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 Annual Report on Form 10-K for the year ended
December 31, 2021 and our unaudited condensed consolidated financial statements
and the notes to the accompanying unaudited condensed consolidated financial
statements appearing elsewhere in this Form 10-Q and the Risk Factors included
in Part II, Item 1A of this Form 10-Q, as well as other cautionary statements
and risks described elsewhere in this Form 10-Q.

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 65% 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 are a global merchant acquirer and payment processor, with approximately
2,400 employees on four continents, servicing over 600,000 merchants in the
Americas and Europe. 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 POS, eCommerce, and 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 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.

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 three and nine months ended September 30, 2022, as demonstrated by the highlights below:

Revenue for the three months ended September 30, 2022 was $138.7 million, an

increase of 2.7% compared to the three months ended September 30, 2021. Revenue

? for the nine months ended September 30, 2022 was $403.3 million, an increase of


   11.0% compared to the nine months ended September 30, 2021. The increase was
   due to


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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 increase in economic activity from the abatement

of COVID-19 related restrictions, especially in Europe for the nine months ended

September 30, 2022. This growth was partially offset by the impact of the strong

U.S. dollar on foreign exchange rates.

Americas segment profit for the three months ended September 30, 2022 was $36.6

million, 2.1% lower than the three months ended September 30, 2021. The

? decrease was primarily due to higher employee compensation as a result of

headcount growth. Americas segment profit for the nine months ended

September 30, 2022 was $105.2 million, 0.1% higher than the nine months ended

September 30, 2021.

Europe segment profit for the three months ended September 30, 2022 was $33.3

million, 50.6% higher than the three months ended September 30, 2021. Europe

segment profit for the nine months ended September 30, 2022 was $65.4 million,

35.4% higher than the nine months ended September 30, 2021. The increase was

primarily due to the recognition of a gain related to our investment in Visa

Series A preferred stock, operating income from the termination of the

? marketing alliance agreement with Liberbank, and an increase in revenue driven

by growth in our merchant portfolio, processing volumes and transactions,

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, especially for the nine months ended

September 30, 2022. This growth was partially offset by the impact of the

strong U.S. dollar on foreign exchange rates.

We processed approximately 1.3 billion transactions in the three months ended

September 30, 2022, an increase of 12.1% from the three months ended

? September 30, 2021. We processed approximately 3.6 billion transactions in the

nine months ended September 30, 2022, an increase of 19.7% from the nine months

ended September 30, 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 Agreement has been unanimously adopted by our board of directors, and
the stockholders of EVO, Inc. approved the Merger at the Special Meeting held on
October 26, 2022. In addition, the waiting period applicable under the HSR Act
expired on October 17, 2022. The consummation of the Merger remains subject to
the satisfaction or, to the extent permitted by law, waiver of other customary
closing conditions, including, (i) the receipt of certain additional competition
and other regulatory approvals outside of the United States, (ii) the lack of
any governmental authority restraining, enjoining or otherwise prohibiting the
Merger, and (iii) the absence of a "Material Adverse Effect" (as defined in the
Merger Agreement) with respect to EVO, Inc. We currently expect the Merger to be
completed by the end of the first fiscal quarter of 2023.

In connection with the execution and delivery of the Merger Agreement, EVO,
Inc., EVO, LLC and certain other parties to the TRA entered into the TRA
Amendment, pursuant to which such parties agreed to certain terms with respect
to the treatment of the TRA upon the consummation of the Merger. In the event
the Merger Agreement is terminated, the TRA Amendment will no longer be of

any
force and effect.

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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



We have seen increased economic activity resulting from the abatement of
COVID-19 related restrictions; however, the COVID-19 pandemic continues to
evolve, impacting global economic conditions and causing market volatility which
has impacted, and will likely continue to impact our business. We continue to
monitor the COVID-19 pandemic to assess and mitigate potential adverse impacts
to our business. 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.

For additional discussion regarding our risks related to the COVID-19 pandemic,
see Part I, Item 1A, "Risk Factors" included in our 2021 Annual Report on Form
10-K.

Russia and Ukraine conflict

The crisis in Russia and Ukraine that began in February 2022 continues as of the
date of this quarterly report. The current conflict between Russia and Ukraine
and the related sanctions and other penalties imposed by countries across the
globe against Russia are creating substantial uncertainty in the global economy.
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.

