landscape will continue to undergo changes that could adversely impact our current competitive position and prospects for growth, including:

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rapid and significant changes in technology, resulting in new and innovative payment methods and programs, that could place us at a competitive disadvantage and reduce the use of our products and services if competitors are able to offer and provide services that we do not;

●

competitors, merchants and other industry participants may develop products and services that compete with or replace our products and services, including alternative payment systems that enable card networks and banks to transact with consumers directly, eCommerce payment systems, payment systems for mobile devices, peer to peer payment services, real-time and faster payment initiatives, delayed payment offerings such as BNPL or installment solutions, cryptocurrency payments initiatives, and customized integrated software and B2B payment solutions;

●

increased competition in certain of our markets in which we process “on-us” transactions, whereby we receive fees as a merchant acquirer and for processing services for the issuing bank, may cause the number of transactions in which we receive fees for both of these roles to decrease, which could reduce our revenue and margins in these jurisdictions; and

●

participants in the financial services and payment technology industries may merge, create joint ventures or form other business combinations that may improve their existing business services, or create new payment services that compete with our services.

In order to remain competitive within our markets, we must anticipate and respond to these changes, which may limit the competitiveness of and demand for our services. It is possible that these changes could ultimately reduce our role in payment transaction processing. Additionally, and in many cases as a result of significant consolidation in the payments industry over recent years, some of our competitors are larger and have greater financial resources than we do, enabling them to maintain a wider range of product offerings, mount extensive promotional campaigns, and be more aggressive in offering products and services at lower rates. Failure to compete effectively against any of these or other competitive threats or to develop value-added services that meet the needs and preferences of our merchants could adversely affect our ability to compete for merchants and financial partners and adversely affect our business, financial condition, or results of operations. Furthermore, potential negative reactions to our products and services by merchants or consumers can spread quickly and damage our reputation before we have the opportunity to respond. If we are unable to anticipate or respond to technological or industry changes on a timely basis, our ability to remain competitive and the demand for our products and services could be adversely affected.

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operations. Furthermore, potential negative reactions to our products and services by merchants or consumers can spread quickly and damage our reputation before we have the opportunity to respond. If we are unable to anticipate or respond to technological or industry changes on a timely basis, our ability to remain competitive and the demand for our products and services could be adversely affected.

Global economic, political, and other conditions may adversely affect trends in consumer, business, and government spending, which may adversely impact the demand for our services, revenue, and profitability.

The financial services and payment technology industries depend heavily upon the overall level of consumer, business, and government spending. A sustained deterioration in general economic conditions, (including ~~distress~~those incaused ~~financial~~by ~~markets~~inflation, ~~turmoil~~high ininterest ~~specific~~rates, ~~economies~~supply ~~around~~chain ~~the world~~disruptions, and ~~additional government intervention)~~COVID-19, particularly in the Americas or Europe, may adversely affect our financial performance by reducing the number or average purchase amount of transactions we process. A reduction in consumer or business spending could result in a decrease of our revenue and profits.

Adverse economic trends may accelerate the timing, or increase the impact of, risks to our financial performance. These trends could include the following:

●

declining economies, foreign currency fluctuations, and the pace of economic recovery can change consumer spending behaviors, such as cross-border travel patterns, on which a portion of our revenue and growth is dependent;

●

low levels of consumer and business confidence typically associated with recessionary environments may result in decreased spending by cardholders;

●

high unemployment may result in decreased spending by cardholders;

●

budgetary concerns in the United States and other countries could affect sovereign credit ratings, and impact consumer confidence and spending;

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supply chain disruptions may result in decreased spending by cardholders with our merchants whose ability to provide goods and services is materially impacted;

●

supply chain disruptions could impact our ability to purchase terminals for existing or prospective customers;

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current and potential future inflationary pressures may adversely impact spending by cardholders;

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emerging market economies tend to be more sensitive to adverse economic trends than the more established markets we serve;

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financial institutions may restrict credit lines to cardholders or limit the issuance of new cards to mitigate cardholder credit concerns;

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uncertainty and volatility in the performance of our merchants’ businesses;

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cardholders may decrease spending for services our merchants market and sell; and

●

government intervention, including the effect of laws, regulations and government investments in our merchants, may have potential negative effects on our business and our relationships with our merchants or otherwise alter their strategic direction away from our products and services.

Our inability to protect our systems and data from continually evolving cybersecurity risks or other technological risks could affect our reputation among merchants, card issuers, financial institutions, card networks, partners, and cardholders and may expose us to penalties, fines, liabilities, and legal claims.

In order to provide our services, we process, transmit, and store sensitive business information and personal information about our merchants, merchants’ customers, vendors, partners, and other parties. This information may include credit and debit card numbers, bank account numbers, personal identification numbers, names and addresses, and other types of personal information or sensitive business information. Some of this information is also processed and stored by our ~~merchants’ third-party service providers to whom we outsource certain functions and other agents (which we refer to collectively as our “associated third parties”).~~

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merchants’ third-party service providers to whom we outsource certain functions and other agents (which we refer to collectively as our “associated third parties”).

We have certain responsibilities to the card networks and their member financial institutions for any failure by us or by any of our associated third parties to protect this information. We have been, and expect to continue to be, a potential target of malicious third party attempts to identify and exploit system vulnerabilities and penetrate or bypass our security measures. While plans and procedures are in place to protect this sensitive data, we cannot be certain that these measures will be successful and will be sufficient to counter all current and emerging technology threats that are designed to breach our systems in order to gain access to confidential information.

The techniques used to obtain unauthorized access, disable, or degrade service or sabotage systems change frequently, have become increasingly complex and sophisticated, and are often difficult to detect. Threats to our systems and our associated third parties’ systems can derive from human error, fraud, or malice on the part of employees or third parties, or may result from accidental technological failure. Computer viruses and other malware can be distributed and could infiltrate our systems or those of our associated third parties. In addition, denial of service or other attacks could be launched against us for a variety of purposes, including to interfere with our services or create a diversion for other malicious activities. Our defensive data protection measures may not prevent unauthorized access or use of sensitive data. While we maintain insurance coverage that may cover certain aspects of cyber risks and incidents, our insurance coverage may be insufficient to cover all losses, and we may not be able to renew the insurance on commercially reasonable terms or at all. Further, we do not control the actions of any of the third parties that facilitate our business activities, including vendors, suppliers, customers, service providers, counterparties or financial intermediaries, or their systems. These third parties have experienced security breaches in the past, and any future problems experienced by these third parties, including those resulting from cyberattacks or other breakdowns or disruptions in services, could adversely affect our ability to conduct our business or expose us to liability.

In addition, following an acquisition, we take steps to ensure our data and system security protection measures cover the acquired business as part of our integration process. As such, there may be a period of increased cybersecurity risk during the period between closing an acquisition and the completion of our data and system security integration.

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We may also be subject to liability for claims relating to misuse of personal information, such as unauthorized marketing and violation of data privacy laws. We cannot provide assurance that the contractual requirements related to security and privacy that we impose on our service providers who have access to merchant and customer data will be followed or will be adequate to prevent the unauthorized use or disclosure of data. In addition, we have agreed in certain agreements to take certain protective measures to ensure the confidentiality of merchant and consumer data. The costs of systems and procedures associated with such protective measures may increase and could adversely affect our ability to compete effectively. Any failure to adequately enforce or provide these protective measures could result in litigation, governmental and card network intervention, and fines, lost revenue, and other liabilities and reputational harm.

Any type of security breach, attack, or misuse of data described above or otherwise, could harm our reputation and deter existing and prospective merchants and partners from using our services, deter customers from making electronic payments generally, increase our operating expenses in order to contain and remediate the incident, expose us to unexpected or uninsured liability, disrupt our operations (including potential service interruptions), distract our management, increase our risk of regulatory scrutiny, result in the imposition of regulatory or card network fines and other penalties, and adversely affect our continued card network registration and financial institution sponsorship. For example, if we were to be removed from the card networks’ lists of Payment Card Industry Data Security Standard (“PCI DSS”) compliant service providers, our existing merchants, sales, and financial institution partners, or other third parties may terminate their relationship with us or cease using or referring our services. Also, prospective merchants, sales partners, financial institution partners or other third parties may delay or choose not to consider us for their processing needs. In addition, card networks could refuse to allow us to process through their networks. Any of the foregoing could adversely impact our business, financial condition, or results of operations.

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We may experience failures in our processing systems due to software defects, undetected errors, computer viruses, and development delays, which could damage customer relations and expose us to liability.

Our core business depends on the reliability of our processing systems. A system outage or other failure could adversely affect our business, financial condition, or results of operations, including by damaging our reputation or exposing us to third-party liability. Certain laws, regulations, and card network rules allow for penalties if our systems do not meet certain operating standards and may require us to report issues to regulators or the card networks within a specified time period. To successfully operate our business, we must be able to protect our systems from interruption, including from events that may be beyond our control. Events that could cause system interruptions include fire, natural disaster, unauthorized entry, power loss, telecommunications failure, computer viruses, terrorist acts, and war. Although we have taken steps to protect against data loss and system failures, there is still risk that we may lose critical data or experience system failures. In addition, we utilize select third parties for certain disaster recovery operations, particularly outside of the United States. To the extent we outsource any disaster recovery functions, we could be adversely impacted in the event of the vendor’s unresponsiveness or other failures. In addition, our insurance may not be adequate to compensate us for all losses or failures that may occur.

Our products and services are based on sophisticated software and computing systems that are constantly evolving. We often encounter delays and cost overruns in developing and implementing changes to our systems. In addition, the underlying software may contain undetected errors, viruses, or defects. We may experience processing delays on our systems due to system capacity or configuration issues as well as due to service interruptions or delays by our service providers. Defects in our software products and errors or delays in our processing of electronic transactions could result in additional development costs, diversion of technical and other resources from our other development efforts, loss of credibility with current or potential merchants, harm to our reputation, or other liabilities. In addition, we rely on technologies supplied to us by third parties that may contain undetected errors, viruses, or defects that could adversely affect our business, financial condition, or results of operations. Although we attempt to limit our potential liability through disclaimers in our software documentation and limitation of liability provisions in our licenses and other agreements with our merchants and partners, we cannot assure that these measures will be successful in limiting our liability.

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Degradation of the quality of the products and services we offer, including support services, could adversely impact our ability to attract and retain merchants and partners.

Our merchants and partners expect a consistent level of quality in the provision of our products and services. If the reliability or functionality of our products and services is compromised or the quality or support of such products and services is otherwise degraded, we could lose existing merchants and partners and find it harder to attract new merchants and partners. If we are unable to scale our support functions to address the growth of our merchant portfolio and partner network, the quality of our support may decrease, which could also adversely affect our ability to attract and retain merchants and partners.

Our ability to recruit, retain, and develop qualified personnel is critical to our success and growth.

For us to successfully compete and grow, we must recruit, retain, and develop personnel who can provide the necessary expertise across a broad spectrum of intellectual capital needs in a rapidly changing technological, social, economic, and regulatory environment. The market for qualified personnel is competitive, and we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications, and we may not be able to fill positions in desired geographic areas or at all and may fail to effectively replace current personnel who depart with qualified or effective successors. Our efforts to retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability. As the economic uncertainty related to the COVID-19 pandemic eases, we have faced, and may continue to face, additional challenges in recruiting and retaining qualified personnel as other companies increase the pace of hiring. We must also continue to retain and motivate existing employees through our compensation practices, company culture, and career development opportunities. We cannot assure that we will be able to attract and retain qualified personnel in the future or that key personnel, including our executive officers, will continue to be employed or that our succession planning will adequately mitigate the risk associated with key personnel transitions. If ~~we fail to attract new personnel or to retain our current personnel, our business and future growth prospects could be adversely affected.~~

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we fail to attract new personnel or to retain our current personnel, our business and future growth prospects could be adversely affected.

Acquisitions create certain risks and may adversely affect our business, financial condition, or results of operations.

We have actively acquired businesses and expect to continue to make acquisitions of businesses and assets in the future~~, including, for example, our pending joint venture and exclusive referral relationship with the National Bank of Greece~~. The acquisition and integration of businesses and assets involve a number of risks. These risks include valuation (determining a fair price for the business and assets), integration (managing the process of integrating the acquired business’ people, products, technology, and other assets to realize the projected value and synergies), regulation (obtaining any applicable regulatory or other government approvals), and due diligence (identifying risks to the prospects of the business, including undisclosed or unknown liabilities or restrictions).

In addition, acquisitions outside of the United States often involve additional or increased risks including:

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managing geographically separated organizations, systems and facilities;

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integrating personnel with diverse business backgrounds and organizational cultures;

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complying with non-U.S. legal, tax, and regulatory requirements;

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addressing financial and other impacts to our business resulting from fluctuations in currency exchange rates;

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enforcing intellectual property rights in non-U.S. countries;

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difficulty entering new markets due to, among other things, consumer acceptance and business knowledge of these markets; and

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general economic and political conditions.

The failure to avoid or mitigate the risks described above or other risks associated with acquisitions could have a material adverse effect on our business, results of operations, and financial condition.

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In addition, we may not be able to successfully integrate businesses that we acquire or do so within the intended timeframe. We could face significant challenges in managing and integrating our acquisitions, including diversion of management’s attention, migrating services from third-parties to our own systems and infrastructure, and integrating operations and personnel. In addition, the expected cost synergies or new revenue associated with our acquisitions may not be fully realized in the anticipated amount or within the contemplated timeframe or cost expectations, which could result in increased costs and have an adverse effect on our business, results of operations, and financial condition.

Further, there may be material risks we are unable to identify or quantify through due diligence. If significant liabilities, including those relating to violations of applicable law, arise at one of our joint ventures or acquired subsidiaries, we may be exposed to material liabilities or our business may be materially and adversely affected.

Additional acquisitions may require us to incur additional debt through new or existing credit agreements or issue additional equity securities to fund the purchase price. The purchase price of a pending foreign acquisition will further be impacted by foreign exchange rate; however, we cannot predict whether future foreign currency exchange fluctuations will have a positive or negative impact on the final purchase price. If we are unable to obtain the required funding on acceptable terms, or at all, we may not be able to complete acquisitions, which could have an adverse impact on our growth.

Finally, future acquisition opportunities may not be available on acceptable terms, or at all, and we may not be able to obtain necessary financing or regulatory approvals to complete potential acquisitions. If we are unable to continue to complete successful acquisitions, our growth prospects could be adversely impacted.

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Continued consolidation and other transactions in the banking industry could adversely affect our growth and financial results.

The banking industry continues to experience consolidation regardless of overall economic conditions. In addition, in times of economic distress, various regulators in the markets we serve have acquired, and in the future may acquire, financial institutions, including banks with which we partner. If a current financial institution referral partner of ours is acquired by another bank, the acquiring bank may seek to terminate our agreement and impose its own merchant services program on the acquired bank. If a financial institution referral partner acquires another bank, our financial institution referral partner may take the opportunity to conduct a competitive bidding process to determine whether to maintain our merchant acquiring services or switch to another provider. In either situation, we may be unable to retain the relationship post-acquisition, or may have to offer financial concessions to do so, which could adversely affect our results of operations or growth. In addition, if a current financial institution referral partner of ours is acquired or becomes subject to a consent decree or similar oversight by a regulator, the regulator may seek to alter the terms or terminate our existing agreement with the acquired financial institution. For example, in October of 2018, BNP Paribas Group acquired one of our financial institutional referral partners, Raiffeisen Bank Polska, in Poland. Under the terms of our contract, BNP Paribas Group elected not to continue the relationship with us in Poland and refunded certain fees to us that we had previously paid to the bank. In addition, our financial institution referral partners may sell certain of their business assets, restructure their business, or rebrand. Any such actions could negatively impact our commercial alliance with such financial institution partner.

One of our financial institution referral partners, Grupo Banco Popular, was acquired by Grupo Santander (“Santander”) in June 2017, which has adversely impacted our business in Spain. Revenues from this channel have declined significantly ~~due~~ primarily due to reduced merchant referrals following Santander’s consolidation of Grupo Banco Popular branches and the bank’s lack of performance of certain of its obligations under our agreements. See Note 19, “Commitments and Contingencies,” in the notes to the accompanying consolidated financial statements for additional information.

Increased customer attrition could cause our financial results to decline.

We experience attrition in merchant transaction processing volume due to several factors, including business closures, transfers of merchants’ accounts to our competitors, unsuccessful contract renewal negotiations, and account closures that we initiate for various reasons, such as heightened credit risks or contract breaches by merchants. We cannot predict the level of attrition that may occur in the future and it could increase. Higher than expected attrition could adversely affect our business, financial condition, or results of operations.

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level of attrition that may occur in the future and it could increase. Higher than expected attrition could adversely affect our business, financial condition, or results of operations.

We incur a chargeback liability when our merchants refuse to or cannot reimburse chargebacks resolved in favor of their customers. Any increase in chargebacks not paid by our merchants may adversely affect our business, financial condition, or results of operations.

In the event that a dispute between a cardholder and a merchant is not resolved in favor of the merchant, the transaction is normally charged back to the merchant and the purchase price is credited or otherwise refunded to the cardholder. If we are unable to collect such amounts from the merchant’s account or reserve account (if applicable), or if the merchant refuses or is unable, due to closure, bankruptcy, or other reasons, to reimburse us for a chargeback, we are responsible for the amount of the refund paid to the cardholder. The risk of chargebacks is typically greater with those merchants that promise future delivery of goods and services, rather than delivering goods or rendering services at the time of payment, as well as “card not present” transactions in which consumers are not physically present, such as eCommerce, telephonic, and mobile transactions. We may experience significant losses from chargebacks in the future. Any increase in chargebacks not paid by our merchants could have a material adverse effect on our business, financial condition, or results of operations. Notwithstanding our policies and procedures for managing credit risk, such as requiring merchant cash reserve accounts and monitoring transaction activity, it is possible that a default on such obligations by one or more of our merchants could adversely affect our business, financial condition, or results of operations.

In addition, in certain cases, governmental authorities may seek to freeze or take possession of merchant cash reserves as part of an investigation or regulatory proceeding. In that event, we may be unable to satisfy chargeback losses from the ~~merchant cash reserves and may experience significant losses if we are required to satisfy chargeback losses from our own funds.~~

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merchant cash reserves and may experience significant losses if we are required to satisfy chargeback losses from our own funds.

Failure to maintain or collect reimbursements from our financial institution referral partners could adversely affect our business.

Certain of our long-term referral arrangements with financial institutions permit our partners to offer their merchant customers lower rates for processing services than we typically provide to the general market. If one of our bank partners elects to offer these lower rates, they are contractually required to reimburse us for the full amount of the discount provided to their merchant customers; however, there can be no assurance that these contractual provisions will fully protect us from potential losses should a bank partner default on its obligations to reimburse us or seek to discontinue such reimbursement obligations in the future. If we are unable to collect the full amount of any such reimbursements for any reason, we may incur losses. In addition, any discount provided by our financial institution partner may cause merchants in these markets to demand lower rates for our services in the future, which could further reduce our margins or cause us to lose merchants, either of which could adversely affect our business, financial condition, or results of operations.

Fraud by merchants or others could adversely affect our business, financial condition, or results of operations.

We may be liable for certain fraudulent transactions and credits initiated by merchants or others. For example, if we were to process payments for a merchant that engaged in unfair or deceptive trade practices, we may be subject to enforcement actions by the Federal Trade Commission, other consumer protection agencies, state attorneys general, regulators or other governmental agencies. Examples of merchant fraud include merchants or other parties knowingly using a stolen or counterfeit credit or debit card, card number, or other credentials to record a false sales or credit transaction, processing an invalid card, or intentionally failing to deliver goods or services sold in an otherwise valid transaction. Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud, especially through eCommerce transactions. Failure to effectively manage risk and prevent fraud could increase our chargeback liability or cause us to incur other liabilities, including if we are subject to enforcement action by a regulatory authority. It is possible that incidents of fraud could increase in the future. Increases in chargebacks or other liabilities could adversely affect our business, financial condition, or results of operations.

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Because we rely on third-party vendors to provide products and services, we could be adversely impacted if they fail to fulfill their obligations.

We depend on third-party vendors and partners to provide us with certain products and services, including components of our computer systems, software, data centers, and telecommunications networks, to conduct our business. For example, we rely on third parties for services such as organizing and accumulating certain daily transaction data from each merchant and card issuer and forwarding the data to the relevant card network. We also rely on third parties for specific software and hardware used in providing our products and services. Some of these organizations and service providers are our competitors or provide similar services and technology to our competitors, and we do not have long-term or exclusive contracts with them. In addition, we rely on various financial institutions to provide clearing services in connection with our settlement activities. If these financial institutions stop providing clearing services, we would need to find other financial institutions to provide those services. If we were unable to do so we would no longer be able to provide processing services to certain merchants, which could adversely affect our business, financial condition, or results of operations.

The systems and operations of our third-party vendors and partners, including our terminal manufacturers, could be exposed to damage or interruption from, among other things, fire, natural disaster, power loss, telecommunications failure, unauthorized access, computer viruses, denial-of-service attacks, acts of terrorism, human error, vandalism or sabotage, financial insolvency, bankruptcy, and similar events.

In addition, we may be unable to renew our existing contracts with our most significant vendors and partners or our vendors and partners may stop providing or otherwise supporting the products and services we obtain from them, and we may not be able to obtain these or similar products or services on the same or similar terms as our existing arrangements, if at all. The failure of our vendors and partners to perform their obligations and provide the products and services we obtain from them in a timely manner for any reason could adversely affect our operations and profitability due to, among other consequences: (i) loss of revenues; (ii) loss of merchants and partners; (iii) loss of merchant and cardholder data; (iv) fines imposed by card networks; (v) reputational harm; (vi) exposure to fraud losses or other liabilities; (vii) additional operating and development costs; or (viii) diversion of management, technical and other resources.

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them in a timely manner for any reason could adversely affect our operations and profitability due to, among other consequences: (i) loss of revenues; (ii) loss of merchants and partners; (iii) loss of merchant and cardholder data; (iv) fines imposed by card networks; (v) reputational harm; (vi) exposure to fraud losses or other liabilities; (vii) additional operating and development costs; or (viii) diversion of management, technical and other resources.

We depend, in part, on our merchant and strategic relationships with various financial institutions and referral partners to grow our business. If we are unable to maintain these relationships, our business may be adversely affected.

We depend, in part, on our merchant relationships to grow our business. Our merchant processing agreements are our main source of revenue. Our failure to maintain or grow these relationships could adversely affect our business and result in a reduction of our revenue and profit.

We also rely on our various financial institution relationships, including our partnerships with Deutsche Bank USA, Deutsche Bank Group, Grupo Santander, PKO Bank Polski, Bank of Ireland, ~~Raiffeisenbank~~Raiffeisen Bank, Moneta, Citibanamex, Sabadell, Banco de Crédito e Inversiones, and ~~Liberbank~~the National Bank of Greece, among others, to grow our business. These relationships are structured in various ways, such as commercial alliance relationships, equity method investments, and joint ventures. We enter into long-term relationships with our bank partners where these partners typically provide exclusive referrals and credit facilities to fund our daily settlement obligations. These facilities are generally short term and at market interest rates. In some cases, our bank partners provide us with card network sponsorship, which enables us to route transactions under the bank’s control and identification numbers to clear card transactions through the card networks. Under the rules of the card networks, we are required to be a member of the network or sponsored through a member financial institution.

