EVERTEC, Inc. (EVTC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue for the year $932 million, a 10% increase over the prior year, 11% on a constant currency basis. This reflects strong execution across all segments, with Latin America Payments & Solutions growing 22% year-over-year due to acquisitions and better-than-expected performance in Brazil.
Merchant Acquiring revenue Grew 5% year-over-year, benefiting from higher sales volume.
Payment Services Puerto Rico revenue Grew 4% year-over-year, driven by strong performance from ATH Móvil business and higher transaction volumes.
Business Solutions revenue Grew 3% year-over-year, reflecting higher network and consulting services and project completions, partially offset by a 10% discount to Popular.
Adjusted EBITDA $373.4 million, up approximately 10% year-over-year with an adjusted EBITDA margin of 40.1%. Growth was driven by revenue outperformance and cost initiatives.
Adjusted EPS Increased 10% year-over-year to $3.62, driven by strong adjusted EBITDA growth and lower interest expense, partially offset by higher tax expense.
Operating cash flows Approximately $227 million for the full year.
Shareholder returns Approximately $82 million returned through share repurchases and dividends, with $66 million in repurchases completed during the fourth quarter.
Liquidity Approximately $490 million as of December 31, reflecting strong cash management.
Fourth quarter revenue $244.8 million, an increase of approximately 13% compared to the prior year, driven by Latin America momentum and contributions from Tecnobank acquisition.
Fourth quarter adjusted EBITDA $98.8 million, up 11.5% year-over-year with a 40.3% margin, supported by revenue outperformance and cost initiatives.
Merchant Acquiring Q4 revenue $48.2 million, a 3% year-over-year increase, driven by new merchant wins and higher non-transactional revenues.
Payment Services Puerto Rico Q4 revenue $56.4 million, a 3% year-over-year increase, supported by ATH Móvil growth and higher POS transactions.
Latin American Payments & Solutions Q4 revenue $109.3 million, a 40% year-over-year increase, driven by Tecnobank acquisition and double-digit organic growth in Brazil.
Business Solutions Q4 revenue $58.3 million, a 7% year-over-year decrease, primarily due to a 10% discount to Popular.
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Operating Highlights
Tecnobank acquisition: Closed in Q4 2025, contributing to revenue growth and expansion in Brazil.
Dimensa acquisition: Announced plans to acquire Dimensa, a B2B technology provider in Brazil, to enhance product offerings and expand the customer base.
AI integration: Embedded AI in products for risk management, fraud monitoring, and credit decisioning, improving operational efficiency and customer experience.
Latin America expansion: Revenue grew 22% YoY, driven by acquisitions and organic growth, particularly in Brazil.
Puerto Rico market: Revenue grew 4% YoY, supported by ATH Móvil and higher transaction volumes.
Revenue growth: Achieved record revenue of $932 million in 2025, a 10% increase YoY.
Adjusted EBITDA: Increased to $373.4 million with a margin of 40.1%.
AI-driven efficiencies: Operationalized AI to reduce engineering task times and improve quality assurance.
M&A strategy: Focused on acquisitions like Tecnobank and Dimensa to diversify and strengthen market position.
AI governance: Implemented a governance framework for responsible AI use, ensuring data security and alignment with business goals.
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Risk or Challenges
10% MSA discount to Popular: The 10% discount to Popular, which became effective in the fourth quarter, has negatively impacted revenue and EBITDA margins in the Business Solutions segment. This discount is expected to continue affecting year-over-year comparisons in 2026.
Higher operating expenses in Puerto Rico: Increased cloud costs and higher POS repair costs have led to a decline in adjusted EBITDA margins for the Payment Services Puerto Rico and Caribbean segment.
Lower margins in Latin America: The Latin America Payments & Solutions segment, while growing, operates at lower margins compared to other segments, which could impact overall profitability as this segment becomes a larger part of the business.
Currency fluctuations: Foreign currency headwinds, particularly in Latin America, have impacted revenue growth in the past and remain a potential risk for future financial performance.
Integration risks from acquisitions: Recent acquisitions, including Tecnobank and the planned acquisition of Dimensa, carry risks related to integration and achieving expected synergies, which could impact financial and operational performance.
Higher tax rates in Latin America: The higher tax profile in Latin America, as this region contributes more to overall revenue, is expected to increase the company's effective tax rate in 2026.
Debt-related risks: Incremental debt from the Tecnobank acquisition and potential future acquisitions could increase financial leverage and interest expenses, impacting financial stability.
Business Solutions revenue decline: The Business Solutions segment is expected to experience a revenue decline in 2026 due to the 10% discount to Popular, which is now fully embedded in the run rate.
