EVERTEC, Inc. (EVTC) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong financial performance with revenue and EBITDA growth, positive guidance, and a focus on cost initiatives. The Q&A reveals optimism in tech modernization, repricing, and M&A opportunities, with management expressing confidence in the pipeline and expansion in Mexico. Despite some avoidance of specifics, the overall sentiment is positive, supported by strong growth in ATH Móvil and raised full-year guidance. Given the company's market cap, a positive stock price reaction (2% to 8%) is anticipated over the next two weeks.
Key Financial Performance
Revenue $230 million, an 8% increase over the prior year, while constant currency revenue was approximately $233 million, representing growth of 10%. The growth was driven by solid performance across all segments.
Adjusted EBITDA $93 million, up approximately 8% year-over-year, with an adjusted EBITDA margin of 40.3%. The growth was attributed to strong revenue performance.
Adjusted EPS $0.89, up 7% year-over-year, driven by strong adjusted EBITDA growth and lower interest expense, partially offset by higher tax expense and operating depreciation and amortization.
Operating Cash Flow Approximately $86 million during the first half of the year. The company returned cash to shareholders through $6.4 million in dividends and $3.7 million of share repurchases.
Merchant Acquiring Revenue $47.3 million, a 4% increase year-over-year, driven by an improvement in spread and sales volume growth. Lower gas prices negatively impacted sales volume growth, but this was offset by an increase in government-related payments related to tax returns.
Payment Services Puerto Rico Revenue $56.4 million, a 4% increase year-over-year, driven by ATH Móvil business and 5% POS transaction growth. This was partially offset by a decrease in services provided to the Latin America segment due to customer attrition.
ATH Móvil Revenue Grew 17% year-over-year, driven by strong performance in ATH business and POS transaction growth.
Latin America Payments & Solutions Revenue $86.1 million, up 15% year-over-year or 20% on a constant currency basis. Growth was driven by organic growth, strong performance in the GetNet Chile relationship, reacceleration in Brazil, and contributions from Grandata and Nubity acquisitions.
Business Solutions Revenue $64.5 million, a 4% increase year-over-year, driven by projects completed in the prior year and an increase in IT consulting services. Adjusted EBITDA was $26 million, down 13% year-over-year, with a margin decrease of 750 basis points due to the prior year's highly accretive nonrecurring project.
Corporate and Other Adjusted EBITDA Negative $9.8 million, or 4.3% of total revenue, reflecting benefits from expense management initiatives.
Net Debt Position $673.6 million, with a weighted average interest rate of approximately 6.55%, a decrease of 60 basis points from the second quarter of 2024. Net debt to trailing 12-month adjusted EBITDA was approximately 1.95x, down from 2.28x a year ago.
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Operating Highlights
ATH Móvil: Revenue grew 17% year-over-year, driven by strong performance in ATH business and POS transaction growth.
Grandata and Nubity acquisitions: Contributed to 15% year-over-year revenue growth in Latin America Payments & Solutions, with 20% growth on a constant currency basis.
Puerto Rico market: Merchant Acquiring revenue grew 4% year-over-year due to pricing initiatives and sales volume growth. Payment Services Puerto Rico also grew 4%, supported by ATH Móvil and POS transaction growth.
Latin America market: Revenue increased 15% year-over-year (20% on constant currency), driven by organic growth and contributions from acquisitions. Pipeline remains active with potential for future wins.
Revenue growth: Total revenue for Q2 2025 was $230 million, an 8% increase year-over-year, with constant currency revenue at $233 million (10% growth).
Adjusted EBITDA: Increased to $93 million, up 8% year-over-year, with a margin of 40.3%.
Cash flow and liquidity: Generated $86 million in operating cash flow in H1 2025. Liquidity remains strong at $485 million as of June 30.
Share repurchase program: Board approved a refresh of the share repurchase program, authorizing up to $150 million in repurchases through December 31, 2026.
Cost initiatives: Implemented to offset the impact of a 10% discount to Popular MSA services starting Q4 2025, with gradual margin improvement expected.
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Risk or Challenges
Potential Tariffs in Latin America: The company remains vigilant about potential tariffs that might be imposed in the countries where it operates, which could impact operations.
Attrition in Latin America Segment: The Latin America segment experienced customer attrition, particularly related to the MELI relationship, which negatively impacted transactions processed.
Foreign Currency Headwinds: The company faced headwinds from the Brazilian real, which affected constant currency revenue growth.