In addition, we rely on our various referral partners to grow our business. Our sales divisions work with a diverse mix of referral partners including ISVs, software dealers, and independent sales agents. These relationships generally consist of non-exclusive referral arrangements pursuant to which we pay our partners a referral fee based on profit generated by the merchants attributable to their referral. If an existing sales partner switches to another payment processor, terminates our services, internalizes payment processing functions that we perform, merges with or is acquired by one of our competitors, seeks alternative product or integration capabilities, or shuts down or becomes insolvent, we may no longer receive new merchant referrals from the sales partner and we risk losing existing merchants that were originally enrolled by the sales partner. In some jurisdictions, we are reliant on a small concentration of sales partners for a substantial portion of our merchant referrals.

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partner. In some jurisdictions, we are reliant on a small concentration of sales partners for a substantial portion of our merchant referrals.

We rely on the growth of our financial institution and referral partner relationships, and our ability to maintain these relationships, to support and grow our business. In addition, in certain of the markets in which we conduct our business, a substantial portion of our revenue is derived from long-term contracts. If we fail to maintain or renew these relationships, or our financial institution partners fail to maintain their brands or decrease the size of their branded networks, or our referral partners fail to penetrate their target markets or fail to remain competitive in such markets, our business, financial condition or results of operations may be adversely affected. Furthermore, failure to maintain our financial institution relationships may prevent us from obtaining settlement facilities, and we may be forced to secure alternative arrangements on less favorable terms. The loss of financial institution relationships or referral partners could adversely affect our business and result in a reduction of our revenue and profit.

Finally, we intend to grow our business by partnering with new financial institutions and tech-enabled partners in our existing markets, as well as new markets. The inability to partner with new financial organizations or tech-enabled partners may inhibit our growth prospects.

A significant number of our merchants are small- and medium-sized businesses or small affiliates of large companies, which can be more difficult and costly to retain than larger enterprises and may increase the impact of economic fluctuations on our business.

We market and sell our products and services to, among others, SMEs and small affiliates of large companies. To continue to grow our revenue, we must add merchants, sell additional services to existing merchants, and encourage existing merchants to continue doing business with us. However, retaining SMEs can be more difficult than retaining large enterprises because SME merchants often have higher rates of business failures and more limited resources; are typically less sophisticated in their ability to make technology-related decisions based on factors other than price; may have decisions related to the choice of payment processor dictated by their affiliated parent entity; and are more able to change their payment processors than larger organizations dependent on our services.

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merchants to continue doing business with us. However, retaining SMEs can be more difficult than retaining large enterprises because SME merchants often have higher rates of business failures and more limited resources; are typically less sophisticated in their ability to make technology-related decisions based on factors other than price; may have decisions related to the choice of payment processor dictated by their affiliated parent entity; and are more able to change their payment processors than larger organizations dependent on our services.

SMEs are typically more susceptible to the adverse effects of economic fluctuations and have been disproportionately affected by the adverse effects of the COVID-19 pandemic and resulting government regulations. Adverse changes in the economic environment or business failures of our SME merchants may have a greater impact on us than on our competitors who do not focus on SMEs to the extent that we do. As a result, we may need to attract and retain new merchants at an accelerated rate or decrease our expenses to mitigate negative impacts in the event our SME merchants experience business declines due to economic trends or otherwise, failure of which may negatively impact our business, financial condition, or results operations.

Our operating results and operating metrics are subject to seasonality and volatility, which could result in fluctuations in our quarterly revenues and operating results or in perceptions of our business prospects.

We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our revenue, which can vary by region. Our revenue has typically been strongest in our fourth quarter and weakest in our first quarter. Some variability results from seasonal retail events and the number of business days in a month or quarter. Our typical seasonality patterns have been disrupted by the ongoing COVID-19 pandemic and related government actions. We also experience volatility in certain other metrics, such as number of transactions processed and payment processing volumes. Volatility in our key operating metrics or their rates of growth could result in fluctuations in financial condition or results of operations and may lead to adverse inferences about our business prospects, which could result in declines in our stock price.

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Our business may be adversely affected by geopolitical and other risks associated with operations outside of the United States and, as we continue to expand internationally, we may become more susceptible to these risks.

We offer merchant acquiring and processing services in many geographies outside of the United States, including in Canada, the Czech Republic, Germany, Ireland, Mexico, Chile, Poland, Spain, and the United Kingdom. We are subject to risks associated with operations in international markets, including changes in foreign governmental policies and requirements applicable to our business. In particular, some countries where we operate lack well-developed legal systems or have not adopted clear regulatory frameworks for the payment services industry. This lack of legal certainty exposes our operations to increased risks, including difficulty enforcing our agreements in those jurisdictions and increased risks of adverse actions by local government authorities, such as expropriations. As we continue to expand internationally, we may face challenges due to the presence of more established competitors and our lack of experience in new markets.

In addition, our current and future financial institution partners in foreign jurisdictions, particularly in Europe, may be acquired, reorganized, or otherwise disposed of in the event of further market turmoil or losses in their loan portfolio that result in such financial institutions becoming less than adequately capitalized. Our revenue derived from these and other non-U.S. operations is subject to additional risks, including those resulting from social and geopolitical instability and unfavorable political or diplomatic developments, all of which could adversely affect our business, financial condition, or results of operations. A possible slowdown in global trade caused by increasing tariffs or other restrictions could decrease consumer or corporate confidence and reduce consumer, government, and corporate spending in countries outside the United States, which could adversely affect our foreign operations. Certain of our partners in foreign jurisdictions are also state-controlled entities, which may adversely affect our ability to seek redress for any contractual breach to the extent these partners can successfully claim sovereign immunity. In addition, in the event ongoing or future sovereign debt concerns in a particular country impact any such partner, our business could be negatively impacted.

We have significant operations in the United Kingdom and throughout Europe more generally. The United Kingdom’s withdrawal from the European Union and the continuing negotiations to determine the terms of the United Kingdom’s relationship with the EU has created significant uncertainty, including the nature of the transition, implementation, or successor arrangements, and future trading arrangements between the United Kingdom and the EU, and may in the future have a material adverse effect on global economic conditions and the stability of the global financial markets. Commencing in January 2021, we availed ourselves of the United Kingdom’s temporary permissions regime, which allows us to continue to operate in that market under our current regulatory permissions for a period of up to three years. In order to maintain our access to the United Kingdom market, we have applied to the United Kingdom regulatory authority for a stand alone PI license to operate in the United Kingdom. However, there is no guarantee that our application will be approved. We continue to closely monitor the impact of Brexit on our operations as further details emerge regarding the post-Brexit regulatory landscape. However, lack of clarity about applicable future laws, regulations, or treaties between the United Kingdom and the European Union could increase our costs and depress market activity. If we are unable to successfully manage the foregoing risks relating to our business outside the United States, our business, financial condition, or results of operations could be adversely impacted.

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successor arrangements, and future trading arrangements between the United Kingdom and the EU, and may in the future have a material adverse effect on global economic conditions and the stability of the global financial markets. We continue to closely monitor the impact of Brexit on our operations as further details emerge regarding the post-Brexit regulatory landscape. However, lack of clarity about applicable future laws, regulations, or treaties between the United Kingdom and the European Union could increase our costs and depress market activity. If we are unable to successfully manage the foregoing risks relating to our business outside the United States, our business, financial condition, or results of operations could be adversely impacted.

A decline in the use of cards as a payment mechanism for consumers or other adverse developments with respect to the card industry in general may adversely impact us.

In order to consistently increase and maintain our profitability, consumers and businesses must continue to use electronic payment methods that we process, including credit and debit cards, and various factors may impact levels of use. For example, consumer credit risk may make it more difficult or expensive for consumers to gain access to credit facilities such as credit cards. Financial institutions may seek to charge their customers additional fees for use of credit or debit cards which could result in decreased use of credit or debit cards. In addition, various technology alternatives to credit and debit cards, such as digital wallets, have been introduced to the market and we expect that additional alternatives will be developed. Any other development that impacts the cost, convenience, or quality of services of electronic payments could result in a decline in the use of credit and debit cards or other electronic payments. Any such decline may adversely impact our business, financial condition, or results of operations.

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Increases in card network fees and other changes to fee arrangements may result in the loss of merchants or a reduction in our earnings.

From time to time, card networks, including Visa and Mastercard, increase the fees that they charge processors. We could attempt to pass these increases along to our merchants but this strategy might result in the loss of merchants to our competitors who do not pass along the increases. If competitive practices prevent us from passing along the higher fees to our merchants in the future, we may have to absorb all or a portion of such increases, which may increase our operating costs and reduce our earnings.

In addition, in certain of our markets, card issuers pay merchant acquirers fees based on debit card usage in an effort to encourage debit card use. If this practice were discontinued, our revenue and margins in jurisdictions where we receive these fees would be adversely affected.

Further, governments in the markets in which we operate have and may continue to implement new laws or regulations that effectively limit our ability to provide DCC or set fees or foreign currency exchange spreads. In March 2018, the EU proposed additional regulations on cross-border transactions within the EU, including specific regulations on DCC. In December 2018, the European Commission, European Council, and European Parliament agreed to legislation that requires disclosure of foreign exchange margins applicable to DCC transactions and eventual comparability between foreign exchange rates offered by DCC providers and bank card issuers. The new legislation went into effect in April 2020. Such regulation could materially and adversely impact our financial results, by reducing the number of DCC transactions we process and the level of profit we generate from such transactions.

In addition to government regulation and card network rules, it is possible that merchants alter their business practices to avoid payment of certain fees to payment processors, such as inactive fees, paper statements, and PCI non-compliance fees. A significant decrease in these fees paid by merchants could have a material adverse effect on our business, financial condition, or results of operations.

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If we fail to comply with the applicable requirements of card networks, they could seek to fine us, suspend us or terminate our registrations. If our merchants or sales partners incur fines or penalties that we cannot collect from them, we may have to bear the cost of such fines or penalties.

In order to provide our transaction processing services, several of our subsidiaries are registered with Visa and Mastercard and other card networks as members or service providers for member institutions. Visa, Mastercard and other card networks set rules and standards with which we must comply. Any failure to comply with the networks’ requirements or to pay the fines they impose could cause the termination of our registration or status as a certified service provider and require us to stop providing payment processing services.

The card network rules subject us and our merchants to a variety of fines or penalties for certain acts or omissions by us or our merchants. The rules of card networks are set by their boards, which include members that are card issuers that directly or indirectly sell processing services to merchants in competition with us. There is a risk that these members could use their influence to enact changes to the card network rules or policies that are detrimental to us. Any changes in network rules or standards that increase the cost of doing business or limit our ability to provide processing services to our merchants will adversely affect the operation of our business. In addition, card networks and their member financial institutions regularly update, and generally expand, security expectations and requirements related to the security of cardholder data and environment. Under certain circumstances, we are required to report incidents to the card networks within a specified time frame.

In addition, if a merchant or sales partner fails to comply with the applicable requirements of card networks, it could be subject to a variety of fines or penalties that may be levied by card networks. We may have to bear the cost of such fines or penalties if we are unable to collect them from the applicable merchant or sales partner. The termination of our member registration, any change in our status as a service provider or merchant processor, or any changes in network rules or standards could prevent us from providing processing services relating to the affected card network and could adversely affect our business, financial condition, or results of operations.

34Risks related to the Merger

The pendency of the Merger may result in disruptions to our business.

On August 1, 2022, we entered into the Merger Agreement with Global Payments and Merger Sub, pursuant to which we will be acquired by Global Payments in an all-cash transaction. The Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the Merger and prohibits us, without Global Payments’ consent, from taking certain specified actions until the Merger has been consummated. These prohibitions may affect our ability to execute our business strategies and attain financial and other goals and may impact our financial condition, results of operations and cash flows.

Further, in connection with the proposed transaction with Global Payments, our current and prospective employees may experience uncertainty about their future roles with us following the Merger, which may adversely affect our ability to attract and retain key personnel. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with us following the Merger, and may depart prior to the consummation of the Merger. Accordingly, no assurance can be given that we will be able to attract and retain key employees to the same extent that we have been able to in the past.

The proposed transaction with Global Payments could cause disruptions to our business or business relationships, which could have an adverse impact on our results of operations. Parties with which we have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.

The proposed transaction with Global Payments may place a significant burden on management and internal resources. It may also divert management’s time and attention from the day-to-day operation of our businesses and the execution of our

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other strategic initiatives. This could adversely affect our financial results. In addition, we have incurred and will continue to incur other significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed transaction with Global Payments, and many of these fees and costs are payable regardless of whether or not such transaction is consummated.

Any of the foregoing could materially and adversely affect our business, our financial condition and our results of operations and prospects.

The Merger may not be consummated within the intended timeframe, or at all, and the failure to consummate the Merger will adversely affect the market price of our common stock and could adversely affect our business, results of operations and financial condition.

There can be no assurance that the Merger will be consummated within the intended timeframe, or at all. The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the Merger.

Assuming the satisfaction or, to the extent permitted by law, waiver of customary closing conditions, the Company expects the Merger to be completed by March 31, 2023. There can be no assurance that the remaining closing conditions will be satisfied (or waived, if applicable), and if all closing conditions are satisfied (or waived, if applicable), we can provide no assurance that the Merger will be consummated promptly or at all.

If the Merger is not consummated within the intended timeframe or at all, we may be subject to a number of material risks. The price of our common stock will significantly decline if the proposed transaction with Global Payments is not consummated within the intended timeframe or at all. In addition, some costs related to the Merger must be paid whether or not the Merger is consummated, as we have already incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed transaction with Global Payments. If the proposed transaction with Global Payments is not consummated within the intended timeframe or at all, we may also experience negative reactions from our investors, customers, partners, suppliers, and employees. Along with transaction costs and fees, the proposed transaction with Global Payments has required and will continue to require the attention and resources of our management team. If the proposed transaction with Global Payments is not consummated within the intended timeframe or at all, our management team’s attention and resources will have been diverted from other uses with little to no additional benefit to EVO, Inc.

Risks related to our financial results and indebtedness

Our results of operations may be adversely affected by changes in foreign currency exchange rates.

We present our financial statements in U.S. dollars and have a significant proportion of net assets and earnings in non-U.S. dollar currencies. Accordingly, we are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business.

Revenue and profit generated by our non-U.S. operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates and the impact may be significant. For example, revenue generated by our non-U.S. operations represented approximately 6065% of our total revenue for the year ended December 31, ~~2021~~2022, and a hypothetical uniform 10% strengthening in the value of the U.S. dollar relative to the local currencies of our non-U.S. operations would result in a decrease of approximately $58.10 million in pretax income for the year ended December 31, ~~2021~~2022. In addition, currency variations can adversely affect the margins on our DCC product offerings. A greater portion of our revenue is generated outside the United States as compared to certain of our competitors and, as such, foreign currency exchange rates may have a more significant impact on our results.

In addition, we may become subject to exchange control regulations that restrict or prohibit the conversion of our other revenue currencies into U.S. dollars. Any of these factors could decrease the value of revenues and earnings we derive from our non-U.S. operations and adversely affect our business.

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While we currently have some degree of diversification in foreign currency, we may seek to reduce our exposure to fluctuations in foreign currency exchange rates in the future through the use of hedging arrangements. To the extent that we hedge our foreign currency exchange rate exposure in the future, we will forgo the benefits we would otherwise experience if foreign currency exchange rates changed in our favor. No strategy can completely insulate us from risks associated with such fluctuations and our currency exchange rate risk management activities could expose us to substantial losses if such rates move materially differently from our expectations.

Our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets would negatively affect our business, financial condition, or results of operations.

As a result of our prior acquisitions, a significant portion of our total assets consists of intangible assets (including goodwill). To the extent we engage in additional acquisitions, we may recognize additional intangible assets and goodwill. We evaluate on a regular basis whether all or a portion of our goodwill and other intangible assets may be impaired. Under current accounting rules, any determination that impairment has occurred would require us to record an impairment charge. An impairment of a significant portion of goodwill or intangible assets would adversely affect our business, financial condition, or results of operations.

If our business does not perform well, we may be required to establish a valuation allowance against the deferred tax assets, which would negatively impact the results of our operations.

We have substantial amounts of deferred tax assets on our balance sheet. The evaluation of realizability of these assets requires us to analyze historical taxable income and make significant assumptions related to forecasted revenues and taxable income in the appropriate tax jurisdiction. Estimated future taxable income can be sensitive to changes in the assumed revenue growth rate and expected operating margin, which are affected by expectations about future market conditions and are inherently uncertain due to their forward-looking nature. Future events could cause us to conclude that impairment indicators exist and may require us to record a valuation allowance. Any significant impairment loss would have an adverse impact on our reported earnings in the period in which the charge is recognized.

Our indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk, and prevent us from meeting our debt obligations.

Upon the consummation of the Merger, our Senior Secured Credit Facilities will be paid off in full. However, there can be no assurance that the Merger will be consummated within the anticipated timeline or at all. For additional discussion regarding our risks related to the Merger, see the risks described under the caption “Risks related to the Merger” in this Annual Report. In the event our indebtedness is not repaid in connection with the consummation of the Merger our indebtedness exposes us to certain risks, including those set forth below.

Our indebtedness could have adverse consequences, including:

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●

increasing our vulnerability to adverse economic, industry, or competitive developments;

●

requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use cash flow to fund our operations, capital expenditures, and future business opportunities;

●

making it more difficult for us to satisfy our obligations with respect to our indebtedness, including restrictive covenants and borrowing conditions, which could result in an event of default under the agreements governing such indebtedness;

●

restricting us from making strategic acquisitions, making it more difficult to structure new partnerships or joint ventures, or causing us to make non-strategic divestitures;

~~● making it more difficult for us to obtain card network sponsorship and clearing services from financial institutions or to obtain or retain other business with financial institutions;~~35

●Table ~~limiting~~of ~~our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; or~~Contents

~~Successful~~● ~~execution~~making ofit ~~our~~more ~~business~~difficult ~~strategy~~for isus ~~dependent in part upon our ability~~ to ~~manage~~obtain ~~our~~card ~~capital~~network ~~structure~~sponsorship ~~to reduce interest expense, have access to sufficient liquidity,~~ and ~~enhance~~clearing ~~free~~services ~~cash~~from ~~flow~~financial ~~generation.~~institutions Weor ~~are party~~ to aobtain senior secured credit facility pursuant to a credit agreement dated November 1, 2021 (our “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities consists of a revolver (the “Revolver”) and a term loan (the “Term Loan”). As of December 31, 2021, our Senior Secured Credit Facilities include revolver commitments of $200.0 million and a term loan of $588.0 million that are scheduled to mature in November 2026. We may not be able to refinance our Senior Secured Credit Facilities or ~~our~~retain other ~~existing~~business ~~indebtedness~~with atfinancial orinstitutions; ~~prior to their maturity at attractive rates of interest because of our high levels of debt, debt incurrence restrictions under our debt agreements,~~ or ~~because of adverse conditions in credit markets generally. We also have the ability to further increase our indebtedness by borrowing additional amounts on the Senior Secured Credit Facilities.~~

In● ~~addition,~~limiting ~~certain of~~ our ~~borrowings,~~ability including borrowings under our Senior Secured Credit Facilities, are at variable rates of interest. If interest rates increase, the interest payment obligations under our variable rate indebtedness will increase even if the amount borrowed remains the same. The condition of the financial and credit markets and prevailing interest rates have fluctuated in the past and are likely to ~~fluctuate~~obtain inadditional ~~the~~financing ~~future.~~for Inworking ~~addition~~capital, ~~developments~~capital ~~in our business and operations could lead to a ratings downgrade for us. In 2020~~expenditures, weproduct ~~entered into an interest rate swap with a notional amount of $500.0 million that matures on December 31~~development, ~~2022 to reduce a portion of exposure to fluctuations in LIBOR interest rates associated with our variable-rate~~ debt. Asservice ~~of December 31~~requirements, ~~2021,~~ ~~we had $588.0 million aggregate principal amount of variable rate indebtedness. As a result~~acquisitions, asand ofgeneral ~~December 31, 2021,~~corporate ~~the~~or ~~impact~~other ~~of a 100 basis point increase in interest rates would have increased our annual interest expense by approximately $0.9 million.~~purposes;

Successful execution of our business strategy is dependent in part upon our ability to manage our capital structure to reduce interest expense, have access to sufficient liquidity, and enhance free cash flow generation. We are party to a senior secured credit facility pursuant to a credit agreement dated November 1, 2021 (our “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities consists of a revolver (the “Revolver”) and a term loan (the “Term Loan”). As of December 31, 2022, our Senior Secured Credit Facilities include revolver commitments of $200.0 million and a term loan of $588.0 million that are scheduled to mature in November 2026. We may not be able to refinance our Senior Secured Credit Facilities or our other existing indebtedness at or prior to their maturity at attractive rates of interest because of our high levels of debt, debt incurrence restrictions under our debt agreements, or because of adverse conditions in credit markets generally. We also have the ability to further increase our indebtedness by borrowing additional amounts on the Senior Secured Credit Facilities.

In addition, certain of our borrowings, including borrowings under our Senior Secured Credit Facilities, are at variable rates of interest. If interest rates increase, the interest payment obligations under our variable rate indebtedness will increase even if the amount borrowed remains the same. The condition of the financial and credit markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future. In addition, developments in our business and operations could lead to a ratings downgrade for us. In 2020, we entered into an interest rate swap with a notional amount of $500.0 million that matured on December 31, 2022 to reduce a portion of exposure to fluctuations in LIBOR interest rates associated with our variable-rate debt. As of December 31, 2022, we had $641.5 million aggregate principal amount of variable rate indebtedness. The impact of a 100 basis point increase in interest rates would have increased our annual interest expense by approximately $6.4 million upon the expiration of the interest rate swap as of December 31, 2022. Effective January 2023, interest rate payments of our entire outstanding term loan will be based on variable interest rates.

Any such fluctuation in the financial and credit markets, or in the credit rating of us or our subsidiaries, may impact our ability to access debt markets in the future or increase our cost of current or future debt, which could adversely affect our business, financial condition, or results of operations.

We may be required to purchase the remainder of our eService subsidiary in Poland.

In December 2013, we acquired a 66% ownership interest in Centrum Elektronicznych Uslug Platniczych eService Sp. z o.o., or eService, from PKO Bank Polski. In connection with the purchase, we granted a put option to PKO Bank Polski that, if exercised, could force us to buy the remainder of the business at the then-current market price. The option expires on January 1, 2024. If we are forced to purchase the remainder of our eService subsidiary at a time in which it is not otherwise in our best interest to do so, our business, including our liquidity, could be adversely affected.

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The phase-out, replacement or unavailability of the London Interbank Offered Rate (“LIBOR”) may adversely affect our results of operations.

In July 2017, the United Kingdom’s Financial Conduct Authority (“FCA”) publicly announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. In the United States, the Alternative Reference Rates Committee, which was convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has identified the Secured Overnight Financing Rate (“SOFR”), a new index calculated by reference to short-term repurchase agreements for U.S. Treasury securities, as its preferred alternative rate for U.S. dollar LIBOR. Financial regulators in the United Kingdom, the European Union, Japan, and Switzerland also have formed working groups with the aim of recommending alternatives to LIBOR denominated in their local currencies.