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
the fourth quarter and weakest in 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.

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Foreign currency translation impact on our operations


We present our financial statements in U.S. dollars and have approximately 65%
of our revenues in non-U.S. dollar 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
unaudited condensed consolidated statements of operations and comprehensive 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.

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, Raiffeisen Bank, Moneta, Citibanamex,
Sabadell, and BCI, among others. We commenced operations in Chile through our
joint venture with BCI at the end of the second quarter in 2021. Our pending
joint venture and exclusive referral relationship with the National Bank of
Greece is expected to be completed by the end of 2022, subject to regulatory
approvals and other customary conditions.

These long-term relationships are structured in various ways, such as commercial
alliance relationships and joint ventures, and our bank partners typically
provide exclusive merchant referrals and credit facilities to support the
settlement process. Prior to entering in to the Merger Agreement, we actively
evaluated opportunities to expand our business through entry into additional
long-term relationships consistent with our strategy. Our relationships with our
financial institution partners may be impacted by, among other things,
consolidations and other transactions in the banking and payments industries.

In January 2022, Citigroup Inc. announced its decision to exit the consumer,
small-business and middle-market banking operations of Citibanamex, our
financial institution partner in Mexico. The details of the proposed transaction
are unknown, including structural complexity and anticipated timing of the
consummation of their transaction. While our long term, exclusive commercial
agreement with Citibanamex remains in place, at this time, we cannot estimate
the potential impact of this development to our referral relationship with
Citibanamex or our Mexican business.

Following the merger of Unicaja Banco, S.A. and Liberbank, and pursuant to the
procedures set forth in the marketing alliance agreement related to a change of
control of Liberbank, the parties elected to terminate the marketing alliance
agreement in the third quarter of 2022. Income from liquidated damages of €7.0
million ($6.9 million, based on the foreign exchange rate as of the date
presented) was recognized in other operating income on the unaudited condensed
consolidated statements of operations. The termination of the Liberbank
marketing alliance agreement will not have a material impact to our financial
position, results of operations, or cash flows.

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 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 unaudited condensed consolidated financial statements for
additional information.

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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 Payments Institution ("PI") license, allowing them to
operate in the European Union (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 the European Payment Services Directive of 2015 ("PSD2").

PSD2 contains a number of additional regulatory mandates, such as provisions
relating to Strong Customer Authentication ("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.

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 three months ended September 30, 2022, we processed approximately 1.3
billion transactions, which included approximately 0.3 billion transactions in
the Americas and approximately 1.0 billion transactions in Europe. This
represents a decrease of 0.7% in the Americas and an increase of 16.1% in Europe
for an aggregate increase of 12.1% compared to the three months ended
September 30, 2021. Transactions processed in the Americas and Europe accounted
for 20.9% and 79.1%, respectively, of the total transactions we processed for
the three months ended September 30, 2022.

For the nine months ended September 30, 2022, we processed approximately 3.6
billion transactions, which included approximately 0.8 billion transactions in
the Americas and approximately 2.8 billion transactions in Europe. This
represents an increase of 3.3% in the Americas and an increase of 25.4% in
Europe for an aggregate increase of 19.7% compared to the nine months ended
September 30, 2021. Transactions processed in the Americas and Europe accounted
for 22.2% and 77.8%, respectively, of the total transactions we processed for
the nine months ended September 30, 2022.

The changes in the transactions processed in the three and nine months ended
September 30, 2022 were 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 increase in economic activity
from the abatement of COVID-19 related restrictions especially in Europe.

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Comparison of results for the three months ended September 30, 2022 and 2021

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



                              Three Months Ended                    Three Months Ended
(dollar amounts in
thousands)                    September 30, 2022    % of revenue    September 30, 2021    % of revenue    $ change    % change
Segment revenue:
Americas                     $             80,172          57.8%   $             79,424          58.8%   $      748       0.9%
Europe                                     58,491          42.2%                 55,617          41.2%        2,874       5.2%
Revenue                      $            138,663         100.0%   $            135,041         100.0%   $    3,622       2.7%