Discount to Popular MSA Services: A 10% discount to Popular MSA services in Q4 2025 is expected to impact revenue and adjusted EBITDA by approximately $4 million per quarter.
Higher Processing Costs: Merchant Acquiring segment faced higher processing costs due to increased overall transactions, despite revenue growth.
Decreasing Margins in Business Solutions: Margins in the Business Solutions segment decreased due to the absence of highly accretive nonrecurring projects recognized in the prior year.
Tax Expense Increase: Higher tax expenses were noted, driven by growth in higher tax jurisdictions and reduced interest expense, which impacts tax efficiencies.
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Guidance & Outlook
Revenue Expectations: Revenues are expected to be between $901 million and $909 million for 2025, representing growth of 6.6% to 7.6%. On a constant currency basis, growth is expected to be 7.8% to 8.7% year-over-year.
Adjusted EPS: Adjusted EPS is expected to grow between 4.8% and 7% from the $3.28 reported for 2024, higher than the previous assumption of 2.4% to 5.2% growth.
Adjusted EBITDA Margin: The adjusted EBITDA margin is expected to remain between 39.5% and 40.5% for 2025.
Segment Revenue Growth: Merchant Acquiring is expected to see mid-single-digit growth. Payments Puerto Rico and Caribbean are expected to see low to mid-single-digit growth. Payments Latin America is expected to see low double-digit growth, with constant currency growth in the low to mid-teens. Business Solutions is expected to see low single-digit revenue growth.
Foreign Currency Impact: Improvement in foreign currency, particularly the Brazilian real, is incorporated into the outlook for the rest of the year.
Capital Expenditures: CapEx is expected to be approximately $85 million for 2025.
Tax Rate: The adjusted effective tax rate is expected to be between 6% and 7%.
Share Repurchase Program: The Board of Directors has authorized a share repurchase program of up to $150 million through December 31, 2026.
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Shareholder Return Plan
Dividends Paid: $6.4 million in dividends were returned to shareholders during the first half of the year.
Share Repurchase Program: The Board of Directors approved a refresh of the share repurchase program, authorizing the company to repurchase up to an aggregate of $150 million of shares of its common stock through December 31, 2026. Approximately $3.7 million worth of shares were repurchased during the quarter.
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Key Q&A
Q:What progress has been made on Sinqia's initiatives like tech modernization and repricing?
A:Sinqia grew double digits this quarter, outperforming expectations. The company focused on modernizing technology and platforms to maximize short-term revenue, a multiyear project expected to continue into 2026. Repricing legacy contracts to align with market rates has shown benefits this year and is expected to continue into next year. Margin optimization efforts have also contributed to the segment's strong performance.
Q:What is the outlook for the second half of the year, and how are macro factors and tariffs expected to impact it?
A:The second half outlook is better than initially thought, partly due to lower FX headwinds. Merchant Acquiring is lapping pricing initiatives, which may reduce tailwinds. Tariffs are included conservatively in the guidance, but no substantial impact is expected. Payments Puerto Rico is expected to perform similarly to the past quarter, with some slowdown in Q4 due to the Popular discount. Latin America will anniversary two acquisitions in Q4, and a $1.8 million catch-up from GetNet in Q3 last year will not recur. Business Solutions will see the full effect of the discount in Q4.
Q:What areas of the business are driving excitement in the pipeline, and has there been any change in decision-making due to tariffs?
A:The company has an active organic pipeline and is optimistic about announcing additional opportunities this year. Tariffs have not impacted demand, as financial institutions are making long-term decisions to upgrade or change technology. The company remains enthusiastic about its pipeline.
Q:What is driving the 17% revenue growth in ATH Móvil?
A:ATH Móvil's growth is driven by increased usage and network effects in Puerto Rico, with nearly 2 million users. Businesses of all sizes, including medium and large ones, are adopting the contactless technology. More volume and business sign-ups are contributing to the growth.
Q:How does Sinqia's history of acquisitions impact the possibility of future acquisitions?
A:The company has focused on integrating Sinqia and improving its growth rate. With a deep understanding of the Brazilian market and an active M&A function, the company is confident in rolling acquisitions into Brazil. It is also exploring opportunities across the region, including Mexico.
Q:What are the company's priorities in Mexico?
A:The company is focused on issuing in Mexico and integrating Grandata and Nubity. These capabilities have opened conversations with other institutions. Mexico is a priority market, and the company is actively seeking opportunities and having good conversations.