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In March 2021, the FCA announced that LIBOR will no longer be provided for the one-week and two-month U.S. dollar settings after December 31, 2021 and that publication of the U.S. dollar settings for the overnight, one-month, three-month, six-month and 12-month LIBOR rates will cease after June 30, 2023.

There is currently no definitive successor reference rate to LIBOR and various industry organizations are still working to develop transition mechanisms. SOFR is calculated based on overnight transactions under repurchase agreements, backed by Treasury securities. SOFR is observed on a daily basis and backward looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate for specified tenors and relies, to some degree, on the expert judgment of submitting panel members. Given that SOFR is a secured rate backed by government securities, it is a rate that does not take into account bank credit risk (as is the case with LIBOR). Because of these and other differences, there is no assurance that SOFR will perform in the same way as LIBOR would have performed at any time, and there is no guarantee that it will be a comparable substitute for LIBOR. As of December 31, ~~2021~~2022, approximately $~~588~~641.05 million of our outstanding indebtedness had interest rate payments determined directly or indirectly based on LIBOR, EURIBOR, or the U.S. prime rate. The terms of our Senior Secured Credit Facilities include provisions that provide for the eventual replacement of LIBOR as a reference rate with SOFR or otherwise an alternate benchmark rate. However, uncertainty regarding the continued use and reliability of LIBOR as a benchmark interest rate could adversely affect the performance of LIBOR relative to its historic values prior to the replacement of LIBOR. Additionally, in 2020, the Company entered into an interest rate swap with a notional amount of $500.0 million to reduce a portion of the exposure to fluctuations in LIBOR interest rates associated with our variable-rate term loan. The interest rate swap ~~has~~had a fixed rate of 0.2025% and amatured ~~maturity~~on ~~date of~~ December 31, 2022. We may incur expenses to amend and adjust our indebtedness ~~and interest rate swap~~ to eliminate any differences between any alternative benchmark rate used by our interest rate hedge and our outstanding indebtedness. Any alternative benchmark rate may be calculated differently than LIBOR, may increase the interest expense associated with our existing or future indebtedness and may not align for our assets, liabilities, and hedging instruments. Any of these occurrences could adversely affect our borrowing costs, financial condition, or results of operations.

Restrictions imposed by our Senior Secured Credit Facilities and our other outstanding indebtedness may materially limit our ability to operate our business and finance our future operations or capital needs.

The terms of our Senior Secured Credit Facilities restrict us and our subsidiaries from engaging in specified types of transactions. These covenants impose certain limitations, subject to certain exceptions, on our ability, and that of our subsidiaries, to, among other things:

●

incur indebtedness;

●

create liens;

●

engage in mergers or consolidations;

●

make investments, loans and advances;

●

pay dividends and distributions and repurchase capital stock;

●

sell assets;

●

engage in certain transactions with affiliates;

●

enter into sale and leaseback transactions;

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make certain accounting changes; and

●

make prepayments on junior indebtedness.

In addition, the credit agreement governing our Senior Secured Credit Facilities contain a financial covenant that requires us to remain under a maximum consolidated leverage ratio determined on a quarterly basis with step-downs over time. We may elect to increase the maximum consolidated leverage level with which we must comply by 0.5x up to two times during the term upon the consummation of a “material acquisition.” See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” A breach of any of these covenants (or any other covenant in the documents governing our Senior Secured Credit Facilities) could result in a default or event of default under our Senior Secured Credit Facilities. If an event of default under our Senior Secured Credit Facilities occurred, the applicable lenders or agents could elect to terminate borrowing commitments and declare all borrowings and loans outstanding thereunder, together with accrued and unpaid interest and any fees and other obligations, to be immediately due and payable. In addition, or in the alternative, the applicable lenders or agents could exercise their rights under the security documents entered into in connection with our Senior Secured Credit Facilities. Subject to certain exceptions specified in our Senior Secured Credit Facilities, we have pledged substantially all of our U.S. assets as collateral securing our Senior Secured Credit Facilities and any such exercise of remedies on any material portion of such collateral would materially and adversely affect our financial condition and our ability to continue operations.

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addition, or in the alternative, the applicable lenders or agents could exercise their rights under the security documents entered into in connection with our Senior Secured Credit Facilities. Subject to certain exceptions specified in our Senior Secured Credit Facilities, we have pledged substantially all of our U.S. assets as collateral securing our Senior Secured Credit Facilities and any such exercise of remedies on any material portion of such collateral would materially and adversely affect our financial condition and our ability to continue operations.

If we were unable to repay or otherwise refinance these borrowings and loans when due, and the applicable lenders proceeded against the collateral granted to them to secure that indebtedness, we may be forced into bankruptcy or liquidation. In the event the applicable lenders accelerate the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness. Any acceleration of amounts due under our Senior Secured Credit Facilities would likely have a material adverse effect our business.

Accelerated funding programs increase our working capital requirements and expose us to incremental credit risk, and if we are unable to access or raise sufficient liquidity to address these funding programs we may be exposed to additional competitive risk.

In response to demand from our merchants and competitive offerings, we offer certain of our merchants various accelerated funding programs which are designed to enable qualified participating merchants to receive their deposits from credit card transactions in an expedited manner. These programs increase our working capital requirements and expose us to incremental credit risk related to our merchants, which could constrain our ability to raise additional capital to fund our operations and adversely affect our business, financial condition, or results of operations. Our inability to access or raise sufficient liquidity to address our needs in connection with the anticipated expansion of such advance funding programs could put us at a competitive disadvantage by restricting our ability to offer programs to all of our merchants similar to those made available by our various competitors.

Risks related to legal and regulatory requirements

Failure to comply with anti-corruption, anti-money laundering, economic and trade sanctions regulations, and similar laws and regulations could subject us to penalties and other adverse consequences.

We operate our business in various countries where certain business practices are prohibited by U.S., foreign, and other laws and regulations applicable to us. We are subject to anti-corruption laws and regulations, including the FCPA, the U.K. Bribery Act, and other laws that prohibit the making or offering of improper payments, including payments to foreign governments, officials, and business entities for the purpose of obtaining or retaining business. We have implemented policies, procedures, systems, and controls designed to identify and address potentially impermissible transactions under such laws and regulations; however, there can be no assurance that our employees, consultants, and agents, including those that may be based in or from countries where practices that violate U.S. or other laws may be customary, will not take actions in violation of our policies for which we may be ultimately responsible.

In addition, we are subject to certain anti-money laundering laws and regulations. In some jurisdictions, we are directly subject to these regulations. In other cases, we are contractually required to comply with certain regulations to which our bank partners are subject. These regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, and the EU Anti-Money Laundering Directive typically require businesses to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity, and maintain transaction records.

We are also subject to certain economic and trade sanctions programs administered by OFAC and similar foreign governmental agencies, which prohibit or restrict transactions with specified countries, governments, and, in certain circumstances, nationals, as well as narcotics traffickers and terrorists or terrorist organizations. Other group entities may be subject to additional foreign or local sanctions requirements in other relevant jurisdictions.

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~~bank~~equivalents ~~partners~~to ~~are~~OFAC ~~subject.~~lists ~~These~~in ~~regulations,~~several ~~including~~other ~~the~~countries ~~Bank~~and ~~Secrecy~~require ~~Act,~~specific asdata ~~amended~~retention byobligations ~~the~~to ~~USA~~be ~~PATRIOT~~observed ~~Act~~by ofintermediaries ~~2001,~~in ~~and~~ the EUpayment ~~Anti-Money~~process. ~~Laundering~~Our ~~Directive typically require~~ businesses toin ~~develop~~those ~~and~~jurisdictions ~~implement~~are ~~risk-based~~subject ~~anti-money~~to ~~laundering~~those ~~programs,~~data ~~report~~retention ~~large cash transactions and suspicious activity, and maintain transaction records~~obligations.

Similar anti-money laundering and counter terrorist financing and proceeds of crime laws apply to movements of currency and payments through electronic transactions and to dealings with persons specified in lists maintained by the country equivalents to OFAC lists in several other countries and require specific data retention obligations to be observed by intermediaries in the payment process. Our businesses in those jurisdictions are subject to those data retention obligations.

Failure to comply with any of these laws or regulations or changes in this legal or regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government, may result in significant financial penalties or reputational harm, or change the manner in which we currently conduct some aspects of our business, which could adversely affect our business, financial condition, or results of operations.

We are subject to governmental regulation and other legal obligations, particularly related to privacy, data protection, and information security, as well as consumer protection laws across different markets where we conduct our business. Our actual or perceived failure to comply with such obligations could harm our business.

Privacy and data security have become significant issues in North America, Europe, and in many other jurisdictions where we may conduct our operations in the future. As we receive, collect, process, use, and store personal and confidential data, we are subject to diverse laws and regulations relating to data privacy and security, including, in the United States, local state laws such as the CCPA which took effect on January 1, 2020, and the forthcoming California Privacy Rights and Enforcement Act of 2020 (the “CPRA”), which expands upon the CCPA and isbecame ~~scheduled~~operative toin ~~take effect on~~ January 1, 2023 (with a lookback to January 1, 2022), and, in the EU, the GDPR.

The CCPA requires companies (regardless of their location) that collect personal information of California residents to notify consumers about their data collection, use, and sharing practices and grants consumers specific rights to access and delete their data and to opt out of certain types of data sharing. The California Attorney General is currently responsible for the enforcement of the CCPA and can impose statutory fines for violations. Consumers also have a limited private right of action for unauthorized access to certain categories of information. The CPRA expands the CCPA to create additional consumer privacy rights, such as the right of correction and the right to limit the use and disclosure of sensitive personal information, and establishes a new privacy enforcement agency. ~~In addition~~Additionally, ~~Virginia~~other U.S. states continue to propose, and ~~Colorado~~in ~~have~~certain ~~each~~cases ~~passed~~adopt, data privacy legislation ~~scheduled~~such toas ~~take~~Colorado, ~~effect~~Virginia, inUtah, ~~2023~~and Connecticut. ~~Both~~The privacy laws emulate the CCPA and the CPRA in many respects, but despite similarities each law includes its own unique compliance requirements. Aspects of the interpretation and enforcement of these laws remain uncertain. ~~Further~~Additionally, several other states, including Nevada and Maine, have introduced or passed similar legislation that may impose varying standards and requirements on our data collection, use, and processing activities and the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. The effects of such laws and other laws and regulations that may be enacted, or new interpretations of existing laws and regulations, may require us to modify our data processing practices and policies and incur compliance-related costs and expense.

GDPR is directly applicable in each EU member state and applies to companies established in the EU that process personal data as well as companies outside of the EU that collect and use personal data to offer goods or services to, or monitor the behavior of, individuals in the EU. GDPR applies stringent data protection obligations for processors and controllers of personal data. Data Protection Authorities in each European jurisdiction are responsible for the enforcement of GDPR and can impose significant penalties and fines for failure to comply with GDPR, including fines of up to €20 million, or 4% of total worldwide annual turnover (revenue), whichever is higher, as well as orders to curtail operations, such as orders to cease certain processing activities or data transfers. Additionally, post-Brexit, the United Kingdom has implemented the GDPR into domestic law through the Data Protection Act and UK GDPR. As of January 2021, we are required to comply with the GDPR and also analogous UK laws, exposing us to two parallel regimes which may diverge in the future, each of which potentially authorizes similar fines and enforcement actions for certain violations.

Compliance with these privacy and data security requirements is rigorous and time-intensive and may increase our cost of doing business. Failure to comply with these requirements, or any other laws or regulations applicable to our business, may expose us to fines and other penalties, litigation, or reputational harm, any of which could materially and adversely affect our business, financial condition, or results of operations.

The regulatory framework for the receipt, collection, processing, use, safeguarding, and sharing and transfer of personal and confidential data is rapidly evolving and is likely to remain uncertain for the foreseeable future as new global privacy rules are enacted and existing ones are updated and strengthened. New or evolving regulations could require us to modify

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~~GDPR~~our ~~into~~systems, ~~domestic~~products, ~~law~~or ~~through~~processes, ~~the~~possibly ~~Data~~in ~~Protection~~a ~~Act~~material ~~and UK GDPR. As of January 2021~~manner, ~~we are required to comply with the GDPR~~ and ~~also~~could ~~analogous~~limit UKour ~~laws,~~ability ~~exposing us~~ to ~~two~~develop ~~parallel~~new ~~regimes~~services ~~which may diverge in the future, each of which potentially authorizes similar fines~~ and ~~enforcement actions for certain violations~~features.

Failure to enforce and defend our intellectual property rights may diminish our competitive advantages or interfere with our ability to market and promote our products and services.

Our trademarks, trade names, trade secrets, know-how, proprietary technology, and other intellectual property are important to our future success, including the rights associated with our EVO and certain of our operating subsidiaries’ trademarks and trade names, among others. We believe our trademarks and trade names are widely recognized and associated with quality and reliable service. While it is our policy to vigorously defend our intellectual property, there can be no assurance that the steps we have taken to protect our intellectual property will be adequate to prevent infringement, misappropriation, or other violations. We also cannot guarantee that others will not independently develop technology with the same or similar functions as the proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors. Furthermore, we may face claims of infringement of third-party intellectual property that could interfere with our ability to market and promote our products and services. Any litigation to enforce our intellectual property rights or defend ourselves against claims of infringement of third-party intellectual property rights could be costly, divert attention of management, and may not ultimately be resolved in our favor. Moreover, if we are unable to successfully defend against claims that we have infringed the intellectual property rights of others, we may be prevented from using certain intellectual property and may be liable for damages, which in turn could have a material adverse effect on our business, financial condition, or results of operations. In addition, the laws of certain non-U.S. countries where we do business or may do business in the future may not recognize intellectual property rights or protect them to the same extent as do the laws of the United States.

We may be adversely impacted by new or revised tax regulations or their interpretations, or by becoming subject to additional foreign or U.S. federal, state, or local taxes that cannot be passed through to our merchants or partners.

We are subject to tax laws in each jurisdiction where we do business. Changes in tax laws or their interpretation could decrease the amount of revenues we receive, the value of any tax loss carry-forwards and tax credits recorded on our balance sheet, and the amount of our cash flow or net income, and adversely affect our business, financial condition, or results of operations. In addition, our financial results could be adversely impacted if we become subject to new or additional taxes that cannot be passed through to our merchants or partners.

In addition to changes in tax regulations or interpretations, our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

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allocation of expenses to and among different jurisdictions;

●

changes in the valuation of our deferred tax assets and liabilities;

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expected timing and amount of the release of any tax valuation allowances;

●

tax effects of stock-based compensation; and

●

mix of future earnings and tax liabilities recognized in foreign jurisdictions at varying rates versus U.S. federal, state, and local income taxes.

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In addition, we may be subject to audits of our income, sales, and other taxes by U.S. federal, state, and local, as well as foreign taxing authorities. Outcomes from these audits could have an adverse effect on our business, financial condition, or results of operations.

Failure to comply with, or changes in, laws, regulations, and enforcement activities may adversely affect our products, services, and the markets in which we operate.

We and our merchants are subject to laws and regulations that affect the electronic payments industry in the many countries in which our services are used. Our merchants are subject to numerous laws and regulations applicable to banks, financial institutions, and card issuers in the United States and abroad, and, consequently, we are at times affected by these foreign, federal, state, and local laws and regulations. A number of our subsidiaries in our European segment hold a PI license, allowing them to operate in the EU member states in which such subsidiaries do business. As a PI, we are subject to regulation and oversight in the applicable EU member states, which includes, among other obligations, a requirement to maintain specific regulatory capital and adhere to certain rules regarding the conduct of our business, including PSD2. PSD2 contains a number of additional regulatory provisions, such as provisions relating to SCA, which required industry wide systems upgrades, and DCC, which requires additional disclosures to our customers. Failure to comply with SCA requirements may result in fines from card networks as well as declined payments from card issuers which could adversely impact our business.

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allowing them to operate in the EU member states in which such subsidiaries do business. As a PI, we are subject to regulation and oversight in the applicable EU member states, which includes, among other obligations, a requirement to maintain specific regulatory capital and adhere to certain rules regarding the conduct of our business, including PSD2. PSD2 contains a number of additional regulatory provisions, such as provisions relating to SCA, which required industry wide systems upgrades, and DCC, which requires additional disclosures to our customers. Failure to comply with SCA requirements may result in fines from card networks as well as declined payments from card issuers which could adversely impact our business.

See “Item 1. Business—Regulatory” for more information on certain laws and regulations to which we are subject. In addition, the U.S. government has increased its scrutiny of a number of credit card practices from which some of our merchants derive significant revenue. Regulation of the payments industry, including regulations applicable to us and our merchants, has also increased significantly in recent years.

We are also subject to U.S. and international financial services regulations, a myriad of consumer protection laws, including economic sanctions, laws and regulations, anticorruption laws, escheat regulations, and privacy and information security regulations. In addition, certain of our financial institution partners are subject to regulation by federal and state authorities and, as a result, could pass through some of those compliance obligations to us, which could adversely affect our business, financial condition, or results of operations.

Failure to comply with laws and regulations could damage our reputation, result in the suspension or revocation of licenses and registrations (including our PI licenses), and subject us to enforcement or criminal actions or penalties, including fines. Post-Brexit, we are operating within the United Kingdom pursuant to the temporary permissions regime and have applied to the FCA for a stand alone PI license to operate long-term in the United Kingdom market.

A loss of our PI licenses would prevent us from operating our business in the EU. In addition, we are subject to the rules of Mastercard, Visa, and other credit and debit networks. Any failure to comply with the networks’ requirements or to pay the fines they impose could cause the termination of our registrations and require us to stop providing payment processing services. Violations of law by our merchants and partners could impact our ability to operate our business and could threaten our licenses and registrations. Any of the foregoing could adversely affect our business, financial condition, or results of operations.

Changes to regulations that are applicable to us, our merchants, our partners, or the card networks could require us to make capital investments to modify our processes or services and could reduce the fees we are able to charge our merchants. Regulations could also result in greater pricing transparency and increased price-based competition leading to lower margins and higher rates of merchant attrition. Furthermore, any regulatory change that results in modifications to our merchants’ business practices could change the demand for our services and alter the type or volume of transactions that we process on behalf of our merchants. Any of the foregoing could adversely impact our business, financial condition, or results of operations.

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From time to time we are subject to various legal proceedings which could adversely affect our business, financial condition, or results of operations.

We are involved in various litigation matters. We are also involved in, or are the subject of, governmental or regulatory agency inquiries or investigations and make voluntary self-disclosures to government or regulatory agencies from time to time. Our insurance or indemnities may not cover all claims that may be asserted against us and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. If we are unsuccessful in our defense in these litigation matters, or any other legal proceeding, we may be forced to pay damages or fines, enter into consent decrees or change our business practices, any of which could adversely affect our business, financial condition, or results of operations.

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Risks related to our organizational structure

Our principal asset is our interest in EVO, LLC, and, as a result, we depend on distributions from EVO, LLC to pay our taxes and expenses, including payments under the tax receivable agreement with the Continuing LLC Owners (the “TRA”). EVO, LLC’s ability to make such distributions may be subject to various limitations and restrictions.

We are a holding company and have no material assets other than our ownership of LLC Interests. As such, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses or declare and pay dividends in the future, if any, will be dependent upon the financial results and cash flows of EVO, LLC and its subsidiaries and distributions we receive from EVO, LLC. There can be no assurance that our subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in our debt instruments, will permit such distributions. Although EVO, LLC is not currently subject to any debt instruments or other agreements that would restrict its ability to make distributions to EVO, Inc., the terms of our Senior Secured Credit Facilities restrict the ability of our subsidiary, EVO Payments International, LLC, and certain of its subsidiaries to pay dividends to EVO, LLC.

EVO, LLC will continue to report as a partnership for U.S. federal income tax purposes and, as such, will not be subject to any entity-level U.S. federal income tax. Instead, any taxable income of EVO, LLC will be allocated to holders of LLC Interests, including us. Accordingly, we will incur income taxes on our allocable share of any net taxable income of EVO, LLC. Under the terms of its limited liability company agreement, EVO, LLC will be obligated to make tax distributions to holders of LLC Interests, including us. In addition to tax expenses, we may also incur expenses related to our operations. We intend, as its managing member, to cause EVO, LLC to make cash distributions to the owners of LLC Interests in an amount sufficient to (1) fund all or part of their tax obligations in respect of taxable income allocated to them, including as applicable, payments under the TRA, which could be significant, and (2) cover our operating expenses. However, EVO, LLC’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would violate applicable law or any agreement to which EVO, LLC is then a party, including debt agreements, or that would have the effect of rendering EVO, LLC insolvent. Payments required under the TRA are generally funded by taxable income and represent the tax benefit from the step-up in tax basis that is passed on to the TRA holders. If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially and adversely affect our liquidity and financial condition and subject us to various restrictions imposed by lenders. To the extent we are unable to make timely payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach that would accelerate payments due under the TRA. In addition, if EVO, LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired. See “General Risks” and “Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend policy.”

The TRA requires us to make cash payments to the Continuing LLC Owners in respect of certain tax benefits to which we may become entitled, and we expect that those payments will be substantial.

Under the TRA, we are required to make cash payments to the Continuing LLC Owners equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (1) the increases in our share of the tax basis of assets of EVO, LLC resulting from any purchases or redemptions of LLC Interests from the Continuing LLC Owners or exchanges by the Continuing LLC Owners of LLC Interests (and paired Class D common stock) for Class A common stock, and (2) certain other tax benefits related to our making payments under the TRA. In general, we are obligated to fund these payments over time on a pro rata basis to the extent we have realized or are deemed to realize tax benefits. We expect that the amount of the cash payments required under the TRA will be significant, but only to the extent we have taxable income. Any payments made by us to the Continuing LLC Owners under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us. Furthermore, our future obligation to make payments under the TRA could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the TRA.

The actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of LLC Interests, the amount of gain recognized by such holders of

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~~Continuing~~ LLC ~~Owners or exchanges by the Continuing LLC Owners of LLC~~ Interests ~~(and paired Class D common stock) for Class A common stock~~, ~~and (2) certain other tax benefits related to our making payments under~~ the ~~TRA.~~amount Inand ~~general,~~timing ~~we are obligated to fund these payments over time on a pro rata basis to the extent we have realized or are deemed to realize tax benefits. We expect that the amount~~ of the ~~cash payments required under the TRA will be significant, but only to the extent we have~~ taxable income. ~~Any~~allocated ~~payments~~to ~~made by~~ us toor ~~the Continuing LLC Owners under the TRA will generally reduce the amount of overall cash flow that might have~~ otherwise ~~been~~generated ~~available~~by to us. ~~Furthermore,~~in ~~our future obligation to make payments under~~ the ~~TRA could make us a less attractive target for an acquisition~~future, ~~particularly~~and in the ~~case~~federal ~~of an acquirer that cannot use some or all of the~~ tax ~~benefits~~rates ~~that~~then ~~are the subject of the TRA~~applicable.