Operating expenses:
Cost of services and
products                     $             21,831          15.7%   $             19,121          14.2%   $    2,710      14.2%
Selling, general, and
administrative                             81,453          58.7%                 71,982          53.3%        9,471      13.2%
Depreciation and
amortization                               21,136          15.2%                 21,941          16.2%        (805)     (3.7%)
Total operating expenses                  124,420          89.7%                113,044          83.7%       11,376      10.1%
Other operating income                      6,939           5.0%                      -           0.0%        6,939     100.0%
Income from operations       $             21,182          15.3%   $             21,997          16.3%   $    (815)     (3.7%)

Segment profit:
Americas                     $             36,558          26.4%   $             37,327          27.6%   $    (769)     (2.1%)
Europe                       $             33,251          24.0%   $             22,086          16.4%   $   11,165      50.6%


Revenue

Revenue was $138.7 million for the three months ended September 30, 2022, an increase of $3.6 million, or 2.7%, compared to the three months ended September 30, 2021.

Americas segment revenue was $80.2 million for the three months ended September 30, 2022, an increase of $0.7 million, or 0.9% compared to the three months ended September 30, 2021.

Europe segment revenue was $58.5 million for the three months ended
September 30, 2022, an increase of $2.9 million, or 5.2%, compared to the three
months ended September 30, 2021. The increase 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. This growth was negatively impacted by the changes in
foreign exchange rates.

Operating expenses

Cost of services and products


Cost of services and products was $21.8 million for the three months ended
September 30, 2022, an increase of $2.7 million, or 14.2%, compared to the three
months ended September 30, 2021, primarily due to the increase in transactions
processed, which was partially offset by the impact of the strong U.S. dollar on
foreign exchange rates.

Selling, general, and administrative expenses



Selling, general, and administrative expenses were $81.5 million for the three
months ended September 30, 2022, an increase of $9.5 million, or 13.2%, compared
to the three months ended September 30, 2021. The increase was primarily due to
higher professional fees related to the Merger.

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Depreciation and amortization


Depreciation and amortization was $21.1 million for the three months ended
September 30, 2022, a decrease of $0.8 million, or 3.7%, compared to the three
months ended September 30, 2021, primarily due to the impact of the strong U.S.
dollar on foreign exchange rates, partially offset by the accelerated
amortization related to the termination of the Liberbank marketing alliance
agreement.

Other operating income

Other operating income was $6.9 million for the three months ended September 30, 2022. This income was recognized as a result of the termination of the marketing alliance agreement with Liberbank, in lieu of future merchant referrals and revenue that would have otherwise been earned.

Interest expense


Interest expense was $4.3 million for the three months ended September 30, 2022,
a decrease of $1.8 million, or 30.4%, compared to the three months ended
September 30, 2021. The decrease was primarily due to the reduction in the
credit spread on the term loan as a result of the refinancing on November 1,
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 three months ended
September 30, 2022, we recorded a tax expense of $18.5 million, which included a
net discrete tax expense of $6.3 million primarily related to changes in
uncertain tax positions. For the three months ended September 30, 2021, we
recorded a tax expense of $8.3 million, which included a net discrete tax
expense of $0.8 million.

Segment performance

Americas segment profit for the three months ended September 30, 2022 was $36.6
million, compared to $37.3 million for the three months ended
September 30, 2021, a decrease of 2.1%. The decrease was primarily due to higher
employee compensation as a result of headcount growth. Americas segment profit
margin was 45.6% for the three months ended September 30, 2022, compared to
47.0% for the three months ended September 30, 2021.

Europe segment profit was $33.3 million for the three months ended
September 30, 2022, compared to $22.1 million for the three months ended
September 30, 2021, an increase of 50.6%. The increase was primarily due to the
recognition of a gain related to our investment in Visa Series A preferred
stock, operating income from the termination of the marketing alliance agreement
with Liberbank, and an increase in revenue driven by growth in our merchant
portfolio, processing volumes and transactions, increased card adoption, and
sales-related activity, including the expansion of tech-enabled partners. This
growth was partially offset by the impact of the strong U.S. dollar on foreign
exchange rates. Europe segment profit margin was 56.8% for the three months
ended September 30, 2022, compared to 39.7% for the three months ended
September 30, 2021.

Corporate expenses not allocated to a segment were $19.4 million for the three
months ended September 30, 2022, compared to $10.5 million for the three months
ended September 30, 2021. The increase was primarily due to higher professional
fees related to the Merger.