Q:Is Sinqia's growth back to the desired level?
A:Yes, Sinqia exceeded expectations for the quarter. After integration efforts and changes, the company is pleased with its performance, which is back to the desired growth rate.
Q:What factors contributed to raising the full-year guidance?
A:The three key buckets in LatAm (Brazil, organic business, and M&A) are performing well. Slight improvement in foreign currency is also contributing. However, the company will anniversary some M&A in Q4.
Q:What is the company's approach to M&A, and is it ready for more material deals?
A:The company is not focused on another transformational deal like Sinqia but is in good shape for M&A. It has an active pipeline and plans to pursue deals similar in size to Grandata and Nubity, with M&A being an important part of growth.
Q:What is EVERTEC's competitive advantage in Latin America?
A:EVERTEC's competitive advantage includes proprietary technology that is customizable and tested, industry expertise in merchant acquiring, compliance and cybersecurity capabilities, and a local presence in each country with Spanish-speaking developers.
Q:What trends have been observed in Merchant Acquiring amidst macro uncertainty?
A:Consumer spend trends have held up well. Gas prices have been a drag due to lower prices, while government payments saw strong volume due to tax return season. Overall, consumer resilience has been observed.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numerical details or clear guidance on certain topics, such as the exact growth rate of Sinqia or the precise impact of tariffs and FX headwinds on the second half outlook. Additionally, while they expressed optimism about the pipeline and M&A opportunities, they did not disclose specific deals or timelines.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AG Research
Associates Inc
Bank AG
Bruyette Woods
CEO Director
CFO Morgan
Castrillo Salgado
Conference Instructions
Cristopher Kennedy
Director Nathaniel
Division Cristopher
Division Davis
Division Eric
Division PM
Division Vasundhara
ET day
Eric Friedman
Executive VP
Financial Group
Friedman Susquehanna
Govil Keefe
Group LLLP
Inc Research
Instructions event
Joaquin Castrillo
Keefe Bruyette
LLC Research
LLLP Research
Nathaniel Svensson
Officer Joaquin
Raymond Associates
Relations Officer
Research Division
Salgado Executive
EVTC Transcript
EVERTEC, Inc. (EVTC) Q1 2026 Earnings Call Transcript
Unknown5-6
The earnings call summary shows positive financial performance with a 10% revenue increase and improved EBITDA and EPS. However, the lack of discussion on strategic initiatives, risks, and shareholder returns limits the positive impact. The Q&A section does not provide additional insights or concerns, and there is no mention of significant catalysts like new partnerships or guidance changes. Given the market cap, the stock is likely to experience a neutral movement in the short term.
EVERTEC, Inc. (EVTC) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call reflects strong financial performance with 10% revenue growth, optimistic guidance, and a robust share repurchase program. Despite some concerns over increased debt and tax rates, the company shows resilience through strategic acquisitions and organic growth, particularly in Latin America. The Q&A indicates analysts' positive sentiment towards growth prospects, especially in Latin America, and the company's M&A strategy. With a market cap of $2.1 billion, these factors suggest a likely stock price increase in the range of 2% to 8% over the next two weeks.
EVERTEC, Inc. (EVTC) Q3 2025 Earnings Call Transcript
Positive11-7
The earnings call reflects a positive sentiment with strong revenue growth in Latin America, increased adjusted EPS, and robust liquidity. Although there was a slight decline in margins, it was attributed to a one-time event. The company has also announced a $150 million share repurchase program, which is a positive indicator for shareholders. The Q&A section highlights successful integration of acquisitions and optimism for continued growth, particularly in LatAm. Overall, despite some uncertainties, the company's strong fundamentals and strategic initiatives suggest a positive stock price movement.
EVERTEC, Inc. (EVTC) Q2 2025 Earnings Call Transcript
Positive7-31
The earnings call indicates strong financial performance with revenue and EBITDA growth, positive guidance, and a focus on cost initiatives. The Q&A reveals optimism in tech modernization, repricing, and M&A opportunities, with management expressing confidence in the pipeline and expansion in Mexico. Despite some avoidance of specifics, the overall sentiment is positive, supported by strong growth in ATH Móvil and raised full-year guidance. Given the company's market cap, a positive stock price reaction (2% to 8%) is anticipated over the next two weeks.
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Frequently Asked Questions
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