~~The~~In ~~actual~~connection ~~amount~~with the execution and ~~timing~~delivery of ~~any payments under~~ the ~~TRA~~Merger ~~will~~Agreement, ~~vary~~EVO, ~~depending~~Inc., ~~upon~~EVO, aLLC, ~~number~~and ofcertain ~~factors,~~other ~~including~~parties to the ~~timing~~TRA ofentered ~~redemptions~~into orAmendment ~~exchanges~~No. by1 to the ~~holders~~Tax ofReceivable ~~LLC~~Agreement ~~Interests,~~ (the ~~amount~~“TRA ofAmendment”), ~~gain~~pursuant ~~recognized~~to bywhich such ~~holders~~parties ofagreed ~~LLC~~to ~~Interests,~~certain ~~the~~terms ~~amount~~with ~~and~~respect ~~timing~~to the treatment of the ~~taxable~~TRA ~~income~~upon ~~allocated~~the toconsummation usof orthe ~~otherwise~~Merger. ~~generated~~In bythe usevent in the ~~future,~~Merger ~~and~~Agreement is terminated, the ~~federal~~TRA ~~tax~~Amendment ~~rates~~will ~~then~~no ~~applicable~~longer be of any force and effect.

Our organizational structure, including the TRA, confers certain benefits upon the Continuing LLC Owners that do not benefit holders of our Class A common stock to the same extent that they benefit the Continuing LLC Owners.

Our organizational structure, including the TRA, confers certain benefits upon the Continuing LLC Owners that do not benefit the holders of our Class A common stock to the same extent, such as the payment by EVO, Inc. to the Continuing LLC Owners of 85% of the amount of certain tax benefits, discussed above. Although EVO, Inc. retains 15% of the amount of such tax benefits, this and other aspects of our organizational structure that benefit the Continuing LLC Owners may adversely impact the future trading market for the Class A common stock.

In certain cases, payments under the TRA to the Continuing LLC Owners may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the TRA.

The TRA provides that, upon certain mergers, asset sales, business combinations, or changes of control transactions, or the early termination of the TRA at our election, payments to the Continuing LLC Owners under the TRA are based on certain assumptions, including an assumption that we will have sufficient taxable income to fully utilize the potential future tax benefits that are subject to the TRA.

As a result, (1) we could be required to make payments under the TRA that are greater than the specified percentage of any actual tax benefits we ultimately realize and (2) if we elect to terminate the TRA early, we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the TRA, based on certain assumptions, which payment may occur significantly in advance of the actual realization of such future tax benefits, if any. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring, or preventing certain mergers, asset sales, other forms of business combinations, or other changes of control. There can be no assurance that we will be able to fund or finance our obligations under the TRA.

We will not be reimbursed for any payments made to the Continuing LLC Owners under the TRA in the event that any tax benefits are disallowed.

Payments under the TRA will be based on the tax reporting positions that we determine. The IRS or another tax authority may challenge all or part of the tax basis increases or other tax benefits we claim, as well as other related tax positions we take, and a court could sustain such challenge. If the outcome of any such challenge would reasonably be expected to materially affect a recipient’s payments under the TRA, then we will not be permitted to settle or fail to contest such challenge without the consent (not to be unreasonably withheld or delayed) of each Continuing LLC Owner that owns at least 10% of the outstanding LLC Interests. The interests of the Continuing LLC Owners in any such challenge may differ from or conflict with our interests or the interests of holders of our Class A common stock and therefore the exercise of their consent rights may be adverse to our interests and the interests of holders of our Class A common stock. We will not be reimbursed for any cash payments previously made to the Continuing LLC Owners under the TRA in the event that any tax benefits initially claimed by us and for which payment has been made to a Continuing LLC Owner are subsequently challenged by a taxing authority and are ultimately disallowed. Instead, any excess cash payments made by us to a Continuing LLC Owner will be netted against any future cash payments that we might otherwise be required to make to such Continuing LLC Owner under the terms of the TRA. However, we may not determine that we have effectively made an excess cash payment to a Continuing LLC Owner for a number of years following the initial time of such payment and, if any of our tax reporting positions are challenged by a taxing authority, we will not be permitted to reduce any future cash payments under the TRA until any such challenge is finally settled or determined. Moreover, the excess cash payments we previously made under the TRA could be greater than the amount of future cash payments against which we would

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~~Continuing LLC Owner will be netted against any future cash payments that we might~~ otherwise be required to make to such Continuing LLC Owner under the terms of the TRA. However, we may not determine that we have effectively made an excess cash payment to a Continuing LLC Owner for a number of years following the initial time of such payment and, if any of our tax reporting positions are challenged by a taxing authority, we will not be permitted to reduce any future cash payments under the TRA until any such challenge is finally settled or determined. Moreover, the excess cash payments we previously made under the TRA could be greater than the amount of future cash payments against which we would otherwise be permitted to net such excess. As a result, payments could be made under the TRA significantly in excess of any tax savings that we realize in respect of the tax attributes with respect to a Continuing LLC Owner that are the subject of the TRA.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), as a result of our ownership of EVO, LLC, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if it (1) is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities or (2) engages, or proposes to engage, in the business of investing, reinvesting, owning, holding, or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined under the 1940 Act.

As the sole managing member of EVO, LLC, we control and operate EVO, LLC. On that basis, we believe that our interest in EVO, LLC is not an “investment security” as that term is used in the 1940 Act. However, if we were to cease participation in the management of EVO, LLC, our interest in EVO, LLC could be deemed an “investment security” for purposes of the 1940 Act.

We and EVO, LLC intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Risks related to our Series A Convertible Preferred Stock and the ownership interest of our Continuing LLC Owners

Our Series A convertible preferred stock has rights, preferences, and privileges that are not held by, and are preferential to, the rights of holders of our Class A common stock, which could adversely affect our liquidity and financial condition, and could in the future substantially dilute the ownership interest of holders of our Class A common stock.

In April 2020, the Company issued 152,250 shares of Series A convertible preferred stock (the “Preferred Stock”), all of which were purchased by an affiliate of MDP.

The Preferred Stock ranks senior to the Company’s Class A common stock with respect to dividends and distributions on liquidation, winding-up and dissolution. Holders of Preferred Stock are entitled to cumulative, paid-in-kind (“PIK”) dividends, which will be payable semi-annually in arrears by increasing the liquidation preference for each outstanding share of Preferred Stock. These PIK dividends accrue at an annual rate of (i) 6.00% per annum for the first ten years and (ii) 8.00% per annum thereafter. Holders of Preferred Stock are also entitled to participate in and receive any dividends declared or paid on the Class A common stock on an as-converted basis, and no dividends may be paid to holders of Class A common stock unless full participating dividends are concurrently paid to holders of Series A Preferred Stock. See Note 16, “Redeemable Preferred Stock,” in the notes to the accompanying consolidated financial statements for additional information.

Under various circumstances defined in the Certificate of Designations, (a) holders of shares of our Preferred Stock may be entitled to convert such shares into shares of our Class A common stock, or (b) we may require all holders of such shares to convert such shares to shares of our Class A common stock. Additionally, if the Company undergoes a change of control (as defined in the Certificate of Designations), each holder of Preferred Stock may require the Company to repurchase all or a portion of the Preferred Stock for cash consideration equal to up to 150% of the then-current liquidation preference per share plus accumulated and unpaid dividends, if any. In connection with the execution of the Merger Agreement, the holders of Preferred Stock agreed to convert the Preferred Stock into Class A common stock effective immediately prior to the closing of the Merger.

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shares to convert such shares to shares of our Class A common stock. Additionally, if the Company undergoes a change of control (as defined in the Certificate of Designations), each holder of Preferred Stock may require the Company to repurchase all or a portion of the Preferred Stock for cash consideration equal to up to 150% of the then-current liquidation preference per share plus accumulated and unpaid dividends, if any.

The share repurchase obligations could adversely affect our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes. Our obligations to the holders of Preferred Stock could also limit our ability to obtain additional financing and increase our borrowing costs, which could have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the holders of Preferred Stock and holders of shares of our Class A common stock.

As holders of our Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our Class A common stock, the issuance of the Preferred Stock effectively reduces the relative voting power of the holders of our Class A common stock. Any conversion of Preferred Stock into Class A common stock would dilute the ownership interest of existing holders of our Class A common stock, and any sales in the public market of the Class A common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

Holders of the Preferred Stock may exercise influence over us, including through their ability to designate a member of our board of directors.

As of December 31, ~~2021~~2022, the outstanding shares of our Preferred Stock represented approximately 18.39% of our outstanding Class A common stock, on an as-converted basis. Holders of Preferred Stock generally will be entitled to vote with the holders of the shares of Class A common stock on all matters submitted for a vote of holders of shares of Class A common stock (voting together with the holders of shares of Class A common stock as one class) on an as-converted basis. The terms of the Preferred Stock grant holders of the Preferred Stock consent rights with respect to certain actions by us, including (1) the authorization, creation, increase in the authorized amount of, or issuance of any class or series of senior or parity equity securities or any security convertible into, or exchangeable or exercisable for, shares of senior or parity equity securities, (2) amendments, modifications or repeal of any provision of the Company’s charter or of the Certificate of Designations that would adversely affect the rights, preferences or voting powers of the Preferred Stock, and (3) certain business combinations and binding or statutory share exchanges or reclassification involving the Preferred Stock unless such events do not adversely affect the rights, preferences or voting powers of the Preferred Stock. As a result, holders of Preferred Stock have the ability to influence the outcome of certain matters affecting our governance and capitalization.

In addition, under the terms of our director nomination agreement with MDP, which was amended and restated in connection with the issuance of the Preferred Stock, MDP has the right to designate for nomination up to two of our directors until MDP no longer holds at least 15% of the voting power of our outstanding voting stock. Thereafter, MDP will have the right to designate one director for nomination until such time as MDP no longer holds at least 5% of the voting power of our outstanding voting stock. Any director designated by MDP is entitled to serve on committees of our board of directors, subject to applicable law and stock exchange rules. Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the director designated by MDP may differ from the interests of other stockholders.

The Continuing LLC Owners have significant influence over us.

The Continuing LLC Owners control a significant portion of the aggregate voting power represented by all our outstanding classes of stock. As a result, the Continuing LLC Owners exercise significant influence over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation, and approval of significant corporate transactions, and will continue to have significant control over our management and policies. Four members of our board of directors are Continuing LLC Owners or are affiliated with our Continuing LLC Owners. The Continuing LLC Owners can take actions that have the effect of delaying or preventing a change of control of us or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them. In addition, the concentration of voting power with the Continuing LLC Owners may have an adverse effect on the price of our Class A common stock and the interests of the Continuing LLC Owners may not be consistent with the interests of our Class A stockholders.

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General Risks

The global COVID-19 pandemic has disrupted, and may continue to disrupt, our business.

The ongoing effects of the global COVID-19 pandemic and measures taken in response have had a significant impact on global economic conditions and may negatively impact certain aspects of our business and results of operations in the future. While many of the direct impacts of the COVID-19 pandemic have eased, the longer-term macroeconomic effects on global supply chains, inflation, labor shortages and wage increases continue to impact many industries and we, and our merchants, may continue to experience disruption in our business, including volatility in transaction volume and the number of transactions processed.

The pandemic continues to evolve, with the potential for new strains of existing viruses to emerge, or other pandemics or epidemics, and certain of the impacts of the pandemic may continue to affect our results in the future, including due to: inflationary pressures arising from supply chain disruptions, depressed transaction activity, and reimpositions of travel restrictions which may reduce cross-border transactions. Continued or future shutdowns, partial reopenings, or the re-imposition of previously lifted restrictions could directly or indirectly impact transaction volumes and negatively impact our operating results. A prolonged disruption in economic activity could adversely impact our business and financial performance, including the potential impairment of certain assets.

The full extent of the impact and effects of COVID-19, and any future pandemics or epidemics, on our business will depend on future developments, including, among other factors, the duration and spread of the outbreak (including whether there are additional periods of increases in the number of COVID-19 cases in future periods), its severity, the evolution of new variants of the virus, the effectiveness of government actions to contain the virus or treat its impact, the length of government restrictions, the distribution and effectiveness of the vaccines, and how quickly and to what extent normal economic and operating conditions resume. COVID-19, or any future pandemics or epidemics, and resulting impacts on the global economy and consumer spending and future developments in these and other areas present uncertainty and risk with respect to our future performance and results of operations.

Certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws may have an antitakeover effect and may delay, defer, or prevent a merger, acquisition, tender offer, takeover attempt, or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. These provisions provide for, among other things:

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a multi-class common stock structure;

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a classified board of directors with staggered three-year terms;

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the ability of our board of directors to issue one or more series of preferred stock;

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advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

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certain limitations on convening special stockholder meetings;

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a prohibition on cumulative voting in the election of directors;

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the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the voting power represented by our then-outstanding common stock; and

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amendment of certain provisions of our certificate of incorporation only by the affirmative vote of at least 66 2/3% of the voting power represented by our then-outstanding common stock.

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These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer was considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.

In addition, we have opted out of Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”), but our amended and restated certificate of incorporation provides that engaging in any of a broad range of business combinations with any “interested” stockholder (any stockholder with 15% or more of our voting stock) for a period of three years following the date on which the stockholder became an “interested” stockholder is prohibited, subject to certain exceptions.

Because we have no current plans to pay regular cash dividends on our Class A common stock, you may not receive any return on investment unless you sell your Class A common stock for a price greater than that which you paid for it.

We do not anticipate paying any regular cash dividends on our Class A common stock. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions, and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends is, and may be, limited by covenants of existing and any future outstanding indebtedness we or our subsidiaries incur, including under our existing Senior Secured Credit Facilities. Therefore, any return on investment in our Class A common stock is solely dependent upon the appreciation of the price of our Class A common stock on the open market, which may not occur. Pursuant to the terms of the Merger Agreement, the Company has agreed to suspend any regular cash dividends during the term of the Merger Agreement.

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Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or stockholders.

Our amended and restated certificate of incorporation provides, subject to limited exceptions, that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf of our Company, (2) claim of breach of a fiduciary duty owed by any director, officer, employee, or stockholder to the Company or the Company’s stockholders, (3) claim against the Company or any director or officer of the Company arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws or (4) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in another jurisdiction, which could adversely affect our business, financial condition, or results of operations.

We have renounced the doctrine of corporate opportunity to the fullest extent permitted by applicable law.

Our amended and restated certificate of incorporation provides that the corporate opportunity doctrine will not apply, to the extent permitted by applicable law, against any of our officers, directors, or stockholders or their respective affiliates (other than those officers, directors, stockholders, or affiliates acting in their capacity as our employee or director) in a manner that would prohibit them from investing or participating in competing businesses. To the extent any of our officers, directors or stockholders or their respective affiliates invest in such other businesses, they may have differing interests than our other stockholders. For example, subject to any contractual limitations, our officers, directors or stockholders or their respective affiliates’ funds may currently invest, and may choose in the future to invest, in other companies within the electronic payments industry which may compete with our business. Accordingly, in certain circumstances, the interests of our officers, directors, or stockholders or their respective affiliates may compete against us or pursue opportunities instead of us, for which we have no recourse. These actions on the part of our officers, directors, or stockholders or their respective affiliates could adversely impact our business, financial condition, or results of operations.

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their respective affiliates’ funds may currently invest, and may choose in the future to invest, in other companies within the electronic payments industry which may compete with our business. Accordingly, in certain circumstances, the interests of our officers, directors, or stockholders or their respective affiliates may compete against us or pursue opportunities instead of us, for which we have no recourse. These actions on the part of our officers, directors, or stockholders or their respective affiliates could adversely impact our business, financial condition, or results of operations.

If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, the price and trading volume of our Class A common stock could decline.

The trading market for our Class A common stock relies, in part, on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts stops covering us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause the stock price or trading volume of our Class A common stock to decline.

As a public reporting company, we are subject to rules and regulations established from time to time by the SEC and Nasdaq regarding our internal control over financial reporting.

We are a public reporting company subject to the rules and regulations established from time to time by the SEC and Nasdaq. These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. For example, we are required to assess the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. If we identify deficiencies in our internal control over financial reporting or if we are unable to comply with the requirements applicable to us as a public company, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. If this occurs, we could become subject to sanctions or investigations by the SEC or other regulatory authorities. In addition, if we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets, and the market price for our Class A common stock may be adversely affected.

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in our internal control over financial reporting or if we are unable to comply with the requirements applicable to us as a public company, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. If this occurs, we could become subject to sanctions or investigations by the SEC or other regulatory authorities. In addition, if we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets, and the market price for our Class A common stock may be adversely affected.

Future sales of Class A common stock in the public market (including shares of Class A common stock issuable upon exchange of LLC Interests or upon conversion of our Series A convertible preferred stock), or the perception of future sales, by us or our existing stockholders could cause the market price for our Class A common stock to decline.

The sale of a significant amount of shares of our Class A common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As part of the Reorganization Transactions, the Continuing LLC Owners received certain sale and exchange rights. Specifically, Blueapple has a sale right providing that, upon our receipt of a sale notice from Blueapple, we will use our commercially reasonable best efforts to pursue a public offering of shares of our Class A common stock and use the net proceeds therefrom to purchase LLC Interests from Blueapple. In addition, pursuant to an exchange agreement (the “Exchange Agreement”) each Continuing LLC Owner (other than Blueapple) has an exchange right providing that, upon receipt of an exchange notice from such Continuing LLC Owner, we will exchange the applicable LLC Interests from such Continuing LLC Owner for newly issued shares of our Class A common stock on a one-for-one basis. Each Continuing LLC Owner (other than Blueapple) also received certain registration rights pursuant to a registration rights agreement, including customary piggyback registration rights, which include the right to participate on a pro rata basis in any public offering we conduct in response to our receipt of a sale notice from Blueapple. In addition, MDP received customary demand registration rights that require us to register shares of Class A common stock held by it, including any Class A common stock received upon our exchange of Class A common stock for its LLC Interests. These registration rights also cover the shares of Class A common stock issuable upon conversion of the Series A convertible preferred stock held by MDP. Blueapple has the right, in connection with any public offering we conduct (including any offering conducted as a result of an exercise by MDP of its registration rights), to request that we use our commercially reasonable best efforts to pursue a public offering of shares of our Class A common stock and use the net proceeds therefrom to purchase a pro rata portion of its LLC Interests. The market price of shares of our Class A common stock could decline, potentially significantly, if any of these stockholders exercise their registration, sale, or exchange rights.

InAs part of the ~~future~~Reorganization Transactions, wethe ~~may~~Continuing ~~also~~LLC ~~issue~~Owners ~~securities~~received incertain ~~connection~~sale ~~with~~and ~~investments~~exchange rights. Specifically, ~~acquisitions~~Blueapple has a sale right providing that, orupon ~~capital~~our ~~raising~~receipt ~~activities.~~of Ina ~~particular~~sale notice from Blueapple, ~~the~~we ~~number~~will use our commercially reasonable best efforts to pursue a public offering of shares of our Class A common stock ~~issued~~and inuse ~~connection~~the ~~with~~net anproceeds ~~investment~~therefrom orto ~~acquisition~~purchase LLC Interests from Blueapple. In addition, orpursuant to ~~raise~~an ~~additional~~exchange ~~equity~~agreement ~~capital,~~(the ~~could~~“Exchange ~~constitute~~Agreement”) aeach ~~material~~Continuing ~~portion~~LLC ofOwner ~~our~~(other ~~then-outstanding~~than ~~shares~~Blueapple) has an exchange right providing that, upon receipt of ~~our~~an ~~Class~~exchange Anotice ~~common~~from ~~stock.~~such InContinuing ~~addition~~LLC Owner, we ~~have~~will ~~reserved~~exchange the applicable LLC Interests from such Continuing LLC Owner for newly issued shares of our Class A common stock on a one-for-one ~~issuance~~basis. ~~under~~Each ~~our~~Continuing ~~Amended~~LLC ~~and~~Owner ~~Restated~~(other ~~2018~~than ~~Omnibus~~Blueapple) ~~Equity~~also ~~Incentive~~received ~~Plan~~certain registration rights pursuant to ~~our~~a ~~employees,~~registration ~~directors~~rights agreement, ~~officers~~including customary piggyback registration rights, ~~and~~which ~~consultants.~~include ~~Any~~the ~~issuance~~right ofto ~~additional~~participate ~~securities~~on a pro rata basis in ~~the~~any ~~future~~public ~~may~~offering ~~result~~we conduct in ~~additional~~response ~~dilution~~to our receipt of a sale notice from Blueapple. In addition, MDP received customary demand registration rights that require us to ~~the~~register ~~holders~~shares of Class A common stock held by it, including any Class A common stock received upon our exchange of Class A common stock orfor ~~may~~its ~~adversely~~LLC ~~impact~~Interests. These registration rights also cover the ~~price~~shares of ~~our~~ Class A common stock issuable upon conversion of the Series A convertible preferred stock held by MDP. Blueapple has the right, in connection with any public offering we conduct (including any offering conducted as a result of an exercise by MDP of its registration rights), to request that we use our commercially reasonable best efforts to

The market price for our Class A common stock may change significantly, and holders of our Class A common stock may not be able to resell shares at or above the price they paid or at all.

It is possible that an active trading market for our Class A common stock will not be sustained, which could make it difficult for holders of our Class A common stock to sell their shares at an attractive price or at all. In addition, volatility in the market price of our Class A common stock may prevent shareholders from selling shares of our Class A common stock at or above the price they paid for them. Many factors, which are outside our control, may cause the market price of

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pursue a public offering of shares of our Class A common stock and use the net proceeds therefrom to ~~fluctuate~~purchase ~~significantly,~~a ~~including~~pro ~~those~~rata ~~described~~portion ~~elsewhere~~of inits ~~this~~LLC ~~“Risk~~Interests. ~~Factors”~~The ~~section~~market ~~and~~price ~~elsewhere~~of inshares ~~this~~of ~~Annual~~our ~~Report~~Class onA ~~Form~~common ~~10-K~~stock could decline, aspotentially ~~well~~significantly, asif ~~the~~any ~~following:~~of these stockholders exercise their registration, sale, or exchange rights.

In the future, we may also issue securities in connection with investments, acquisitions, or capital raising activities. In particular, the number of shares of our Class A common stock issued in connection with an investment or acquisition, or to raise additional equity capital, could constitute a material portion of our then-outstanding shares of our Class A common stock. In addition, we have reserved shares of Class A common stock for issuance under our Amended and Restated 2018 Omnibus Equity Incentive Plan to our employees, directors, officers, and consultants. Any issuance of additional securities in the future may result in additional dilution to the holders of our Class A common stock or may adversely impact the price of our Class A common stock.

The market price for our Class A common stock may change significantly, and holders of our Class A common stock may not be able to resell shares at or above the price they paid or at all.

●

results of operations that vary from those of our competitors or the expectations of securities analysts and investors;

●

changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

●

technology changes, changes in consumer behavior, or changes in merchant relationships in our industry;

●

security breaches related to our systems or those of our merchants, affiliates, or partners;

●

changes in market valuations of, or earnings and other announcements by, companies in our industry;

●

declines in the market prices of stocks generally, particularly those of payment companies;

●

market response to the ongoing COVID-19 pandemic and related government actions;

●

announcements by us, our competitors, or our partners of significant contracts, new products, acquisitions, joint ventures, other strategic relationships and partnerships, or capital commitments;

●

changes in business, regulatory, economic, or market conditions affecting our industry or the economy as a whole and, in particular, in the consumer spending environment;

●

investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives;

●

announcements relating to litigation or governmental investigations;

●

guidance, if any, that we provide to the public, any changes in this guidance, or our failure to meet this guidance;

●

the development and sustainability of an active trading market for our Class A common stock;

●

changes in accounting principles; and

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●

other events or factors, including those resulting from system failures and disruptions, pandemics, natural disasters, war, acts of terrorism, or responses to these events.

