EVERTEC, Inc. (EVTC) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue Revenue for the third quarter was $228.6 million, an 8% increase over the prior year. Constant currency revenue was approximately $227.9 million, representing growth of 8%. The growth was driven by strong organic growth across all segments and contributions from acquisitions.
Adjusted EBITDA Adjusted EBITDA increased to $92.6 million, up approximately 6% year-over-year. Adjusted EBITDA margin was 40.5%, a decrease of 80 basis points from a year ago. The growth was supported by strong revenue, M&A contributions, and cost initiatives, but partially offset by higher tax expenses.
Adjusted EPS Adjusted EPS was $0.92, up 7% year-over-year. This was driven by strong adjusted EBITDA growth and lower interest expense, partially offset by higher tax expense.
Operating Cash Flow Operating cash flow for the first 9 months of the year was approximately $157 million. This reflects strong cash generation and financial stability.
Merchant Acquiring Revenue Merchant Acquiring revenue grew 3% year-over-year to $46.8 million. Growth was driven by higher sales volume, new merchant relationships, and events like the Bad Bunny residency. However, there was a slight decrease in spread due to a shift towards more card-present transactions.
Payment Services Revenue (Puerto Rico) Payment Services in Puerto Rico grew 5% year-over-year to $55.2 million. Growth was driven by strong performance in ATH Móvil, particularly ATH Business, and POS transaction growth.
Business Solutions Revenue Business Solutions revenue grew 1% year-over-year to $61.7 million. Growth was primarily driven by completed projects and higher hardware sales, partially offset by a one-time credit related to a managed services contract.
Latin America Revenue Revenue in Latin America increased 19% year-over-year to $90.4 million, or 18% on a constant currency basis. Growth was fueled by organic growth, reacceleration in Brazil, contract repricing, and contributions from acquisitions like Grandata and Nubity.
Liquidity Liquidity was approximately $518.6 million as of September 30, reflecting strong financial health and an increase of $50 million from the prior year.
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Operating Highlights
Tecnobank acquisition: Strengthened financial technology capabilities in Brazil and opened new avenues for growth and scale.
ATH Móvil: Continued strong performance, particularly ATH Business, driving higher sales volume and transactions.
Latin America expansion: Revenue increased 19% year-over-year, driven by organic growth, acquisitions (Grandata and Nubity), and new deals with Banco de Chile and Financiera Oh in Peru.
Puerto Rico market: Merchant Acquiring revenue grew 3% year-over-year, supported by higher sales volume and events like the Bad Bunny residency.
Cybersecurity incident: Incident in Brazil's PIX real-time payment system was contained, with most funds recovered and systems back online.
Cost efficiencies: Targeted cost initiatives contributed to maintaining adjusted EBITDA margin at 40.5%.
Leadership transitions: Joaquin Castrillo promoted to COO and Karla Cruz-Jusino to CFO, ensuring continuity in leadership.
M&A strategy: Acquisition of Tecnobank and previous acquisitions (Grandata and Nubity) driving diversification and growth in Latin America.
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Risk or Challenges
Cybersecurity Incident: A cybersecurity breach in the PIX real-time payment system in Brazil resulted in unauthorized activity. Although the situation was contained and most funds were recovered, the incident incurred costs and potential claims related to client losses, impacting financials.
Regulatory and Compliance Risks: The PIX system is governed by the Brazilian Central Bank, and the incident required approval from the bank to resume operations. This highlights regulatory dependencies and potential risks in maintaining compliance.
Economic and Currency Risks in Latin America: Revenue growth in Latin America is subject to foreign currency fluctuations, particularly in Brazil, which could impact financial performance.
Banco Popular Discount Impact: A 10% discount on selected services for Banco Popular, effective October 2025, is expected to reduce revenue by approximately $14 million annually, impacting primarily the Business Solutions segment.
Interest Rate and Debt Management: While interest expenses have decreased due to debt repricing, the acquisition of Tecnobank has added incremental debt, which could offset some benefits.
Tax Rate Increases: Higher tax rates are anticipated due to increased contributions from Latin America operations and reduced interest expenses, which previously provided tax efficiencies.
Operational Challenges in Latin America: While Latin America shows strong growth, the integration of acquisitions like Tecnobank and the ramp-up of new contracts may pose operational challenges and delay financial contributions.
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Guidance & Outlook
Revenue Expectations: Revenue for 2025 is expected to be between $921 million and $927 million, representing growth of 8.9% to 9.6%. On a constant currency basis, growth is expected to be 10% to 11% year-over-year.