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Comparison of results for the nine months ended September 30, 2022 and 2021



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

                              Nine Months Ended                      Nine Months Ended
(dollar amounts in
thousands)                   September 30, 2022     % of revenue    September 30, 2021     % of revenue     $ change     % change
Segment revenue:
Americas                     $           238,724           59.2%    $           226,830           62.4%    $   11,894        5.2%
Europe                                   164,536           40.8%                136,626           37.6%        27,910       20.4%
Revenue                      $           403,260          100.0%    $           363,456          100.0%    $   39,804       11.0%

Operating expenses:
Cost of services and
products                     $            66,278           16.4%    $            54,276           14.9%    $   12,002       22.1%
Selling, general, and
administrative                           224,668           55.7%                198,050           54.5%        26,618       13.4%
Depreciation and
amortization                              60,453           15.0%                 63,562           17.5%       (3,109)      (4.9%)

Total operating expenses                 351,399           87.1%                315,888           86.9%        35,511       11.2%
Other operating income                     6,939            1.7%                      -            0.0%         6,939      100.0%
Income from operations       $            58,800           14.6%    $      

     47,568           13.1%    $   11,232       23.6%

Segment profit:
Americas                     $           105,167           26.1%    $           105,084           28.9%    $       83        0.1%
Europe                       $            65,371           16.2%    $            48,267           13.3%    $   17,104       35.4%


Revenue

Revenue was $403.3 million for the nine months ended September 30, 2022, an increase of $39.8 million, or 11.0%, compared to the nine months ended September 30, 2021.

Americas segment revenue was $238.7 million for the nine months ended
September 30, 2022, an increase of $11.9 million, or 5.2%, compared to the nine
months ended September 30, 2021. The increase was primarily due to the growth in
our merchant portfolio, processing volumes and transactions, increased card
adoption, and sales-related activity.

Europe segment revenue was $164.5 million for the nine months ended
September 30, 2022, an increase of $27.9 million, or 20.4%, compared to the nine
months ended September 30, 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 increase in economic activity from the abatement of COVID-19
related restrictions. This growth was negatively impacted by the changes in
foreign exchange rates.

Operating expenses

Cost of services and products



Cost of services and products was $66.3 million for the nine months ended
September 30, 2022, an increase of $12.0 million, or 22.1%, compared to the nine
months ended September 30, 2021, primarily due to the increase in transactions
processed, which was partially offset by the impact of the strong U.S. dollar on
foreign exchange rates.

Selling, general, and administrative expenses



Selling, general, and administrative expenses were $224.7 million for the nine
months ended September 30, 2022, an increase of $26.6 million, or 13.4%,
compared to the nine months ended September 30, 2021. The increase was primarily
due to higher professional fees related to the Merger, personnel costs due to
growth in headcount, and incentive compensation expenses based on business

performance.

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Depreciation and amortization



Depreciation and amortization was $60.5 million for the nine months ended
September 30, 2022, a decrease of $3.1 million, or 4.9%, compared to the nine
months ended September 30, 2021, primarily due to the impact of the strong U.S.
dollar on foreign exchange rates, partially offset by the accelerated
amortization related to the termination of the Liberbank marketing alliance
agreement.

Other operating income

Other operating income was $6.9 million for the nine months ended September 30, 2022. This income was recognized as a result of the termination of the marketing alliance agreement with Liberbank, in lieu of future merchant referrals and revenue that would have otherwise been earned.

Interest expense


Interest expense was $12.6 million for the nine months ended September 30, 2022,
a decrease of $5.7 million, or 30.9%, compared to the nine months ended
September 30, 2021. The decrease was primarily due to the reduction in the
credit spread on the term loan as a result of the refinancing on November 1,
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 nine months ended
September 30, 2022, we recorded a tax expense of $29.6 million, which included a
net discrete tax expense of $6.3 million primarily related to changes in
uncertain tax positions. For the nine months ended September 30, 2021, we
recorded a tax expense of $19.9 million, which included a net discrete tax
expense of $4.2 million primarily related to a valuation allowance recorded to
reduce the deferred tax assets not expected to be realized in Spain.

Segment performance

Americas segment profit for the nine months ended September 30, 2022 was $105.2
million, compared to $105.1 million for the nine months ended
September 30, 2021, an increase of 0.1%. Americas segment profit margin was
44.1% for the nine months ended September 30, 2022, compared to 46.3% for the
nine months ended September 30, 2021.