Broad market and industry fluctuations may adversely affect the market price of our Class A common stock, regardless of our actual operating performance. Furthermore, the stock market may experience extreme volatility that, in some cases, may be unrelated or disproportionate to the operating performance of particular companies. For example, in ~~2021~~2022, our stock and the stock of many companies in the payments and financial services industries experienced significant volatility. In addition, price volatility may be greater if the public float and trading volume of our Class A common stock is low.

In addition, the price of our Class A common stock increased significantly in connection with the announcement of the Merger. The price of our Class A common stock will significantly decline if the proposed transaction with Global Payments is not consummated within the intended timeframe or at all.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

As of December 31, ~~2021~~ 2022, we leased 2528 office locations in 1213 countries around the world, including data centers and our corporate headquarters located in Atlanta, Georgia.

We believe that these facilities are suitable and adequate to support our ongoing business needs. Refer to Note 7, “Leases",” in the notes to the accompanying consolidated financial statements for further information on our leased real property.

ITEM 3. LEGAL PROCEEDINGS

The Company is party to various claims and lawsuits incidental to the normal conduct of its business. The Company does not believe the ultimate outcome of such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

Market information

Our Class A common stock is traded on the Nasdaq Global Market system under the symbol “EVOP.” There is currently no established public trading market for our Class D common stock.

Holders

There were approximately ~~five~~eleven stockholders of record of our Class A common stock and nine stockholders of record of our Class D common stock as of January 31, ~~2022~~2023. The number of beneficial owners of our Class A common stock is substantially greater than the number of record holders because a large portion of our Class A common stock is held in “street name” by banks and brokers.

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Issuer purchases of equity securities

The following table sets forth information regarding purchases of Class A common stock for the quarter ended December 31, ~~2021~~2022:


				Total Number of Shares	Approximate Dollar Value of Shares

				Total Number of Shares	Approximate Dollar Value of Shares
	Total	Average		Purchased as Part of	that May Yet Be Purchased Under
	Number	Price		Publicly Announced	the Plans or Programs
Period	of Shares (1)	per Share		Plans or Programs	(in millions)

October 1, 2021 to October 31, 2021	20	$	22.28	—	$	—
October 1, 2022 to October 31, 2022	890	$	33.34	—	$	—
November 1, 2021 to November 30, 2021	3,921	$	22.55	—	$	—
November 1, 2022 to November 30, 2022	4,860	$	33.69	—	$	—
December 1, 2021 to December 31, 2021	1,131	$	22.23	—	$	—
December 1, 2022 to December 31, 2022	9,661	$	33.73	—	$	—
Total	515,~~072~~411	$	2233.4870

(1)

Shares surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of restricted stock awards issued to employees.

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Dividend policy

Since our initial public offering (“IPO”), we have not declared or paid any cash dividends on our common stock, and we have no current plan to do so. Because a significant portion of our operations is through our subsidiaries, our ability to pay dividends depends in part on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur. The terms of our Senior Secured Credit Facilities restrict the ability of EVO Payments International, LLC (“EPI”), a controlled subsidiary of EVO, Inc. and certain of its subsidiaries from paying dividends to EVO, LLC. In addition, our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of us or our subsidiaries.

Recent sales of unregistered securities

There were no unregistered sales of equity during the year ended December 31, ~~2021~~2022, except for shares of Class A common stock issued to the Continuing LLC Owners in satisfaction of the exchange rights granted to them in connection with the IPO.

The Continuing LLC Owners (other than Blueapple) have the right to require us to exchange all or a portion of their LLC Interests for newly-issued shares of Class A common stock on a one-for-one basis (simultaneously cancelling an equal number of shares of Class D common stock of the exchanging member). We may, under certain circumstances, elect to redeem the LLC Interests from any exchanging holder under the terms of the EVO LLC Agreement in lieu of any such exchange. On May 25, 2021, pursuant to the Company’s amended and restated certificate of incorporation, each outstanding share of Class C common stock was automatically converted into one share of Class D common stock.

Following the cancellation of our Class B common stock on May 25, 2021, Blueapple continues to hold 32,163,538 LLC Interests and maintains all of its rights under the EVO LLC Agreement, including the sale right under the EVO LLC Agreement that provides that, upon the receipt of a sale notice from Blueapple, the Company will use its commercially reasonable best efforts to pursue a public offering of shares of Class A common stock and use the net proceeds therefrom to purchase LLC Interest from Blueapple. Upon the Company’s receipt of such a sale notice, the Company may elect, at its option (determined solely by its independent directors (within the meaning of the rules of Nasdaq) who are disinterested), to cause EVO LLC to instead redeem the applicable LLC Interest for cash; provided that Blueapple consents to any election by the Company to cause EVO LLC to redeem the LLC Interests.

Equity compensation plan information

For information regarding securities authorized for issuance under our equity compensation plans, see Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

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Equity compensation plan information

Stock performance graph

The following graph compares the total shareholder return from May 23, 2018, the date on which our Class A common shares commenced trading on the Nasdaq, through December 31, ~~2021~~2022 of (i) our Class A common stock, (ii) the Standard and Poor's 500 Stock Index (“S&P 500 Index”) and (iii) the Standard and Poor's 500 Information Technology Index (“S&P Information Technology”). The stock performance graph and table assume an initial investment of $100 on May 23, 2018.

The performance graph and table are not intended to be indicative of future performance. The performance graph and table shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933 or the Exchange Act.

*S&P 500 Index and S&P Information Technology assume reinvestment of all dividends.


	EVO Payments, Inc.		S&P 500Index		S&P Information Technology
May 23, 2018	$	100.00	$	100.00	$	100.00
December 31, 2018		129.71		92.82		89.61
December 31, 2019		138.85		122.04		134.67
December 31, 2020		142.01		144.49		193.78
December 31, 2021		134.60		185.97		260.69
December 31, 2022		177.82		152.29		187.19

ITEM 6. RESERVED

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) is intended to provide an understanding of our financial condition, cash flow, liquidity and results of operations. This MD&A should be read in conjunction with our consolidated financial statements and the notes to the accompanying consolidated financial statements appearing elsewhere in this Form 10-K and the Risk Factors included in Part I, Item 1A of this Form 10-K, as well as other cautionary statements and risks described elsewhere in this Form 10-K.

The comparison of results for the years ended December 31, 2021 ~~2020~~ and ~~2019~~2020 that are not included in this Form 10-K are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~ 2021.

Company background

We are a leading payments technology and services provider offering an array of payment solutions to merchants ranging from small and mid-size enterprises to multinational companies and organizations across the Americas and Europe. As a fully integrated merchant acquirer and payment processor across more than 50 markets and 150 currencies worldwide, we provide competitive solutions that promote business growth, increase customer loyalty, and enhance data security in the markets we serve.

Founded in 1989 as an individually owned, independent sales organization in the United States, we have transformed into a publicly traded company that today derives approximately 6065% of its revenues from markets outside of the United States. Our revenue consists primarily of transaction and volume based fees, as well as fixed fees for certain services we perform.

We classify our business into two segments: the Americas and Europe. The alignment of our segments is designed to establish lines of business that support the various geographical markets we operate in and allow us to further globalize our solutions while working seamlessly with our teams across these markets. In both of our segments, we provide our customers with merchant acquiring solutions, including integrated solutions for retail transactions at the physical and virtual POS, as well as B2B transactions. Refer to Part I, Item 1 “Business” contained in Part I of this Annual Report for information related to our operating segments and sales distribution channels.

We plan to continue to grow our business and improve our operations by expanding market share in our existing markets and entering new markets. In our current markets, we seek to grow our business through broadening our distribution network, leveraging our innovative payment technology solutions and direct sales force, and acquiring additional merchant portfolios and tech-enabled businesses. We seek to enter new markets through acquisitions and partnerships in Latin America, Europe, and certain other markets.

Executive overview

We delivered solid financial performance in the year ended December 31, ~~2021~~2022, as demonstrated by the highlights below:

● Revenue for the year ended December 31, ~~2021~~2022 was $~~496~~543.61 million, an increase of 139.14% compared to the year ended December 31, ~~2020~~2021. The increase was primarily due to the growth in our merchant portfolio, processing volumes, and transactions, increased card adoption, sales-related activity, including the expansion of our tech-enabled partners, and the ~~recovery~~increase in economic activity from the abatement of COVID-19 related restrictions, especially in Europe. The strengthening of the U.S. dollar on foreign exchange rates adversely impacted this growth rate by approximately 4.5%.

● Americas segment profit for the year ended December 31, ~~2021~~2022 was $~~135~~143.13 million, 276.41% higher than the year ended December 31, ~~2020~~2021. The increase was primarily due to the increase in revenue, ~~growth~~driven ~~in our merchant portfolio, processing volumes, and transactions, and sales-related activity, including the expansion of tech-enabled partners, which was partially offset~~ by ~~the~~growth ~~normalization~~in ~~of employee compensation expenses that were~~our

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~~reduced~~merchant inportfolio, ~~2020~~processing involumes ~~reaction~~and totransactions, ~~the~~and ~~onset~~sales-related ofactivity, ~~the~~including ~~pandemic. By~~ the ~~end~~expansion of ~~2020, base salaries were returned to pre~~tech-~~pandemic~~enabled ~~levels and no employees remained on furlough~~partners.

● Europe segment profit for the year ended December 31, ~~2021~~2022 was $6381.60 million, 227.84% ~~lower~~higher than the year ended December 31, ~~2020~~2021. The ~~decrease~~increase was primarily due to athe ~~gain~~recognition of ~~$17.6~~a ~~million~~gain ~~recognized~~related ~~from~~to our investment in Visa Series A preferred stock ~~in 2020~~, ~~which~~operating ~~decreased~~income ~~the~~from ~~year over year growth rate by 35.2%, and~~ the ~~normalization~~termination of ~~employee~~the ~~compensation~~marketing ~~expenses~~alliance ~~that~~agreement ~~were~~with ~~reduced~~Liberbank, ~~in 2020 in reaction to the onset of the pandemic~~S.A. ~~By the end of 2020~~(“Liberbank”), ~~base salaries were returned to pre-pandemic levels~~ and ~~no employees remained on furlough. These decreases were partially offset by~~ an increase in ~~segment~~revenue ~~profit~~driven ~~due~~by ~~to the increase in revenue,~~ growth in our merchant portfolio, processing volumes, and transactions, ~~and~~increased card adoption, sales-related activity, including the expansion of tech-enabled partners, and the increase in economic activity from the abatement of COVID-19 related restrictions.

● We processed approximately 4.29 billion transactions in the year ended December 31, ~~2021~~2022, an increase of 17.94% from the year ended December 31, ~~2020~~2021.

Merger with Global Payments Inc.

On August 1, 2022, we entered into the Merger Agreement with Global Payments and Merger Sub. Subject to the terms and conditions of the Merger Agreement, Global Payments has agreed to acquire EVO, Inc. in an all-cash transaction for $34.00 per share of Class A common stock. Upon the consummation of the Merger, we will cease to be a publicly traded company. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements. The Merger is expected to close in the first quarter in 2023, subject to customary closing conditions.

Business trends and challenges

Economic conditions and uncertainties

Global economic challenges, including the impact of the crisis in Russia and Ukraine, the COVID-19 pandemic, severe and sustained inflation, rising interest rates, supply chain disruptions, and foreign exchange fluctuations could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market. We closely monitor economic conditions and the impact to our revenue. In response to potential reductions in revenue, we can take actions to align our cost structure and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of potential future adverse economic conditions and reductions in our revenue.

COVID-19

~~Global~~We ~~economic~~have ~~conditions~~seen ~~may~~increased ~~continue~~economic toactivity beresulting ~~volatile~~from asthe ~~long~~abatement asof COVID-19 ~~(and~~related ~~its~~restrictions; ~~variants) remains a public health threat~~however, ~~which volatility could negatively impact our business. Due to~~ the ~~continuing impact of the~~ COVID-19 pandemic oncontinues ~~the~~to ~~global economy~~evolve, ~~certain~~and ~~of our vendors have indicated that they~~ may becontinue ~~exposed~~ to ~~potential~~impact ~~incidents~~global ofeconomic ~~supply~~conditions ~~chain~~and ~~disruption,~~our ~~constraint,~~business. orWe ~~other~~continue ~~difficulties,~~to ~~including~~monitor asthe itCOVID-19 ~~relates~~pandemic to ~~their~~assess ~~ability~~and tomitigate ~~meet~~potential ~~the~~adverse ~~POS~~impacts ~~terminal~~to ~~delivery needs for~~ our ~~merchants~~business. ~~While~~Longer term, we ~~are~~believe ~~seeking to mitigate~~ the ~~impact~~pandemic ofwill ~~any~~serve ~~such~~as ~~potential~~a ~~incidents,~~catalyst ~~including,~~for ingreater ~~some~~utilization ~~cases, by entering into terminal purchase agreements with vendors which provides us with prioritized allocation~~ of ~~their~~digital ~~available supply~~payments, ~~disruption~~a intrend ~~the~~we ~~delivery~~are ofcontinuing ~~POS~~to ~~terminals~~see in ~~the future could impact~~ our ~~ability to service our merchants or add new merchants~~markets.

~~The~~Russia ~~ongoing impact of the pandemic on our business will largely depend on the progression of the vaccine rollout, the emergence of,~~ and ~~response~~Ukraine to, virus variants, improvements in global supply chain outlook, and the extent of government restrictions across our markets. Although volatile, we began to see signs of economic recovery in 2021 that positively impacted our operating results. We are confident in our continued ability to manage through the challenges posed by the pandemic. Longer term, we believe the pandemic will serve as a catalyst for greater utilization of digital payments, a trend we are continuing to see in our markets.conflict

~~Factors~~The ~~impacting~~ongoing ~~our~~crisis ~~business~~in Russia and ~~results~~Ukraine is also contributing to economic and geopolitical uncertainty. While we do not have operations or merchants in Russia or Ukraine, we are unable to predict the future impact of this evolving situation, including on the political and economic environment in Europe. We will continue to monitor the conflict and assess any potential impact to our operations.

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Other factors impacting our business and results of operations

In general, our revenue is impacted by factors such as global consumer spending trends, foreign exchange rates, the pace of adoption of commerce-enablement and payment solutions, acquisitions and dispositions, types and quantities of products and services provided to merchants, timing and length of contract renewals, new merchant wins, retention rates, mix of payment solution types employed by consumers, and changes in card network fees, including interchange rates and size of merchants served. In addition, we may pursue acquisitions from time to time. These acquisitions could result in redundant costs, such as increased interest expense resulting from indebtedness incurred to finance such acquisitions, or could require us to incur additional costs as we restructure or reorganize our operations following these acquisitions.

Seasonality

We have experienced in the past, and expect to continue to experience, seasonality in our revenues as a result of consumer spending patterns. Historically, in both the Americas and Europe, our revenue has been strongest in ~~our~~the fourth quarter and weakest in ~~our~~the first quarter as many of our merchants experience a seasonal lift during the traditional vacation and holiday months. Operating expenses do not typically fluctuate seasonally.

Foreign currency translation impact on our operations

We present our financial statements in U.S. dollars and have aapproximately ~~significant~~65% ~~proportion~~ of ~~net~~our ~~assets~~revenues ~~and~~in ~~earnings~~non-U.S. indollar currencies. The primary non-U.S. dollar currencies are the Euro, Polish Zloty, and Mexican Peso. Accordingly, we are exposed to foreign currency exchange rate risk arising from transactions in the normal course of business. It is difficult to predict the future fluctuations of foreign currency exchange rates and how those fluctuations will impact our consolidated statements of operations and comprehensive income (loss) in the future. As a result of the relative size of our international operations, these fluctuations may be material on individual balances. Our revenues and expenses from our international operations are generally denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of currency fluctuations on our operating results and margins is partially mitigated.

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normal course of business. It is difficult to predict the future fluctuations of foreign currency exchange rates and how those fluctuations will impact our consolidated statements of operations and comprehensive (loss) income in the future. As a result of the relative size of our international operations, these fluctuations may be material on individual balances. Our revenues and expenses from our international operations are generally denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of currency fluctuations on our operating results and margins is partially mitigated.

Financial institution partners

We maintain referral partnerships with a number of leading financial institutions, including Deutsche Bank USA, Deutsche Bank Group, Grupo Santander, PKO Bank Polski, Bank of Ireland, ~~Raiffeisenbank~~Raiffeisen Bank, Moneta, Citibanamex, Sabadell, BCI, and ~~Liberbank,~~the National Bank of Greece among others. We commenced operations in Chile through our joint venture with BCI (“BCI Pagos”) at the end of the second quarter in 2021. ~~Our~~In ~~pending~~December 2022, we commenced operations in Greece through our joint venture and exclusive referral relationship with the National Bank of Greece ~~is expected to be completed in the second half of 2022, subject to regulatory approvals and other customary conditions~~.

InThese ~~November~~long-term ~~2021,~~relationships ~~the~~are ~~Company~~structured ~~and~~in ~~the~~various ~~Bank~~ways, ofsuch ~~Ireland~~as ~~entered~~commercial ~~into~~alliance anrelationships ~~agreement~~and tojoint ~~extend~~ventures, ~~the~~and ~~parties’~~our ~~commercial~~bank ~~alliance.~~partners ~~Under~~typically ~~the~~provide ~~partnership,~~exclusive ~~EVO~~merchant referrals and ~~the~~credit ~~bank~~facilities ~~will continue~~ to ~~provide~~support ~~payment~~the ~~services~~settlement toprocess. ~~merchants~~Our ~~throughout~~relationships ~~Ireland~~with ~~and~~our ~~the~~financial ~~United~~institution ~~Kingdom~~partners ~~and~~may ~~the~~be ~~bank~~impacted ~~will~~by, ~~continue~~among toother ~~exclusively~~things, ~~refer~~consolidations ~~its~~and ~~merchants~~other totransactions in the ~~Company~~banking and payments industries.

WeIn ~~rely~~January on2022, ~~our~~Citigroup ~~various~~Inc. ~~financial~~announced ~~institution~~its ~~relationships~~decision to ~~grow~~exit ~~and~~the ~~maintain~~consumer, ~~our~~ small-business. ~~These~~and ~~relationships~~middle-market ~~are~~banking ~~structured~~operations inof ~~various ways~~Citibanamex, ~~such~~our asfinancial ~~commercial~~institution ~~alliance~~partner ~~relationships~~in ~~and~~Mexico. ~~joint~~The ~~ventures.~~details Weof ~~enter~~the ~~into~~proposed ~~long-term~~transaction ~~relationships~~are ~~with~~unknown, ~~our~~including ~~bank~~the ~~partners~~identity ~~where~~of ~~these~~the ~~partners~~purchaser ~~typically~~and ~~provide~~anticipated ~~exclusive~~timing ~~merchant~~of ~~referrals~~the ~~and~~consummation ~~credit~~of ~~facilities~~their totransaction. ~~support~~While ~~the~~our ~~settlement~~long ~~process.~~term, ~~Our~~exclusive ~~relationships~~commercial agreement with ~~our~~Citibanamex ~~financial~~remains ~~institution~~in ~~partners~~place, ~~may~~at bethis ~~impacted by~~time, ~~among~~we ~~other~~cannot ~~things,~~estimate ~~consolidations~~the ~~and~~potential ~~other~~impact ~~transactions~~of inthis ~~the~~development ~~banking~~to ~~and~~our ~~payments~~referral ~~industries.~~relationship with Citibanamex or our Mexican business.

InFollowing ~~January~~the ~~2022,~~merger ~~Citigroup~~of ~~Inc~~Unicaja Banco, S.A. ~~announced~~and ~~its~~Liberbank, ~~decision~~and pursuant to ~~exit~~the procedures set forth in the ~~consumer,~~marketing ~~small-business~~alliance ~~and~~agreement ~~middle-market~~related ~~banking~~to ~~operations~~a change of ~~Citibanamex~~control of Liberbank, ~~our~~the ~~financial~~parties ~~institution~~elected ~~partner~~to terminate the marketing alliance agreement in ~~Mexico.~~the ~~The~~third ~~details~~quarter of ~~the~~2022. ~~proposed~~Income ~~transaction~~from ~~are~~liquidated ~~unknown~~damages of €7.0 million ($6.9 million, ~~including~~based ~~structural~~on ~~complexity~~the ~~and~~foreign ~~anticipated~~exchange ~~timing~~rate as of the ~~consummation.~~date ~~While~~presented) ~~our~~was ~~long~~recognized ~~term,~~in ~~exclusive~~other ~~commercial~~operating ~~agreement~~income ~~with~~on ~~Citibanamex~~the ~~remains~~consolidated instatements ~~place,~~of atoperations. ~~this~~The ~~time,~~termination weof ~~cannot~~the ~~estimate~~Liberbank ~~the~~marketing ~~potential~~alliance ~~impact~~agreement ofwill ~~this~~not ~~development~~have a material impact to our ~~referral~~financial ~~relationship~~position, ~~with~~results ~~Citibanamex~~of operations, or ~~our~~cash ~~Mexican business~~flows.

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One of our Spanish financial institution referral partners, Banco Popular, was acquired by Santander in June 2017. As reported previously and reflected in our previous years’ financial statements, Santander’s acquisition of Banco Popular has adversely impacted our business in Spain. Revenues from this channel have declined significantly ~~due~~ primarily due to reduced merchant referrals following the acquisition and the bank’s failure to perform certain of its other obligations under our agreements. See Note 19, “Commitments and Contingencies,” in the notes to the accompanying consolidated financial statements for additional information.

Increased regulations and compliance

We, our partners, and our merchants are subject to various laws and regulations that affect the electronic payments industry in the many countries in which our services are used, including numerous laws and regulations applicable to banks, financial institutions, and card issuers. A number of our subsidiaries in our Europe segment hold a PI license, allowing them to operate in the EU member states in which such subsidiaries do business. As a PI, we are subject to regulation and oversight, which include, among other obligations, a requirement to maintain specific regulatory capital and adhere to certain rules regarding the conduct of our business, including PSD2.

PSD2 contains a number of additional regulatory mandates, such as provisions relating to SCA, which aim to increase the security of electronic payments by requiring multi-factor user authentication. Failure to comply with SCA requirements may result in fines from card networks as well as declined payments from card issuers. The EU has also enacted legislation relating to the offering of DCC services, which went into effect in April 2020. These new rules require additional disclosures of foreign exchange margins in connection with our DCC product offerings.

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We are currently operating in the United Kingdom within the scope of its temporary permissions regime pending approval of our application for a stand alone PI license. In addition, we continue to closely monitor the impact of Brexit on our operations as further details emerge regarding the post-Brexit regulatory landscape.