Adjusted EPS: Adjusted EPS is projected to grow between 8.5% and 10.4% from the $3.28 reported for 2024, higher than the previous assumption of 4.8% to 7% growth.
Adjusted EBITDA Margin: The adjusted EBITDA margin is expected to be approximately 40% for the full year 2025.
Merchant Acquiring Segment: Mid-single-digit growth is anticipated for 2025, with Q4 performance expected to align with Q3 results.
Payments Puerto Rico and Caribbean Segment: Mid-single-digit growth is expected, driven by ATH Móvil momentum, partially offset by lower processing services to the LatAm segment and the impact of a 10% discount to Popular starting in October.
Latin America Payments and Solutions Segment: High teens growth is projected, driven by strong organic momentum and the Tecnobank acquisition. On a constant currency basis, growth is expected to be in the low 20s.
Business Solutions Segment: Low single-digit revenue growth is expected, reflecting the 10% discount to Popular, which impacts approximately $18 million annually, with $4 million in Q4.
2026 Preliminary Outlook: The 10% discount to Popular represents a $14 million headwind in 2026, mostly impacting the Business Solutions segment. Merchant Acquiring growth is expected to normalize, with continued strength in ATH Móvil and POS transactions in Puerto Rico. Latin America is expected to maintain momentum through organic growth and M&A, including Tecnobank. Margins will be managed through cost efficiency initiatives.
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Shareholder Return Plan
Dividends Paid: $9.6 million in dividends were returned to shareholders in the first 9 months of 2025.
Share Repurchases: $3.7 million in share repurchases were conducted in the first 9 months of 2025.
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Key Q&A
Q:What is the perspective on the growth and expansion in LatAm, including the impact of recent deals like Banco de Chile?
A:The company has built scalable products through acquisitions, leading to significant growth in LatAm. Recent deals like Banco de Chile and others in Peru demonstrate the scalability and success of their products. The Sinqia acquisition has also been integrated successfully, enabling further acquisitions like Tecnobank. The company is optimistic about continued growth in LatAm through 2026.
Q:What is the contribution of cost of living adjustments (CPI) in a typical year?
A:The CPI for September was announced at 3%, but it is currently capped at 1.5% for the MSA agreement with Popular and 2.5% for the ATH processing agreement. Starting in 2026, the escalator will allow CPI increases above 2%, capped at 2%.
Q:What are the potential cross-sell opportunities between Tecnobank and Sinqia?
A:Tecnobank has significant cross-sell opportunities with financial institutions and consortiums, which are its primary customers. Sinqia customers who do not currently use Tecnobank products represent additional opportunities. The cross-sell potential is considered relevant.
Q:What are the potential impacts of the government shutdown on the Puerto Rican economy and the company’s benefits business?
A:There has been no direct impact so far, but the situation is being closely monitored. The Puerto Rican economy relies on federal funds, and programs like NAP and SNAP could be affected. These programs are funded through November, providing some runway to assess potential impacts.
Q:Has the security incident within Sinqia affected business momentum or pipeline?
A:The security incident has not impacted the commercial business. It affected only two banks, and the issues have been resolved. The company has hardened its systems and aims to turn this into an advantage. The incident was part of a broader issue affecting multiple technology companies in Brazil.
Q:What caused the year-over-year margin decline in the third quarter, and was it in line with expectations?
A:The year-over-year margin decline was due to a one-time event in LatAm last year that was highly margin accretive. Sequential growth in margins aligned with expectations. A slight decline in merchant acquiring margins was due to a decrease in average ticket size, despite good sales volume. The trends will continue to be monitored.
Q:What are the updated thoughts on capital allocation, including M&A and stock buybacks?
A:The company is evaluating capital allocation quarterly, balancing stock price and M&A opportunities. They have $150 million available under the share repurchase program, which ends in 2026. The balance sheet is in good shape, and the company remains focused on making the right decisions.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific contribution of cost of living adjustments (CPI) in a typical year, providing only capped percentages and future escalator details without quantifying the typical contribution.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Accounting Officer
America win
Aval Colombia
BCB context
BCB security
BCB system
Banco de
Bank BCB
Bank Sinqia
CFO
Central Bank
Chief Officer
Cruz Jusino
Jusino Chief
LatAm
PIX
Tecnobank acquisition
capability Brazil
continuity
credit
cybersecurity incident
finance
fund
institution
market EVERTEC
monitoring
payment system
presence
solution
strength
system Brazil
track record
transition
update Puerto
update cybersecurity
vision
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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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