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Guidance & Outlook
Revenue Expectations for 2026: Reported revenue is expected to be in the range of $1.024 billion to $1.036 billion, representing growth of 9.9% to 11.2% year-over-year. On a constant currency basis, revenue growth is projected between 8.7% to 10%.
Adjusted EPS for 2026: Expected to grow between 6.1% and 9.4% from the $3.62 reported for 2025, or between 4.7% and 8% on a constant currency basis.
Adjusted EBITDA Margin for 2026: Expected to be in the range of 39.5% to 40.5%.
Segment Revenue Growth Projections for 2026: - Merchant Acquiring: Mid-single-digit growth supported by stable transactions, sales volume trends, and new merchant implementations in the second half of the year.
- Payments Puerto Rico and Caribbean: Mid-single-digit growth driven by ATH Móvil momentum and POS transaction growth.
- Latin America Payments & Solutions: Growth in the mid-20s, low 20s on a constant currency basis, driven by client implementations, pipeline conversion, and contributions from Tecnobank.
- Business Solutions: Revenue expected to decline in the low to mid-single digits due to the 10% discount to Popular, partially offset by CPI escalator and demand for network and consulting services.
Capital Expenditures for 2026: Targeted at approximately $90 million, focusing on platform modernization, product innovation, and information security enhancements.
Interest Expense for 2026: Projected to remain aligned with 2025 levels, supported by debt repricing and lower interest rates, offset by incremental debt from the Tecnobank acquisition.
Tax Rate for 2026: Adjusted effective tax rate expected to be between 11% and 12%, reflecting a higher contribution from Latin America.
Dimensa Acquisition: Expected to close in the second quarter of 2026, with guidance updates to follow post-closure.
Second Half 2026 Growth Acceleration: Client wins and implementations currently in progress are expected to drive growth, particularly in Latin America, during the second half of the year.
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Shareholder Return Plan
Dividends: Returned approximately $82 million to shareholders through share repurchases and dividends in 2025.
Share Repurchase Program: Repurchased $66 million worth of shares in the fourth quarter of 2025, taking advantage of the attractive share price. The Board of Directors approved a refresh of the share repurchase program, authorizing the company to repurchase up to $150 million of shares through December 31, 2027.
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Key Q&A
Q:Can you provide additional details on the pipeline in Latin America, its size relative to previous quarters, and its role in supporting double-digit organic growth in 2026?
A:The pipeline in Latin America is healthy, with significant wins such as Banco de Chile and Grupo Aval. These deals are expected to impact growth in 2026. Additional opportunities exist, but details will only be shared after deals are signed and implemented.
Q:What made Dimensa an attractive acquisition, and what are the plans post-acquisition?
A:Dimensa is a joint venture between TOTVS and B3, offering entry into a new vertical (insurance), cross-sell opportunities, and potential cost synergies. The company plans to integrate Dimensa and leverage its 15,000 clients for growth.
Q:Should we expect the current pace of M&A activity to continue?
A:The company plans to continue investing in M&A, focusing on integrating Dimensa while exploring further opportunities. A low leverage ratio provides capacity for additional deals.
Q:Can you provide details on the size and performance of ATH Movil?
A:ATH Movil continues to show double-digit growth and is a preferred payment method in Puerto Rico. However, specific metrics were not disclosed.
Q:What are your perspectives on macro trends in Puerto Rico and expectations for 2026?
A:The macroeconomic environment in Puerto Rico remains stable, as reflected in the growth seen in 2025 and early 2026.
Q:Review of Unclear Management Responses
A:Management avoided providing specific metrics for ATH Movil, citing a lack of detailed statistics to share during the call.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Conference Today
Cruz Jusino
EVERTEC Full
Finance Investor
Full Conference
Jusino Chief
Karla Cruz
Manager Finance
Officer Karla
Relations Senior
Relations afternoon
Senior Manager
Today conference
afternoon EVERTEC
conference floor
currency income
floor Investor
rule currency
share measure
today President
EVTC Transcript
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.
EVERTEC, Inc. (EVTC) Q1 2025 Earnings Call Transcript
Positive5-10
The earnings call reveals strong financial performance with an 11.4% revenue increase and 14% adjusted EBITDA growth. Positive guidance and a focus on organic growth and margin optimization further support a positive sentiment. Although there are concerns like client attrition and currency headwinds, the robust performance and optimistic outlook for LATAM, especially Brazil, are promising. The Q&A session reinforces confidence in the company's strategy, with outperformance in key segments and a strong M&A pipeline. Given the company's market cap, a positive stock price movement of 2% to 8% is anticipated.
EVTC Slides
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Frequently Asked Questions
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