Key performance indicators

Transactions Processed

Transactions processed refers to the number of transactions we processed during any given period of time and is a meaningful indicator of our business and financial performance, as a significant portion of our revenue is driven by the number and/or value of transactions we process. In addition, transactions processed provides a valuable measure of the level of economic activity across our merchant base. In our Americas segment, transactions include acquired Visa and Mastercard credit and signature debit, American Express, Discover, UnionPay, JCB, PIN-debit, electronic benefit transactions, and gift card transactions. In our Europe segment, transactions include acquired Visa and Mastercard credit and signature debit, other card network merchant acquiring transactions, and ATM transactions.

For the year ended December 31, ~~2021~~2022, we processed approximately 4.29 billion transactions, which included approximately 1.1 billion transactions in the Americas and approximately 3.18 billion transactions in Europe. This represents an increase of 93.52% in the Americas and an increase of 2122.13% in Europe for an aggregate increase of 17.94% compared to the year ended December 31, ~~2020~~2021. Transactions processed in the Americas and Europe accounted for 2522.43% and 7477.67%, respectively, of the total transactions we processed for the year ended December 31, ~~2021~~2022.

The ~~increase~~changes in the transactions processed during the year ended December 31, ~~2021~~2022 compared to the prior year was primarily driven by the growth in our merchant portfolio, increased card adoption, sales-related activity, including the expansion of our tech-enabled partners, and the ~~recovery~~increase in economic activity from the abatement of COVID-19 related restrictions especially in Europe.

For the year ended December 31, ~~2020~~2021, we processed approximately 34.62 billion transactions, which included approximately 1.01 billion transactions in the Americas and approximately 23.61 billion transactions in Europe. This represents aan ~~decrease~~increase of 9.5% in the Americas and an increase of 121.81% in Europe for an aggregate ~~decrease~~increase of 117.69% compared to the year ended December 31, 2019. Transactions processed in the Americas and Europe accounted for 27.0% and 73.0%, respectively, of the total transactions we processed for the year ended December 31, 2020.

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~~Comparison~~compared to the year ended December 31, 2020. Transactions processed in the Americas and Europe accounted for 25.4% and 74.6%, respectively, of ~~results~~the total transactions we processed for the ~~years~~year ended December 31, 2021 ~~and 2020~~.

Comparison of results for the years ended December 31, 2022 and 2021

The following table sets forth the consolidated statements of operations in dollars and as a percentage of revenue for the period presented.


	Year Ended			Year Ended
(dollar amounts in thousands)	December 31, ~~2021~~2022		% of revenue	December 31, ~~2020~~2021		% of revenue	$ change		% change
Segment revenue:
Americas	$	~~307~~320,~~183~~925	6159.91%	$	~~275~~307,~~233~~183	6261.79%	$	3113,~~950~~742	114.65%
Europe		~~189~~222,~~462~~157	3840.19%		~~163~~189,~~868~~462	3738.31%		2532,~~594~~695	1517.63%
Revenue	$	~~496~~543,~~645~~082	100.0%	$	~~439~~496,~~101~~645	100.0%	$	5746,~~544~~437	139.14%

Operating expenses:
Cost of services and products	$	7589,~~765~~370	1516.35%	$	8475,~~336~~765	1915.23%	$	(813,~~571)~~605	~~(10~~18.2)0%
Selling, general, and administrative		~~266~~309,~~117~~539	5357.60%		~~250~~266,~~676~~117	5753.16%		1543,~~441~~422	616.23%
Depreciation and amortization		8384,~~389~~143	1615.85%		8583,~~924~~389	1916.68%		~~(2,535)~~754	~~(3.~~0).9%
Impairment of intangible assets		—	0.0%		802	0.2%		(802)	(100.0)%
Total operating expenses		483,052	88.9%		425,271	85.6%		57,781	13.6%
Total operating expenses		425,271	85.6%		421,738	96.1%		3,533	0.8%
Other operating income		6,939	1.3%		—	0.0%		6,939	100.0%
Income from operations	$	7166,~~374~~969	1412.43%	$	1771,~~363~~374	414.04%	$	54(4,~~011~~405)	~~311~~(6.12%)

Segment profit:
Americas	$	~~135~~143,~~081~~297	2726.24%	$	~~106~~135,~~052~~081	2427.2%	$	298,~~029~~216	276.41%
Europe	$	6380,~~588~~992	1214.89%	$	6563,~~448~~588	1412.98%	$	(117,~~860)~~404	(227.8)4%

Revenue

Revenue was $~~496~~543.61 million for the year ended December 31, ~~2021~~2022, an increase of $5746.54 million, or 139.14% compared to the year ended December 31, ~~2020~~2021. The strengthening of the U.S. dollar on foreign exchange rates adversely impacted this growth rate by approximately 4.5%.

Americas segment revenue was $~~307~~320.29 million for the year ended December 31, ~~2021~~2022, an increase of $3213.07 million, or 114.65%, compared to the year ended December 31, ~~2020~~2021.

Europe segment revenue was $~~189~~222.52 million for the year ended December 31, ~~2021~~2022, an increase of $2532.67 million, or 1517.63%, compared to the year ended December 31, ~~2020~~2021. The strengthening of the U.S. dollar on foreign exchange rates adversely impacted this growth rate by approximately 12.2%.

The increase in both Americas and Europe segment revenue for the year ended December 31, 2022 ~~2021~~ was primarily due to the growth in our merchant portfolio, processing volumes, and transactions, increased card adoption, and sales-related activity, including the expansion of our tech-enabled partners~~, and the recovery from COVID-19~~.

Operating expenses

Cost of services and products

Cost of services and products was $7589.84 million for the year ended December 31, ~~2021~~2022, aan ~~decrease~~increase of $813.6 million, or 1018.20%, compared to the year ended December 31, ~~2020,~~2021 primarily due to the ~~decline~~increase inof ~~merchant~~17.4% ~~loss~~in ~~reserves~~transactions ~~and third-party costs as we work to further leverage our proprietary processing technology~~processed.

Selling, general, and administrative expenses

Selling, general, and administrative expenses were $266.1 million for the year ended December 31, 2021, an increase of $15.4 million, or 6.2%, compared to the year ended December 31, 2020. The increase was primarily due to the normalization of employee compensation expenses that were reduced in 2020 in reaction to the onset of the pandemic.

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Selling, general, and administrative expenses

Selling, general, and administrative expenses were $309.5 million for the year ended December 31, 2022, an increase of $43.4 million, or 16.3%, compared to the year ended December 31, 2021. The increase was primarily due to higher professional fees related to the Merger, acquisitions, and litigation as well as personnel costs due to growth in headcount, and incentive compensation expenses based on business performance.

Depreciation and amortization

Depreciation and amortization was $8384.41 million for the year ended December 31, ~~2021~~2022, aan ~~decrease~~increase of $20.58 million, or 3.0.9%, compared to the year ended December 31, ~~2020~~2021. The ~~decrease~~increase was primarily ~~driven~~due to the accelerated amortization related to the termination of the Liberbank marketing alliance agreement and the change in recoverability of the Banco Popular marketing alliance agreement, partially offset by lower amortization due to the accelerated amortization method of merchant contract portfolios acquired in prior periods.

~~Impairment~~Other ofoperating ~~intangible assets~~income

~~There~~Other ~~was~~operating noincome ~~impairment~~was of$6.9 ~~intangible~~million ~~assets~~ for the year ended December 31, ~~2021,~~2022. aThis ~~decrease~~income ofwas ~~$0.8~~recognized ~~million,~~as ~~compared~~a toresult of the ~~year~~termination ~~ended~~of ~~December~~the ~~31,~~marketing ~~2020.~~alliance ~~The~~agreement ~~2020~~with ~~impairment~~Liberbank, ~~charge~~in ~~primarily~~lieu ~~related~~of tofuture ~~the~~merchant ~~retirement~~referrals ofand ~~certain~~revenue ~~trademarks~~that ~~driven~~would byhave anotherwise ~~internal~~been ~~reorganization~~earned.

Interest expense

Interest expense was $2317.26 million for the year ended December 31, ~~2021~~2022, a decrease of $75.05 million, or 23.28%, compared to the year ended December 31, ~~2020~~2021. The decrease was primarily due to ~~lower~~the ~~variable~~reduction ~~interest~~in ~~rates~~the ascredit ~~well~~spread ason the ~~paydown~~term ofloan ~~our~~as ~~revolving credit facility and~~ a ~~portion~~result of the ~~outstanding~~refinancing ~~balance~~ on ~~the~~November ~~first~~1, ~~lien term loan in 2020~~2021.

Income tax expense

Income tax expense represents federal, state, local and foreign taxes based on income in multiple domestic and foreign jurisdictions. Historically, as a limited liability company treated as a partnership for U.S. federal income tax purposes, EVO, LLC’s income was not subject to corporate tax in the United States, but only on income earned in foreign jurisdictions. In the United States, our members were taxed on their proportionate share of income of EVO, LLC. However, following the Reorganization Transactions, we incur corporate tax on our share of taxable income of EVO, LLC. Our income tax expense reflects such U.S. federal, state and local income tax as well as taxes payable in foreign jurisdictions by certain of our subsidiaries. For the year ended December 31, ~~2021~~2022, we recorded a tax expense of $2236.02 million, which included a net discrete tax ~~benefit~~expense of $12.56 million primarily related to changes in uncertain tax positions offset by the true up of the deferred taxes due to an increase in the state effective tax rate ~~offset by a valuation allowance recorded to reduce the deferred tax assets not expected to be realized in Spain~~. For the year ended December 31, ~~2020~~2021, we recorded a tax expense of $1322.10 million, which included a tax benefit of $21.65 million ~~from~~primarily arelated ~~release~~to the true up of the ~~U.S.~~deferred ~~interest~~taxes ~~limitation~~due to an increase in the state effective tax rate offset by a valuation allowance recorded to reduce the deferred tax assets not expected to be realized in Spain.

Segment performance

Americas segment profit for the year ended December 31, ~~2021~~2022 was $~~135~~143.13 million, compared to $~~106~~135.1 million for the year ended December 31, ~~2020~~2021, an increase of 276.41%. The increase was primarily due to the increase in revenue, driven by growth in our merchant portfolio, processing volumes, and transactions, and sales-related activity, including the expansion of tech-enabled partners, ~~which was~~ partially offset by ~~the~~an ~~normalization~~increase of employee compensation, ~~expenses~~as ~~that~~a ~~were~~result ~~reduced in 2020 in reaction to the onset~~ of ~~the~~headcount ~~pandemic~~growth. ~~By the end of 2020, base salaries were returned to pre-pandemic levels and no employees remained on furlough.~~ Americas segment profit margin was 44.07% for the year ended December 31, ~~2021~~2022, compared to 3844.50% for the year ended December 31, ~~2020~~2021.

Europe segment profit was $6381.60 million for the year ended December 31, ~~2021~~2022, compared to $6563.46 million for the year ended December 31, ~~2020~~2021, aan ~~decrease~~increase of 227.84%. The ~~decrease~~increase was primarily due to athe ~~gain~~recognition of ~~$17.6~~a ~~million~~gain ~~recognized~~related ~~from~~to our investment in Visa Series A preferred stock ~~in 2020~~, ~~which~~operating ~~decreased~~income from the ~~year~~termination ~~over~~of ~~year~~the ~~growth~~marketing ~~rate~~alliance byagreement ~~35.2%~~with Liberbank, and ~~the~~an ~~normalization~~increase ofin ~~employee~~revenue ~~compensation~~driven ~~expenses~~by ~~that~~growth ~~were~~in ~~reduced~~our inmerchant ~~2020~~portfolio, inprocessing ~~reaction~~volumes toand ~~the~~transactions, ~~onset~~increased ofcard ~~the~~adoption, ~~pandemic.~~sales-related Byactivity, including the ~~end~~expansion of ~~2020~~tech-enabled partners, ~~base~~and ~~salaries~~the ~~were~~increase ~~returned~~in toeconomic ~~pre-pandemic~~activity ~~levels~~from ~~and~~the noabatement ~~employees~~of ~~remained~~COVID-19 onrelated ~~furlough~~restrictions. ~~These~~This ~~decreases~~was ~~were~~ partially offset by anthe ~~increase~~impact inof ~~profit due to~~ the ~~increase~~strong inU.S. ~~revenue,~~dollar ~~growth~~on inforeign ~~our~~exchange ~~merchant~~rates ~~portfolio, processing volumes,~~ and ~~transactions,~~higher ~~and~~professional ~~sales-~~fees related ~~activity,~~to ~~including the expansion of tech-enabled partners~~litigation. Europe segment profit margin was 3336.65% for the year ended December 31, ~~2021~~2022, compared to 3933.96% for the year ended December 31, ~~2020~~2021.

Corporate expenses not allocated to a segment were $35.6 million for the year ended December 31, 2021, compared to $34.2 million for the year ended December 31, 2020.

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Comparison of results for the years ended December 31, 2020 and 2019

~~The~~Corporate ~~comparison~~expenses ~~of results for the years ended December 31, 2020 and 2019 that are~~ not ~~included~~allocated into ~~this~~a ~~Form~~segment ~~10-K~~were ~~are~~$51.5 ~~included~~million infor ~~“Management’s~~the ~~Discussion~~year ~~and~~ended ~~Analysis~~December 31, 2022, ofcompared ~~Financial~~to ~~Condition~~$35.6 ~~and~~million ~~Results~~for ofthe ~~Operations”~~year inended ~~Part II~~December 31, 2021. ~~Item~~The 7increase ofwas ~~our~~primarily ~~Annual~~due ~~Report~~to onthe ~~Form~~higher ~~10-K~~professional ~~for~~fees ~~the~~related ~~fiscal~~to ~~year~~the ~~ended~~Merger, ~~December 31~~acquisitions, ~~2020~~ and litigation.

Comparison of results for the years ended December 31, 2021 and 2020

~~Liquidity~~The ~~and~~comparison ~~capital~~of ~~resources~~results for the years ended December 31, 2021 and 2020 that are not included in this Form 10-K are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Liquidity and capital resources for the years ended December 31, 2022 and 2021

Overview

We have historically funded our operations primarily with cash flow from operations and, when needed, with borrowings, including under our Senior Secured Credit Facilities. Our principal uses for liquidity have been debt service, capital expenditures, working capital, and funds required to finance acquisitions. However, the Merger Agreement with Global Payments imposes certain limitations on how we conduct our business during the period between the execution of the Merger Agreement and the effective time of the Merger, including limitations on our ability to, among other things, engage in certain acquisitions, incur indebtedness or issue or sell new debt securities.

We expect to continue to use capital to innovate and advance our products as new technologies emerge and to accommodate new regulatory requirements in the markets in which we operate. We expect these strategies to be funded primarily through cash flow from operations and borrowings from our Senior Secured Credit Facilities. Short-term liquidity needs will primarily be funded through the revolving credit facility portion of our Senior Secured Credit Facilities.

To the extent that additional funds are necessary to finance future acquisitions, and to meet our long-term liquidity needs as we continue to execute on our strategy, we anticipate that they will be obtained through additional indebtedness, equity, or debt issuances, or both.

As of December 31, ~~2021~~2022, our capacity under the revolving credit facility portion of our Senior Secured Credit Facilities was $200.0 million, with availability of $~~198~~130.67 million for additional borrowings and utilization of $68.2 million and $1.41 million in revolver and standby letters of credit, respectively.

We have structured our operations in a manner to allow for cash to be repatriated through tax-efficient methods using dividends or long-term loans from foreign jurisdictions as our main source of repatriation. We follow local government regulations and contractual restrictions on cash as well as how much and when dividends can be repatriated. As of December 31, ~~2021~~2022, cash and cash equivalents of $~~410~~356.45 million includes cash in the United States of $~~151~~110.40 million and $~~259~~246.05 million in foreign jurisdictions, respectively. Of the United States cash balances, $432.09 million is available for general purposes, and the remaining $~~108~~107.41 million is considered merchant reserves and settlement-related cash and is therefore unavailable for our general use. Of the foreign cash balances, $~~132~~100.51 million is available for general purposes, and the remaining $~~126~~146.54 million is considered merchant reserves and settlement-related cash and is therefore unable to be repatriated. Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements for additional information on our cash and cash equivalents.

We do not intend to pay cash dividends on our Class A common stock in the foreseeable future. EVO, Inc. is a holding company that does not conduct any business operations of its own. As a result, EVO, Inc.’s ability to pay cash dividends on its common stock, if any, is dependent upon cash dividends and distributions and other transfers from EVO, LLC. The amounts available to EVO, Inc. to pay cash dividends are subject to the covenants and distribution restrictions in our Senior Secured Credit Facilities. Further, EVO, Inc. may not pay cash dividends to holders of Class A common stock unless it concurrently pays full participating dividends to holders of the Preferred Stock on an “as converted” basis. Pursuant to the terms of the Merger Agreement, the Company has agreed to suspend any regular cash dividends during the term of the Merger Agreement.

In connection with our IPO, we entered into the Exchange Agreement with certain of the Continuing LLC Owners, under which these Continuing LLC Owners have the right, from time to time, to exchange their units in EVO, LLC and related Class D common shares of EVO, Inc. for shares of our Class A common stock or, at our option, cash. If we choose to satisfy the exchange in cash, we anticipate that we will fund such exchange through cash from operations, funds available under the revolving portion of our Senior Secured Credit Facilities, equity, or debt issuances or a combination thereof.

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In addition, in connection with the IPO, we entered into the TRA with the Continuing LLC Owners. Payments required under the TRA are generally funded by taxable income and represent the tax benefit from the step-up in tax basis that is passed on to the TRA holders. Although the actual timing and amount of any payments that may be made under the TRA will vary, we expect that the payments we will be required to make to the Continuing LLC Owners will be significant. Any payments made by us to non-controlling LLC owners under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us and, to the extent that we are unable to make payments under the TRA for any reason, the unpaid amounts generally will be deferred and will accrue interest in accordance with the terms of the TRA until paid by us. Refer to Note 5, “Tax Receivable Agreement,” in the notes to the accompanying consolidated financial statements for additional information on the TRA.

~~The~~In ~~following~~connection ~~table~~with ~~sets~~our ~~forth~~IPO, ~~summary~~we ~~cash~~entered ~~flow~~into ~~information~~the Exchange Agreement with certain of the Continuing LLC Owners, under which these Continuing LLC Owners have the right, from time to time, to exchange their units in EVO, LLC and related Class D common shares of EVO, Inc. for shares of our Class A common stock or, at our option, cash. If we choose to satisfy the ~~years~~exchange ~~ended~~in ~~December 31~~cash, ~~2021~~ we anticipate that we will fund such exchange through cash from operations, ~~2020~~funds available under the revolving portion of our Senior Secured Credit Facilities, equity, or debt issuances or a combination thereof. In connection with the Merger Agreement, Blueapple entered into the Common Unit Purchase Agreement with Global Payments and ~~2019:~~us, pursuant to which Blueapple agreed to sell all of its common units to us in exchange for $1,093,560,292, concurrently with, and contingent and conditioned upon, the closing of the transactions contemplated by the Merger Agreement.


	Year Ended December 31,
(in thousands)	2021		2020		2019
Net cash provided by operating activities	$	103,597	$	116,020	$	27,889
Net cash used in investing activities		(74,704)		(25,967)		(76,643)
Net cash (used in) provided by financing activities		(24,382)		9,763		3,920
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(12,435)		14,634		(1,774)
Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(7,924)	$	114,450	$	(46,608)

In addition, in connection with the IPO, we entered into the TRA with the Continuing LLC Owners. Payments required under the TRA are generally funded by taxable income and represent the tax benefit from the step-up in tax basis that is passed on to the TRA holders. Any payments made by us to non-controlling LLC owners under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us and, to the extent that we are unable to make payments under the TRA for any reason, the unpaid amounts generally will be deferred and will accrue interest in accordance with the terms of the TRA until paid by us. In connection with the execution of the Merger Agreement, we entered into the TRA amendment, pursuant to which such parties agreed to terminate the TRA immediately after the effective time of the Merger on the terms set forth therein. In connection with the termination, EVO agreed to pay certain other members of EVO, LLC and their assignees (the “TRA Payment Recipients”) an aggregate termination payment equal to $225 million minus any payments made under the TRA to the TRA Payment Recipients between August 1, 2022 and the effective time of the Merger. Refer to Note 5, “Tax Receivable Agreement,” in the notes to the accompanying consolidated financial statements for additional information on the TRA.

The following table sets forth summary cash flow information for the years ended December 31, 2022, 2021, and 2020:


	Year Ended December 31,
(in thousands)	2022		2021		2020
Net cash provided by operating activities	$	163,068	$	103,597	$	116,020
Net cash used in investing activities		(252,142)		(74,704)		(25,967)
Net cash provided by (used in) financing activities		43,837		(24,382)		9,763
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(8,162)		(12,435)		14,634
Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(53,399)	$	(7,924)	$	114,450

Operating activities

Net cash provided by operating activities was $~~103~~163.61 million for the year ended December 31, ~~2021~~2022, aan ~~decrease~~increase of $1259.45 million compared to net cash provided by operating activities of $~~116~~103.06 million for the year ended December 31, ~~2020~~2021. ~~This~~The ~~decrease~~increase was primarily due to higher net income and changes in working capital, including the timing of settlement-related assets and liabilities. ~~Excluding the impact of settlement-related assets and liabilities, net cash provided by operating activities increased $71.3 million.~~

Investing activities

Net cash used in investing activities was $74252.71 million for the year ended December 31, ~~2021~~2022, an increase of $48177.74 million compared to net cash used in investing activities of $2674.07 million for the year ended December 31, ~~2020~~2021. The increase was primarily due to the acquisitions, ~~higher~~of ~~capital~~NBG ~~expenditures,~~Pay Single Member Societe Anonyme (“NBG Pay”) and ~~the~~Electronic ~~acquisition~~Data ofProcessing ~~intangible~~Source ~~assets~~S.A. (“EDPS”).

Capital expenditures were $33.4 million for the year ended December 31, 2021, an increase of $12.9 million compared to $20.5 million for the year ended December 31, 2020. The increase was primarily due to the higher POS terminal purchases and software licenses related to our European payment processing platform.60

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Financing activities

Net cash ~~used~~provided inby financing activities was $2443.48 million for the year ended December 31, ~~2021~~2022, aan ~~decrease~~increase of $3468.2 million, compared to net cash ~~provided~~used byin financing activities of $924.84 million for the year ended December 31, ~~2020~~2021. The ~~decrease~~increase was primarily due to athe ~~change~~utilization ~~in net activity~~ of ~~long-term~~revolver ~~debt~~to ~~and~~facilitate ~~proceeds from~~ the ~~issuance~~acquisitions ~~of Preferred Stock~~ in ~~2020~~Greece.

~~Liquidity~~Effect ~~and~~of ~~capital~~exchange ~~resources~~rate ~~for~~changes ~~the~~on ~~years~~cash, ~~ended~~cash ~~December 31~~equivalents, ~~2020~~ and ~~2019~~restricted cash

~~The~~Cash, ~~discussion of~~ cash ~~flow~~equivalents, ~~activities~~and ~~for~~restricted ~~the~~cash ~~year~~are ~~ended~~impacted ~~December 31, 2020~~by ~~as compared to~~ the ~~year~~fluctuation ~~ended~~of ~~December 31, 2019~~foreign ~~that~~exchange ~~are~~rates ~~not~~upon ~~included~~translation inof ~~this Form 10~~non-KU.S. ~~are~~currencies ~~included~~to inU.S. ~~“Management’s~~dollars. ~~Discussion~~The ~~and~~foreign ~~Analysis~~exchange ofrate ~~Financial~~volatility ~~Condition~~in ~~and~~the ~~Results~~current ofyear ~~Operations”~~impacted inthe ~~Part~~translation ~~II,~~during ~~Item~~the 7year ofended ~~our~~December ~~Annual~~31, ~~Report~~2022, oncompared ~~Form~~to ~~10-K for~~ the ~~fiscal~~ year ended December 31, ~~2020~~ 2021.