Europe segment profit was $65.4 million for the nine months ended
September 30, 2022, compared to $48.3 million for the nine months ended
September 30, 2021, an increase of 35.4%. The increase was primarily due to the
recognition of a gain related to our investment in Visa Series A preferred
stock, operating income from the termination of the marketing alliance agreement
with Liberbank, and an increase in revenue driven by growth in our merchant
portfolio, processing volumes and transactions, 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. This growth was partially offset by the impact of the strong U.S.
dollar on foreign exchange rates. Europe segment profit margin was 39.7% for the
nine months ended September 30, 2022, compared to 35.3% for the nine months
ended September 30, 2021.

Corporate expenses not allocated to a segment were $37.4 million for the nine
months ended September 30, 2022, compared to $26.6 million for the nine months
ended September 30, 2021. The increase was primarily due to higher professional
fees related to the Merger.

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Liquidity and capital resources for the nine months ended September 30, 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 September 30, 2022, our capacity under the revolving credit facility portion of our Senior Secured Credit Facilities was $200.0 million, with availability of $198.9 million for additional borrowings and utilization of $1.1 million in standby letters of credit.



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 September 30, 2022, cash and cash
equivalents of $429.8 million includes cash in the United States of $101.2
million and $328.6 million in foreign jurisdictions, respectively. Of the United
States cash balances, $2.1 million is available for general purposes, and the
remaining $99.1 million is considered merchant reserves and settlement-related
cash and is therefore unavailable for our general use. Of the foreign cash
balances, $199.1 million is available for general purposes, and the remaining
$129.5 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 unaudited condensed 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.

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. 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 unaudited condensed consolidated financial statements for
additional information on the TRA.

The following table sets forth summary cash flow information for the nine months ended September 30, 2022 and 2021:



                                                             Nine Months Ended September 30,
(in thousands)                                                  2022       

2021


Net cash provided by operating activities                 $        125,438      $         72,056
Net cash used in investing activities                             (50,284)              (51,561)
Net cash used in financing activities                             (19,418)              (13,084)
Effect of exchange rate changes on cash, cash
equivalents, and restricted cash                                  (36,088)               (9,708)
Net increase (decrease) in cash, cash equivalents, and
restricted cash                                           $         19,648      $        (2,297)


Operating activities

Net cash provided by operating activities was $125.4 million for the nine months
ended September 30, 2022, an increase of $53.3 million compared to net cash
provided by operating activities of $72.1 million for the nine months ended
September 30, 2021. The increase was primarily due to net income and changes in
working capital, including the timing of settlement-related assets and
liabilities.

Investing activities


Net cash used in investing activities was $50.3 million for the nine months
ended September 30, 2022, a decrease of $1.3 million compared to net cash used
in investing activities of $51.6 million for the nine months ended
September 30, 2021. The decrease was primarily due to the acquisition of Pago
Fácil in the prior year, partially offset by the purchases of North49 and
intellectual property in the current year.

Financing activities

Net cash used in financing activities was $19.4 million for the nine months ended September 30, 2022, an increase of $6.3 million compared to net cash used in financing activities of $13.1 million for the nine months ended September 30, 2021. The increase was primarily due to a net increase in repayments of long-term debt and settlement lines of credit.

Effect of exchange rate changes on cash, cash equivalents, and restricted cash


Cash, cash equivalents, and restricted cash are impacted by the fluctuation of
foreign exchange rates upon translation of non-U.S. currencies to U.S. dollars.
The foreign exchange rate volatility in the current year, due to the
strengthening of the U.S. dollar relative to other currencies, impacted the
translation during the nine months ended September 30, 2022, compared to the
nine months ended September 30, 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

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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.

Refer to Note 13, "Long-Term Debt and Lines of Credit," in the notes to the accompanying unaudited condensed 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 September 30, 2022, we had $3.6 million outstanding under these lines of credit with additional capacity of $127.3 million to fund settlement.

Contractual obligations

Other than changes which occur in the ordinary course of business, as of September 30, 2022, there were no significant changes to the contractual obligations reported as of December 31, 2021 in our Annual Report on Form 10-K for the year ended December 31, 2021.

Critical accounting policies and estimates

Our critical accounting policies have not changed from those reported as of December 31, 2021 in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021.

New accounting pronouncements


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

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