60Liquidity and capital resources for the years ended December 31, 2021 and 2020

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The discussion of cash flow activities for the year ended December 31, 2021 as compared to the year ended December 31, 2020 that are not included in this Form 10-K are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Senior Secured Credit Facilities

The Company (through its subsidiary EPI) entered into the Restatement Agreement in November 2021 to amend and restate our senior secured credit facilities (as amended and restated by the Restatement Agreement, the “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities are comprised of a $200.0 million revolving credit facility maturing in November 2026, and a $588.0 million term loan maturing in November 2026. In addition, our Senior Secured Credit Facilities also provide us with the option to access incremental credit facilities, refinance the loans with debt incurred outside our Senior Secured Credit Facilities, and extend the maturity date of the revolving loans and term loans, subject to certain limitations and terms. In connection with the Senior Secured Credit Facilities refinanced under the Restatement Agreement, a loss of $5.7 million was presented within other (expense) income in the consolidated statements of operations and comprehensive income (loss) ~~income~~ for the year ended December 31, 2021. The total loss of $5.7 million includes a debt extinguishment loss of $2.2 million and a loss of $3.5 million related to unamortized deferred financing costs.

Borrowings under the Senior Secured Credit Facilities bear interest at an annual rate equal to, at EPI’s option, (a) a base rate, plus an applicable margin or (b) LIBOR, plus an applicable margin. The applicable margin for base rate loans ranges from 0.75% to 1.75% per annum and for LIBOR loans ranges from 1.75% to 2.75% per annum, in each case based upon achievement of certain consolidated leverage ratios. In addition to paying interest on outstanding principal, EPI is required to pay a commitment fee to the lenders in respect of the unutilized revolving commitments thereunder ranging from 0.25% to 0.375% per annum based upon achievement of certain consolidated leverage ratios. The Senior Secured Credit Facilities include provisions that provide for the eventual replacement of LIBOR as a reference rate with the Secured Overnight Financing Rate (as defined in the credit agreement) or otherwise an alternate benchmark rate that has been selected by the administrative agent and EPI and not objected to by a majority of the lenders.

The Senior Secured Credit Facilities require prepayment of outstanding loans, subject to certain exceptions, with: (1) 100% of the net cash proceeds of non-ordinary course asset sales or other dispositions of assets (including casualty events) by EPI and its restricted subsidiaries, subject to reinvestment rights and certain other exceptions (subject to step-downs to 50% and 0% based on achievement of certain consolidated leverage ratios), and (2) 50% of the excess cash flow (subject to certain exceptions and step-downs to 25% and 0% based on achievement of certain consolidated leverage ratios).

EPI may voluntarily repay outstanding loans under the Senior Secured Credit Facilities at any time without a premium.

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All obligations under the Senior Secured Credit Facilities are unconditionally guaranteed by most of EPI’s direct and indirect, wholly-owned domestic subsidiaries, subject to certain exceptions.

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a first-priority lien on the capital stock owned by EPI or by any guarantor in each of EPI’s or their respective subsidiaries (limited, in the case of capital stock of foreign subsidiaries and first tier domestic subsidiaries substantially all the assets of which are the capital stock of foreign subsidiaries, to 65% of the voting stock and 100% of the non-voting stock of such subsidiaries); and

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a first-priority lien on substantially all of EPI’s and each guarantor’s present and future intangible and tangible assets (subject to customary exceptions).

The Senior Secured Credit Facilities contain a number of significant negative covenants. These covenants, among other things, restrict, subject to certain exceptions, EPI and its restricted subsidiaries ability to:

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incur indebtedness;

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create liens;

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engage in mergers or consolidations;

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make investments, loans and advances;

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pay dividends and distributions and repurchase capital stock;

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sell assets;

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engage in certain transactions with affiliates;

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enter into sale and leaseback transactions;

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●

make certain accounting changes; and

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make prepayments on junior indebtedness.

The Senior Secured Credit Facilities also contain a financial covenant that requires EPI to remain under a maximum consolidated leverage ratio determined on a quarterly basis with step-downs over time. The Borrower may elect to increase the maximum consolidated leverage ratio with which it must comply by 0.5x up to two times during the term upon the consummation of a “material acquisition.”

In addition, the Senior Secured Credit Facilities contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Senior Secured Credit Facilities will be entitled to take various actions, including the acceleration of amounts due thereunder and exercise of remedies on the collateral.

Refer to Note 13, “Long-Term Debt and Lines of Credit,” in the notes to the accompanying consolidated financial statements for additional information on our long-term debt and settlement lines of credit.

Settlement lines of credit

We have specialized lines of credit which are restricted for use in funding settlement. The settlement lines of credit generally have variable interest rates and are subject to annual review. As of December 31, ~~2021~~2022, we had $85.0 million outstanding under these lines of credit with additional capacity of $~~142~~296.65 million to fund settlement.

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Contractual obligations

Our purchase obligations consists of agreements to purchase goods and services, including POS terminals, software licenses, and software maintenance support, entered into in the ordinary course of business.

We lease certain facilities under non-cancellable operating lease arrangements that expire at various dates in the future. As of December 31, ~~2021~~2022, the value of our obligations under operating leases was $4350.8 million. Refer to Note 7, “Leases,” in the notes to the accompanying consolidated financial statements for additional information.

Our tax receivable agreement requires us to make payments to the Continuing LLC Owners in the amount equal to 85% of the applicable cash tax savings, if any. Refer to Note 5, “Tax Receivable Agreement,” in the notes to the accompanying consolidated financial statements for additional information.

Inflation

While inflation may impact our revenue and expenses, we believe the effects of inflation, if any, on our results of operations and financial condition have not been significant. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future.

Critical accounting policies and estimates

Our discussion and analysis of our financial condition and results of operations for the periods described is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgments in certain circumstances that affect the reported amounts of assets, liabilities, and contingencies as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical information and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have provided a summary of our significant accounting policies, as well as a discussion of our evaluation of the impact of recent accounting pronouncements in Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements. The following discussion pertains to accounting policies management believes are most critical to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective, or complex judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition, results of operations, and cash flows to those of other companies.

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consolidated financial statements. The following discussion pertains to accounting policies management believes are most critical to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective, or complex judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition, results of operations, and cash flows to those of other companies.

Revenue recognition

Our primary revenue source consists of fees for payment processing services and revenue from the sale and rental of electronic POS equipment. Payment processing service revenue is primarily based on a percentage of transaction value or on a specified amount per transaction or related services.

When third parties are involved in the Company’s merchant acquiring arrangements and processing services, we apply judgment to determine whether we are acting as a principal or an agent of the third party. We follow the requirements of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, which states that the determination of whether an entity should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement. To determine whether we are acting as a principal or an agent, we assess indicators including: 1) whether we or the third party is primarily responsible for fulfillment; 2) which party has discretion in establishing pricing for the service; and 3) other considerations deemed to be applicable to the specific situation.

Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 2, “Revenue,” in the notes to the accompanying consolidated financial statements for further information.

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Goodwill and intangible assets

We evaluate our goodwill for impairment annually, or more frequently, if events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. Goodwill is tested for impairment at the reporting unit level. Our reporting units are consistent with our segments: the Americas and Europe.

Factors we consider in the qualitative assessment include macroeconomic conditions, industry and market considerations, changes in certain costs, overall financial performance of each reporting unit, and other relevant entity-specific events. If we elect to bypass the qualitative assessment or if we determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative test would be required.

The quantitative impairment test involves a comparison of the estimated fair value of a reporting unit to its carrying amount. We estimate the fair value of our reporting units using both an income approach and a market approach. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on our estimates of revenue growth rates, operating margins, and other factors, such as working capital and capital expenditures. The discount rate is based on the weighted-average cost of capital adjusted for the relevant risks associated with business specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, we estimate the fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with characteristics similar to the reporting unit. Determining the fair value of a reporting unit involves judgment and the use of significant estimates and assumptions, which include revenue growth rates and operating margins used to calculate projected future cash flows, risk adjusted discount rates, and the selection of appropriate market multiples.

Finite-lived intangible assets include merchant contract portfolios and customer relationships, marketing alliance agreements, trademarks, internally developed and acquired software, and non-competition agreements.

The acquired intangible assets were recorded at their estimated fair value at the date of acquisition. Determination of the fair value of our acquired merchant contract portfolios, customer relationships, marketing alliance agreements, and acquired software involves significant estimates and assumptions related to revenue growth rates, discount rates, merchant attrition rates, and expected merchant referrals from our referral partners. Determination of the fair value of our acquired trademarks involves significant estimates and assumptions related to revenue growth rates, royalty rates, and discount rates.

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trademarks involves significant estimates and assumptions related to revenue growth rates, royalty rates, and discount rates.

We also develop software that is used in providing services to our customers. Capitalization of internal-use software occurs when we have completed the preliminary project stage. Costs incurred during the preliminary project stage are expensed as incurred.

Finite-lived intangible assets are amortized over their estimated useful lives ranging from 2 to 21 years using either accelerated or straight-line method. Determination of estimated useful lives of intangible assets requires significant judgment. The useful lives for customer-related intangible assets are based primarily on forecasted cash flows, which include estimates for the revenues, expenses, and customer attrition associated with the assets. The useful lives of contract-based intangible assets are based on the terms of the agreements. The useful lives of trademarks are based on our assumptions regarding the period of time during which a significant portion of the economic value of such assets is expected to be realized. The useful lives of internally developed and acquired software are based on various factors, including analysis of potential obsolescence due to new technology, competition, and other economic factors. We regularly evaluate whether events and circumstances have occurred that indicate the useful lives of finite-lived intangible assets may warrant revision.

Finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated from use of the asset and its eventual disposition. If the total of the undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

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Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 9, “Goodwill and Intangible Assets,” in the notes to the accompanying consolidated financial statements for further information.

Income taxes

EVO, LLC is considered a pass-through entity for U.S. federal and most applicable state and local income tax purposes. As a pass-through entity, taxable income or loss is passed through to and included in the taxable income of its members.

EVO, Inc. is subject to U.S. federal, state, and local income taxes with respect to our allocable share of taxable income of EVO, LLC and is taxed at the prevailing corporate tax rates. In addition to incurring actual tax expense, we also may make payments under the TRA. We account for the income tax effects and corresponding TRA effects resulting from future taxable purchases of LLC Interests of the Continuing LLC Owners or exchanges of LLC Interests for Class A common stock at the date of the purchase or exchange by recognizing an increase in our deferred tax assets based on enacted tax rates at that time. Further, we evaluate the likelihood that we will realize the benefit represented by the deferred tax assets and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we reduce the carrying amount of the deferred tax assets with a valuation allowance. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the TRA are estimated at the time of any purchase or exchange and are recorded as an increase to shareholders’ equity; the effects of changes in any of our estimates after this date are included in net earnings. Similarly, the effects of subsequent changes in the enacted tax rates are included in net earnings.

The Company recognizes deferred tax assets to the extent that it is expected that these assets are more likely than not to be realized. The Company evaluates the realizability of the deferred tax assets, and to the extent that the Company estimates that it is more likely than not that a benefit will not be realized, the carrying amount of the deferred tax assets is reduced with a valuation allowance. As a part of this evaluation, the Company assesses all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations (including cumulative losses in recent years), to determine whether sufficient future taxable income will be generated to realize existing deferred tax assets.

The Company has identified objective and verifiable negative evidence in the form of cumulative losses on an unadjusted basis in certain jurisdictions over the preceding twelve quarters ended December 31, ~~2021~~2022. The Company evaluated both its actual forecasts of future taxable income and its historical core earnings by jurisdiction over the prior twelve quarters, adjusted for certain nonrecurring items. On the basis of this assessment, and after considering future reversals of existing taxable temporary differences, and its actual forecasts of future taxable income, the Company determined that valuation allowances are needed in certain European jurisdictions. In the United States, with the exception of the interest expense limitation and a stand alone domestic subsidiary, the Company concluded that its indefinite lived deferred tax assets will be realizable and recorded no valuation allowance. In arriving at this determination, the Company considered both (i) historical core earnings, after adjusting for certain nonrecurring items, and (ii) the projected future profitability of its core operations and the impact of enacted changes in the application of the interest expense limitation rules beginning in 2022.

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its actual forecasts of future taxable income and its historical core earnings by jurisdiction over the prior twelve quarters, adjusted for certain nonrecurring items. On the basis of this assessment, and after considering future reversals of existing taxable temporary differences, and its actual forecasts of future taxable income, the Company determined that valuation allowances are needed in certain European jurisdictions to reduce the carrying amount of deferred tax assets to an amount that is more likely than not to be realized. In the United States jurisdiction, however, the Company concluded that its indefinite lived deferred tax assets will be realizable and recorded no valuation allowance. In arriving at this determination, the Company considered both (i) historical core earnings, after adjusting for certain nonrecurring items, and (ii) the projected future profitability of its core operations and the impact of enacted changes in the application of the interest expense limitation rules beginning in 2022.

In the United States jurisdiction, the Company’s future taxable income projections are derived from historical core operations adjusted for certain non-recurring items, which indicate that the Company will move out of a period of cumulative losses as taxable loss periods are replaced by taxable income periods. The amount of the deferred tax asset considered realizable, however, could be adjusted if the Company’s estimates of the projected future profitability of its core operations are reduced by a level significantly different than the Company’s historical revenues and expenses adjusted for certain nonrecurring items. As a secondary measure, the Company compares its adjusted historical core earnings to its actual forecast to ensure that adjusted core earnings are realizable. The Company also evaluates the realizability of the deferred tax assets, and to the extent that the Company estimates that it is more likely than not that a benefit will not be realized, the carrying amount of the deferred tax assets would be offset with a valuation allowance and the related TRA liability would be reduced. The future taxable income projections are subject to a high degree of uncertainty and could be impacted, both positively and negatively, by changes in our business or the markets in which we operate. A change in the assessment of the realizability of its deferred tax assets could materially impact our results of operations.

Refer to Note 5, “Tax Receivable Agreement,” and Note 12, “Income Taxes,” in the notes to the accompanying consolidated financial statements for further information.

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Redeemable non-controlling interest in eService, BCI Pagos, and NBG Pay

Redeemable non-controlling interest (“RNCI”) in eService relates to the portion of equity in our consolidated subsidiary in Poland, not attributable, directly or indirectly, to us, which is realizable upon the occurrence of an event that is not solely within our control. We adjust the RNCI at each balance sheet date to reflect our estimate of the maximum redemption amount with changes recognized as an adjustment to our additional paid-in capital or, in the absence of additional paid-in capital, to shareholders’ deficit. Such estimate is based on projected operating performance of the subsidiary and the key assumptions used in estimating the fair value include, but are not limited to, revenue growth rates and weighted-average cost of capital.

Redeemable non-controlling interest (“RNCI”) in eService, BCI Pagos, and NBG Pay relate to the portion of equity in our consolidated subsidiaries in Poland, Chile, and Greece, not attributable, directly or indirectly, to us, which is realizable upon the occurrence of an event that is not solely within our control. We adjust the RNCI at each balance sheet date to reflect our estimate of the maximum redemption amount with changes recognized as an adjustment to our additional paid-in capital or, in the absence of additional paid-in capital, to shareholders’ deficit. Such estimate is based on projected operating performance of the subsidiary and the key assumptions used in estimating the fair value include, but are not limited to, revenue growth rates and weighted-average cost of capital.

Refer to Note 17, “Redeemable Non-controlling Interests,” for further information.

New accounting pronouncements

For information regarding new accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, if any, refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our future income, cash flows and fair values of the financial instruments are subject to risks relating to interest rates and foreign currency exchange rates.

Interest rate risk

We are subject to interest rate risk in connection with our long-term debt and settlement facilities, which have variable interest rates. The interest rates on these facilities are based on a fixed margin plus a market interest rate, which can fluctuate but is subject to a minimum rate. Interest rate changes could impact the amount of our interest payments, and accordingly, our future earnings and cash flows, assuming other factors are held constant.

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fluctuate but is subject to a minimum rate. Interest rate changes could impact the amount of our interest payments, and accordingly, our future earnings and cash flows, assuming other factors are held constant.

As of December 31, ~~2021~~2022, we had approximately $~~588~~641.05 million of debt outstanding, net of accrued interest, of which $500.0 million was subject to an interest rate hedge. The Company entered into the interest rate hedge in 2020 to reduce a portion of the exposure to market rate risk associated with its variable-rate debt. The interest rate hedge matured on December 31, 2022. Refer to Note 14, “Derivatives,” in the notes to the accompanying consolidated financial statements.

In the future, interest rates may fluctuate and we may be subject to interest rate risk. Based on the amount outstanding on our Senior Secured Credit Facilities on December 31, ~~2021~~2022, an increase or a decrease of 100 basis points in the applicable interest rate (assuming such reduction would not be below the minimum rate) would increase or decrease our annual interest expense by approximately $06.94 million upon the expiration of the interest rate swap. Effective January 2023, interest rate payments of our entire outstanding term loan will be based on variable interest rates.

Foreign currency risk

We are exposed to changes in foreign currency rates as a result of our significant foreign operations. Revenue and income generated by international operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates related to certain foreign intercompany balances. A hypothetical uniform 10% weakening or strengthening in the value of the U.S. dollar relative to all the currencies in which our revenue and income are denominated would result in an increase or decrease to pretax income of approximately $58.10 million on an annual basis. The change results from revenue and income earned in foreign currencies, primarily denominated in the Euro, Polish Zloty and Mexican Peso. There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that foreign exchange rate movements are linear and instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect our income.

The Company uses foreign currency swaps and window forward contracts to help mitigate exposure to fluctuations in foreign currency exchange rates related to certain foreign intercompany balances. As of December 31, 2021, the Company had no open foreign currency swaps or window forward positions. The impact of the foreign currency swaps and window forward contracts that settled in 2021 were immaterial to the consolidated financial statements. Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements.66

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The Company uses a forward contract, foreign currency swap, and window forward contracts to help mitigate exposure to fluctuations in foreign currency exchange rates related to certain foreign intercompany balances. Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the notes to the accompanying consolidated financial statements.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements


Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34)		6869
Consolidated Balance Sheets as of December 31, 2021 and 2020		71
Consolidated Balance Sheets as of December 31, 2022 and 2021		72
Consolidated Statements of Operations and Comprehensive (Loss) Income for each of the years ended December 31, 2021, 2020, and 2019		72
Consolidated Statements of Operations and Comprehensive Income (Loss) for each of the years ended December 31, 2022, 2021, and 2020		73
Consolidated Statements of Changes in Equity (Deficit) for each of the years ended December 31, 2021, 2020, and 2019		73
Consolidated Statements of Changes in Equity (Deficit) for each of the years ended December 31, 2022, 2021, and 2020		74
Consolidated Statements of Cash Flows for each of the years ended December 31, 2021, 2020, and 2019		76
Consolidated Statements of Cash Flows for each of the years ended December 31, 2022, 2021, and 2020		77
Notes to Consolidated Financial Statements		7778
Schedule I – Condensed Financial Information of Registrant		~~118~~122
Schedule II – Valuation and Qualifying Accounts		~~123~~127

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of EVO Payments, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of EVO Payments, Inc. and subsidiaries (the “Company”) as of December 31, ~~2021~~2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2021~~2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company as of and for the year ended December 31, ~~2021~~2022, and our report dated February 2322, ~~2022~~2023, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“"generally accepted accounting principles”"). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

New York, New York

February 2322, ~~2022~~2023

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of EVO Payments, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of EVO Payments, Inc. and subsidiaries (the "Company") as of December 31, ~~2021~~2022 and ~~2020~~2021, the related consolidated statements of operations and comprehensive income (loss) ~~income~~, changes in equity (deficit), and cash flows, for each of the three years in the period ended December 31, ~~2021~~2022, and the related notes and the schedules listed in the Index to the Consolidated Financial Statements (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2021~~2022 and ~~2020~~2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2021~~2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2021~~2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 2322, ~~2022~~2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that ~~were~~was communicated or required to be communicated to the audit committee and that (1) ~~relate~~relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue—Refer to Notes 1 and 2 to the consolidated financial statements

Critical Audit Matter Description

The Company’s revenue primarily consists of transaction-based fees that are made up of a significant volume of low-dollar transactions, sourced from multiple systems, platforms, and applications. The Company’s payment processing services are

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highly automated and are based on contractual terms with merchants. Because of the nature of the payment processing services, the Company relies on automated systems to process and record its revenue transactions. Netting against the Company’s revenue are commissions for referral partners and third-party processing and assessment costs such as interchange fees and card network fees.

We identified revenue as a critical audit matter because the Company’s multiple systems to process and record revenue are highly automated with multiple platforms, including systems to record commissions cost. This required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), to identify, test, and evaluate the Company’s systems, applications, and automated controls.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s systems to process revenue transactions, including commissions cost, included the following, among others:

● With the assistance of our IT specialists, we:

–

Identified the significant systems used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.

–

Performed testing of interface controls and automated controls relevant to revenue processes.

●	We tested internal controls within the relevant revenue processes, including those in place to reconcile the various systems to the Company’s general ledger.

●	For certain components of revenue, we developed an independent expectation of revenue and compared it to the amount recorded by the Company.

●	For certain components of revenue, we performed detail transaction testing for a sample of such revenue transactions, by agreeing the amounts recognized to source documents, and tested the mathematical accuracy of the recorded revenue.

●	For commissions to referral partners, we developed an independent expectation for commissions cost and compared it to the commissions cost recorded by the Company.

/s/ Deloitte & Touche LLP

New York, New York

February 2322, ~~2022~~2023

We have served as the Company's auditor since 2016.

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Consolidated Balance Sheets

(In thousands, except share data)


	December 31,		December 31,
	~~2021~~2022		~~2020~~2021
Assets
Current assets:
Cash and cash equivalents	$	~~410~~356,~~368~~459	$	~~418~~410,~~439~~368
Accounts receivable, net		1620,~~065~~107		1716,~~052~~065
Other receivables		1823,~~087~~624		2018,~~128~~087
Inventory		48,~~210~~113		54,~~221~~210
Settlement processing assets		~~311~~732,~~681~~284		~~285~~311,~~705~~681
Other current assets		2026,~~514~~875		1520,~~284~~514
Total current assets		~~780~~1,~~925~~167,462		~~761~~780,~~829~~925
Equipment and improvements, net		6869,~~506~~957		8368,~~606~~506
Goodwill, net		~~385~~528,~~651~~555		~~383~~385,~~108~~651
Intangible assets, net		~~200~~386,~~726~~688		~~217~~200,~~077~~726
Deferred tax assets		~~238~~241,~~261~~652		~~234~~238,~~749~~261
Operating lease right-of-use assets		3440,~~704~~980		3534,~~124~~704
Investment in equity securities, at fair value		2535,~~398~~818		25,~~526~~398
Other assets		19,~~214~~703		1619,~~702~~214
Total assets	$	12,~~753~~490,~~385~~815	$	1,~~757~~753,~~721~~385

Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Settlement lines of credit	$	75,~~887~~033	$	137,~~718~~887
Current portion of long-term debt		14,~~058~~092		414,~~628~~058
Accounts payable		67,~~889~~309		96,~~482~~889
Accrued expenses and other current liabilities		~~127~~157,~~060~~347		~~118~~127,~~251~~060
Settlement processing obligations		~~422~~861,~~109~~080		~~446~~422,~~344~~109
Current portion of operating lease liabilities, inclusive of related party liability of $1.3 million and $1.1 million at December 31, 2021 and December 31, 2020, respectively		7,122		6,614
Current portion of operating lease liabilities, inclusive of related party liability of $0.7 million and $1.3 million at December 31, 2022 and December 31, 2021, respectively		8,283		7,122
Total current liabilities		~~585~~1,~~125~~053,144		~~599~~585,~~037~~125
Long-term debt, net of current portion		~~568~~623,~~632~~196		~~579~~568,~~162~~632
Deferred tax liabilities		2225,~~207~~330		1322,~~957~~207
Tax receivable agreement obligations, inclusive of related party liability of $169.4 million and $164.3 million at December 31, 2021 and December 31, 2020, respectively		180,143		173,890
Tax receivable agreement obligations, inclusive of related party liability of $171.9 million and $169.4 million at December 31, 2022 and December 31, 2021, respectively		182,726		180,143
Operating lease liabilities, net of current portion, inclusive of related party liability of $1.0 million and $2.2 million at December 31, 2021 and December 31, 2020, respectively		28,948		30,968
Operating lease liabilities, net of current portion, inclusive of related party liability of $0.1 million and $1.0 million at December 31, 2022 and December 31, 2021, respectively		34,504		28,948
Other long-term liabilities		712,~~891~~687		107,~~174~~891
Total liabilities		1,~~392~~931,~~946~~587		1,~~407~~392,~~188~~946
Commitments and contingencies
Redeemable non-controlling interests		1,~~029~~515,~~090~~450		1,~~055~~029,~~633~~090
Redeemable preferred stock (par value, $0.0001 per share), Authorized, Issued and Outstanding – 152,250 shares at December 31, 2021 and December 31, 2020. Liquidation preference: $168,309 and $158,647 at December 31, 2021 and December 31, 2020, respectively		164,007		154,118
Redeemable preferred stock (par value, $0.0001 per share), Authorized, Issued and Outstanding – 152,250 shares at December 31, 2022 and December 31, 2021. Liquidation preference: $178,559 and $168,309 at December 31, 2022 and December 31, 2021, respectively		174,531		164,007
Shareholders' equity (deficit):
Class A common stock (par value, $0.0001 per share), Authorized - 200,000,000 shares, Issued and Outstanding - 47,446,061 and 46,401,607 shares at December 31, 2021 and December 31, 2020, respectively		5		5
Class A common stock (par value, $0.0001 per share), Authorized - 200,000,000 shares, Issued and Outstanding - 48,423,077 and 47,446,061 shares at December 31, 2022 and December 31, 2021, respectively		5		5
Class B common stock (par value, $0.0001 per share), Authorized - 40,000,000 shares, Issued and Outstanding - 0 and 32,163,538 shares at December 31, 2021 and December 31, 2020, respectively		—		3
Class D common stock (par value, $0.0001 per share), Authorized - 32,000,000 shares, Issued and Outstanding - 3,741,074 and 3,783,074 shares at December 31, 2022 and December 31, 2021, respectively		—		—
Class C common stock (par value, $0.0001 per share), Authorized - 4,000,000 shares, Issued and Outstanding - 0 and 1,720,425 shares at December 31, 2021 and December 31, 2020, respectively		—		—
Class D common stock (par value, $0.0001 per share), Authorized - 32,000,000 shares, Issued and Outstanding - 3,783,074 and 2,390,870 shares at December 31, 2021 and December 31, 2020, respectively		—		—
Additional paid-in capital		—		—
Accumulated deficit attributable to Class A common stock		(~~652~~928,~~871~~187)		(~~675~~652,~~209~~871)
Accumulated other comprehensive (loss) income		(9,154)		1,045
Accumulated other comprehensive loss		(7,954)		(9,154)
Total EVO Payments, Inc. shareholders' deficit		(~~662~~936,~~020~~136)		(~~674~~662,~~156~~020)
Nonredeemable non-controlling interests		(~~170~~194,~~638~~617)		(~~185~~170,~~062~~638)
Total deficit		(~~832~~1,~~658~~130,753)		(~~859~~832,~~218~~658)
Total liabilities, redeemable non-controlling interests, redeemable preferred stock, and shareholders’ deficit	$	12,~~753~~490,~~385~~815	$	1,~~757~~753,~~721~~385

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Operations and Comprehensive Income (Loss) ~~Income~~

(In thousands, except share and per share data)


	Year Ended December 31,
	~~2021~~2022		~~2020~~2021		~~2019~~2020
Revenue	$	~~496~~543,~~645~~082	$	~~439~~496,~~101~~645	$	~~485~~439,~~778~~101
Operating expenses:
Cost of services and products		7589,~~765~~370		8475,~~336~~765		9684,~~365~~336
Selling, general, and administrative		~~266~~309,~~117~~539		~~250~~266,~~676~~117		~~267~~250,~~926~~676
Depreciation and amortization		8384,~~389~~143		8583,~~924~~389		9285,~~059~~924
Impairment of intangible assets		—		~~802~~—		~~13,101~~802
Total operating expenses		~~425~~483,~~271~~052		~~421~~425,~~738~~271		~~469~~421,~~451~~738
Income from operations		71,374		17,363		16,327
Other operating income		6,939		—		—
Income from operations		66,969		71,374		17,363
Other expense:
Interest income		13,~~651~~136		1,~~172~~651		21,~~872~~172
Interest expense		(2317,~~161~~641)		(3023,~~160~~161)		(4430,~~011~~160)
Gain on investment in equity securities		~~237~~7,313		~~17,574~~237		—17,574
Other (expense) income, net		(103,~~375~~226)		3(10,~~007~~375)		53,~~994~~007
Total other expense		(3110,~~648~~418)		(831,~~407~~648)		(358,~~145~~407)
Income (loss) before income taxes		39,726		8,956		(18,818)
Income before income taxes		56,551		39,726		8,956
Income tax expense		(2236,~~037~~245)		(1322,~~122~~037)		(413,~~548~~122)
Net income (loss)		1720,~~689~~306		(417,~~166)~~689		(234,~~366~~166)
Less: Net income attributable to non-controlling interests in consolidated entities		911,~~003~~596		79,~~189~~003		7,~~877~~189
Less: Net income (loss) attributable to non-controlling interests of EVO Investco, LLC		333,431		~~(9,679)~~33		(219,~~138~~679)
Net income (loss) attributable to EVO Payments, Inc.		85,~~653~~279		(18,~~676)~~653		(101,~~105~~676)
Less: Accrual of redeemable preferred stock paid-in-kind dividends		910,~~889~~524		69,~~528~~889		—6,528
Net loss attributable to Class A common stock	$	(15,~~236~~245)	$	(81,~~204~~236)	$	(108,~~105~~204)

Earnings per share
Basic	$	(0.0311)	$	(0.2003)	$	(0.3120)
Diluted	$	(0.0311)	$	(0.2003)	$	(0.3120)

Weighted-average Class A common stock outstanding
Basic		47,~~092~~979,~~937~~393		4147,~~980~~092,~~163~~937		3241,~~720~~980,~~370~~163
Diluted		47,~~092~~979,~~937~~393		4147,~~980~~092,~~163~~937		3241,~~720~~980,~~370~~163

Comprehensive (loss) income:
Comprehensive income (loss):
Net income (loss)	$	1720,~~689~~306	$	(417,~~166)~~689	$	(234,~~366~~166)
Change in fair value of interest rate swap, net of tax(1)		(1,~~591~~126)		~~(465)~~1,591		—(465)
Unrealized (loss) gain on foreign currency translation adjustment, net of tax (2)		(28,336)		8,774		324
Change in fair value of cross currency swap, net of tax(2)		(44)		—		—
Other comprehensive (loss) income		(26,745)		8,309		324
Unrealized (loss) gain on foreign currency translation adjustment, net of tax (3)		(2,726)		(28,336)		8,774
Comprehensive (loss) income		(9,056)		4,143		(23,042)
Other comprehensive (loss) income		(3,896)		(26,745)		8,309
Less: Comprehensive income attributable to non-controlling interests in consolidated entities		3,237		8,774		7,513
Comprehensive income (loss)		16,410		(9,056)		4,143
Less: Comprehensive loss attributable to non-controlling interests of EVO Investco, LLC		(10,747)		(5,948)		(21,258)
Less: Comprehensive income attributable to non-controlling interests in consolidated entities		10,052		3,237		8,774
Comprehensive (loss) income attributable to EVO Payments, Inc.	$	(1,546)	$	1,317	$	(9,297)
Less: Comprehensive loss attributable to non-controlling interests of EVO Investco, LLC		(121)		(10,747)		(5,948)
Comprehensive income (loss) attributable to EVO Payments, Inc.	$	6,479	$	(1,546)	$	1,317

(1) Net of tax benefit (expense) ~~benefit~~ of $0.2 million, $(0.2) million, and $0.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

(2) Net of tax benefit ~~(expense)~~ of ~~$4.1~~less ~~million,~~than $~~(2.5) million, and $(~~0.1) million for the ~~years~~year ended December 31, ~~2021, 2020, and 2019, respectively~~2022.

(3)	Net of tax benefit (expense) of $5.6 million, $4.1 million, and $(2.5) million for the years ended December 31, 2022, 2021, and 2020, respectively.

See accompanying notes to consolidated financial statements.

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EVO PAYMENTS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity (Deficit)

(In thousands)


	Shareholders' Equity (Deficit)
															Accumulated				Total
															deficit		Accumulated		EVO
													Additional		attributable to		other		Payments,		Nonredeemable				Redeemable
	Class A Common Stock			Class B Common Stock			Class C Common Stock			Class D Common Stock			paid-in		Class A		comprehensive		Inc. equity		non-controlling		Total equity		non-controlling
	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		capital		common stock		loss		(deficit)		interests		(deficit)		interests
Balance, January 1, 2019	26,025	$	3	35,914	$	4	2,461	$	—	16,786	$	1	$	178,176	$	(223,799)	$	(2,993)	$	(48,608)	$	(814,074)	$	(862,682)	$	1,010,093

Prior period adjustment*	—		—	—		—	—		—	—		—		(20,629)		—		—		(20,629)		20,629		—		—
Net loss	—		—	—		—	—		—	—		—		—		(10,105)		—		(10,105)		(6,549)		(16,654)		(6,712)
Cumulative translation adjustment	—		—	—		—	—		—	—		—		—		—		1,045		1,045		(378)		667		(229)
Distributions	—		—	—		—	—		—	—		—		—		—		—		—		(297)		(297)		(9,475)
Sale of Class A common stock in secondary offerings(1)	14,250		1	(1,750)		(1)	—		—	(11,750)		(1)		(470,830)		—		—		(470,831)		538,262		67,431		(48,447)
Fair value adjustment in connection with purchase of Blueapple Class B shares	—		—	—		—	—		—	—		—		—		2,020				2,020		823		2,843		(2,843)
Share-based compensation expense	—		—	—		—	—		—	—		—		10,921		—		—		10,921		—		10,921		—
Vesting of equity awards	78		—	—		—	—		—	—		—		(1,819)		—		—		(1,819)		—		(1,819)		—
Stock options exercised	61		—	—		—	—		—	—		—		1,010		—		—		1,010		—		1,010		—
Exchanges of Class C and Class D common stock for Class A common stock	820		—	—		—	(139)		—	(681)		—		(37,533)		—		—		(37,533)		37,533		—		—
Deferred taxes in connection with share exchanges and secondary offerings(1)	—		—	—		—	—		—	—		—		8,001		—		—		8,001		—		8,001		—
Tax receivable agreement in connection with share exchanges and secondary offerings(1)	—		—	—		—	—		—	—		—		17,993		—		—		17,993		—		17,993		—
eService redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—		—		(12,561)		—		(12,561)		(3,655)		(16,216)		16,216
Blueapple redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—		—		(28,203)		—		(28,203)		(65,642)		(93,845)		93,845
Reclassification of additional paid-in capital to accumulated deficit	—		—	—		—	—		—	—		—		314,710		(314,710)		—		—		—		—		—
Balance, December 31, 2019	41,234	$	4	34,164	$	3	2,322	$	—	4,355	$	—	$	—	$	(587,358)	$	(1,948)	$	(589,299)	$	(293,348)	$	(882,647)	$	1,052,448


				Shareholders' Equity (Deficit)
																		Accumulated				Total
																		deficit		Accumulated		EVO
	Redeemable															Additional		attributable to		other		Payments,		Nonredeemable				Redeemable
	Preferred Stock			Class A Common Stock			Class B Common Stock			Class C Common Stock			Class D Common Stock			paid-in		Class A		comprehensive		Inc. equity		non-controlling		Total equity		non-controlling
	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		capital		common stock		income (loss)		(deficit)		interests		(deficit)		interests
Balance, January 1, 2020	—	$	—	41,234	$	4	34,164	$	3	2,322	$	—	4,355	$	—	$	—	$	(587,358)	$	(1,948)	$	(589,299)	$	(293,348)	$	(882,647)	$	1,052,448

Net loss	—		—	—		—	—		—	—		—	—		—		—		(1,676)		—		(1,676)		(1,341)		(3,017)		(1,149)
Cumulative translation adjustment	—		—	—		—	—		—	—		—	—		—		—		—		3,190		3,190		341		3,531		5,243
Contributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		—		—		505
Distributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		24		24		(4,537)
Sale of Class A common stock in secondary offerings	—		—	4,152		1	(2,000)		—	—		—	(2,152)		—		(34,540)		(8,945)		—		(43,484)		94,834		51,350		(51,350)
Fair value adjustment in connection with purchase of Blueapple Class B shares	—		—	—		—	—		—	—		—	—		—		—		(1,436)		—		(1,436)		(214)		(1,650)		1,650
Share-based compensation expense	—		—	—		—	—		—	—		—	—		—		20,664		—		—		20,664		—		20,664		—
Vesting of equity awards	—		—	197		—	—		—	—		—	—		—		(1,345)		—		—		(1,345)		—		(1,345)		—
Exercise of stock options	—		—	405		—	—		—	—		—	—		—		6,145		—		—		6,145		—		6,145		—
Exchanges of Class C and Class D common stock for Class A common stock	—		—	414		—	—		—	(602)		—	188		—		(16,658)		—		—		(16,658)		16,658		—		—
Deferred taxes in connection with increase in ownership of EVO Investco, LLC	—		—	—		—	—		—	—		—	—		—		2,995		—		—		2,995		—		2,995		—
Tax receivable agreement in connection with share exchanges	—		—	—		—	—		—	—		—	—		—		4,548		—		—		4,548		—		4,548		—
Issuance of redeemable preferred stock, net of issuance costs	152		147,590	—		—	—		—	—		—	—		—		—		—		—		—		—		—		—
Accrual of redeemable preferred stock paid-in-kind dividends	—		6,528	—		—	—		—	—		—	—		—		(6,528)		—		—		(6,528)		—		(6,528)		—
Change in fair value of interest rate swap	—		—	—		—	—		—	—		—	—		—		—		—		(197)		(197)		(45)		(242)		(223)
eService redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(43,105)		25,069		—		(18,036)		(1,628)		(19,664)		19,664
Blueapple redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(353,175)		320,136		—		(33,039)		(343)		(33,382)		33,382
Reclassification of additional paid-in capital to accumulated deficit	—		—	—		—	—		—	—		—	—		—		420,999		(420,999)		—		—		—		—		—
Balance, December 31, 2020	152	$	154,118	46,402	$	5	32,164	$	3	1,720	$	—	2,391	$	—	$	—	$	(675,209)	$	1,045	$	(674,156)	$	(185,062)	$	(859,218)	$	1,055,633

*The prior period adjustment relates to the nonredeemable non-controlling interests, which are the portion of equity in a consolidated subsidiary not attributable, directly or indirectly, to the Company as of December 31, 2018, that were retrospectively adjusted to reflect the exchange of certain Class C and D shares to Class A shares. This immaterial adjustment decreased the previously reported amounts of additional paid-in capital and nonredeemable non-controlling interests, as reported in the consolidated balance sheet and consolidated statement of changes in equity as of December 31, 2018, by $20.6 million.

(1) Secondary offerings refers to the sale of Class A common stock and the purchase of an equivalent number of LLC Interests and shares of Class D and Class B common stock in connection with the April 2019 Secondary Offering, the August 2019 Secondary Offering, and the December 2019 Secondary Offering.

See accompanying notes to consolidated financial statements.

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EVO PAYMENTS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity (Deficit)

(In thousands)


				Shareholders' Equity (Deficit)
																		Accumulated				Total
																		deficit		Accumulated		EVO
	Redeemable															Additional		attributable to		other		Payments,		Nonredeemable				Redeemable
	Preferred Stock			Class A Common Stock			Class B Common Stock			Class C Common Stock			Class D Common Stock			paid-in		Class A		comprehensive		Inc. equity		non-controlling		Total equity		non-controlling
	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		capital		common stock		income (loss)		(deficit)		interests		(deficit)		interests
Balance, January 1, 2020	—	$	—	41,234	$	4	34,164	$	3	2,322	$	—	4,355	$	—	$	—	$	(587,358)	$	(1,948)	$	(589,299)	$	(293,348)	$	(882,647)	$	1,052,448

Net loss	—		—	—		—	—		—	—		—	—		—		—		(1,676)		—		(1,676)		(1,341)		(3,017)		(1,149)
Cumulative translation adjustment	—		—	—		—	—		—	—		—	—		—		—		—		3,190		3,190		341		3,531		5,243
Contributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		—		—		505
Distributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		24		24		(4,537)
Sale of Class A common stock in secondary offerings	—		—	4,152		1	(2,000)		—	—		—	(2,152)		—		(34,540)		(8,945)		—		(43,484)		94,834		51,350		(51,350)
Fair value adjustment in connection with purchase of Blueapple Class B shares	—		—	—		—	—		—	—		—	—		—		—		(1,436)		—		(1,436)		(214)		(1,650)		1,650
Share-based compensation expense	—		—	—		—	—		—	—		—	—		—		20,664		—		—		20,664		—		20,664		—
Vesting of equity awards	—		—	197		—	—		—	—		—	—		—		(1,345)		—		—		(1,345)		—		(1,345)		—
Exercise of stock options	—		—	405		—	—		—	—		—	—		—		6,145		—		—		6,145		—		6,145		—
Exchanges of Class C and Class D common stock for Class A common stock	—		—	414		—	—		—	(602)		—	188		—		(16,658)		—		—		(16,658)		16,658		—		—
Deferred taxes in connection with increase in ownership of EVO Investco, LLC	—		—	—		—	—		—	—		—	—		—		2,995		—		—		2,995		—		2,995		—
Tax receivable agreement in connection with share exchanges	—		—	—		—	—		—	—		—	—		—		4,548		—		—		4,548		—		4,548		—
Issuance of redeemable preferred stock, net of issuance costs	152		147,590	—		—	—		—	—		—	—		—		—		—		—		—		—		—		—
Accrual of redeemable preferred stock paid-in-kind dividends	—		6,528	—		—	—		—	—		—	—		—		(6,528)		—		—		(6,528)		—		(6,528)		—
Change in fair value of interest rate swap	—		—	—		—	—		—	—		—	—		—		—		—		(197)		(197)		(45)		(242)		(223)
eService redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(43,105)		25,069		—		(18,036)		(1,628)		(19,664)		19,664
Blueapple redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(353,175)		320,136		—		(33,039)		(343)		(33,382)		33,382
Reclassification of additional paid-in capital to accumulated deficit	—		—	—		—	—		—	—		—	—		—		420,999		(420,999)		—		—		—		—		—
Balance, December 31, 2020	152	$	154,118	46,402	$	5	32,164	$	3	1,720	$	—	2,391	$	—	$	—	$	(675,209)	$	1,045	$	(674,156)	$	(185,062)	$	(859,218)	$	1,055,633


				Shareholders' Equity (Deficit)
																		Accumulated				Total
																		deficit		Accumulated		EVO
	Redeemable															Additional		attributable to		other		Payments,		Nonredeemable				Redeemable
	Preferred Stock			Class A Common Stock			Class B Common Stock			Class C Common Stock			Class D Common Stock			paid-in		Class A		comprehensive		Inc. equity		non-controlling		Total equity		non-controlling
	Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		Shares	Amounts		capital		common stock		income (loss)		(deficit)		interests		(deficit)		interests
Balance, January 1, 2021	152	$	154,118	46,402	$	5	32,164	$	3	1,720	$	—	2,391	$	—	$	—	$	(675,209)	$	1,045	$	(674,156)	$	(185,062)	$	(859,218)	$	1,055,633

Net income	—		—	—		—	—		—	—		—	—		—		—		8,653		—		8,653		255		8,908		8,781
Cumulative translation adjustment	—		—	—		—	—		—	—		—	—		—		—		—		(10,999)		(10,999)		(1,258)		(12,257)		(16,079)
Contributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		—		—		1,487
Distributions	—		—	—		—	—		—	—		—	—		—		—		—		—		—		(213)		(213)		(13,655)
Share-based compensation expense	—		—	—		—	—		—	—		—	—		—		27,419		—		—		27,419		—		27,419		—
Vesting of equity awards	—		—	266		—	—		—	—		—	—		—		(4,577)		—		—		(4,577)		—		(4,577)		—
Exercise of stock options	—		—	450		—	—		—	—		—	—		—		7,866		—		—		7,866		—		7,866		—
Cancellation of Class B common stock	—		—	—		—	(32,164)		(3)	—		—	—		—		3		—		—		—		—		—		—
Conversion of Class C common stock to Class D common stock	—		—	—		—	—		—	(1,599)		—	1,599		—		—		—		—		—		—		—		—
Exchanges of Class C and Class D common stock for Class A common stock	—		—	328		—	—		—	(121)		—	(207)		—		(15,038)		—		—		(15,038)		15,038		—		—
Deferred taxes in connection with increase in ownership of EVO Investco, LLC	—		—	—		—	—		—	—		—	—		—		255		—		—		255		—		255		—
Tax receivable agreement in connection with share exchanges	—		—	—		—	—		—	—		—	—		—		380		—		—		380		—		380		—
Accrual of redeemable preferred stock paid-in-kind dividends	—		9,889	—		—	—		—	—		—	—		—		(9,889)		—		—		(9,889)		—		(9,889)		—
Change in fair value of interest rate swap	—		—	—		—	—		—	—		—	—		—		—		—		800		800		84		884		707
eService redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(22,331)		10,638		—		(11,693)		(904)		(12,597)		12,597
BCI Pagos redeemable non-controlling interest fair value adjustment	—		—	—		—	—		—	—		—	—		—		(4,285)		—		—

Filing Compare · EVO Payments, Inc.