Revenue: $228.8 million, up 11% year over year. Adjusted EBITDA: $89.4 million, up 14% year over year; margin of 39.1%. Adjusted EPS: $0.87, up 21% year over year. Operating Cash Flow: $37.6 million. Liquidity: Approximately $460 million as of March 31. Merchant Acquiring Revenue: $47.6 million, up 11% year over year. Payment Services Puerto Rico and Caribbean Revenue: $55.2 million, up 4% year over year. Latin America Payments and Solutions Revenue: $83.8 million, up 13% year over year, or 22% on a constant currency basis. Business Solutions Revenue: $65.6 million, up 13% year over year. Net Debt: $704 million; net debt to trailing 12-month adjusted EBITDA of 2.04 times. Capital Expenditures: $22.3 million for the quarter. 2025 Revenue Outlook: $903 million to $911 million, constant currency growth of 6.8% to 7.7%. 2025 Adjusted EPS Growth Outlook: 4.9% to 7.6% from $3.28 reported for 2024.

Warning! GuruFocus has detected 5 Warning Signs with EVTC.

Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Evertec Inc (NYSE:EVTC) reported a strong start to 2025 with an 11.4% increase in revenue over the prior year, reaching $228.8 million. Adjusted EBITDA rose by approximately 14% year over year to $89.4 million, with a margin increase of 100 basis points to 39.1%. The company experienced double-digit organic growth in Latin America, driven by the GetNet Chile relationship and the reacceleration of the Brazil business. Evertec Inc (NYSE:EVTC) maintained strong liquidity with approximately $460 million as of March 31, 2025. The company returned $3.2 million to shareholders through dividends and has a robust M&A pipeline, indicating a focus on strategic growth.

Negative Points

Currency fluctuations posed a headwind of approximately 3.3% in the quarter, impacting revenue growth. The Business Solutions segment saw a decrease in adjusted EBITDA by approximately 4% due to a mix shift towards lower-margin hardware and software sales. The company anticipates a 10% popular discount impacting revenue and adjusted EBITDA in the fourth quarter of 2025. Evertec Inc (NYSE:EVTC) faces potential indirect impacts from tariffs and macroeconomic uncertainties, particularly in countries reliant on exports like Brazil and Chile. The loss of Mercado Libre transactions is expected to impact the Payments Puerto Rico and Caribbean segment, with effects starting in Q2 2025.

Q & A Highlights

Q: Can you elaborate on the strong revenue performance this quarter and whether macroeconomic factors are included in your guidance? A: Joaquin Castrillo, CFO, explained that Evertec outperformed expectations across all segments, with strong consumer confidence and a tailwind in spread. While some macroeconomic degradation is considered in the guidance, nothing drastic is expected, and April's performance aligns with expectations.

Story Continues

Q: How does Evertec view its position in the M&A landscape, both as an acquirer and a potential target? A: Morgan Schuessler, CEO, stated that Evertec remains focused on M&A, with a robust pipeline and recent acquisitions like Grandata and Nubity. The company is optimistic about future opportunities but does not comment on being a potential acquisition target.

Q: Can you provide insights into the reacceleration of the business in Brazil and the overall Latin American exposure? A: Schuessler noted that Brazil's business is performing well due to leadership changes and initiatives like contract repricing. While Brazil's currency fluctuations are a concern, no significant economic impacts have been observed yet.

Q: Could you discuss the progress and impact of the GetNet Chile relationship? A: Schuessler highlighted that GetNet Chile is fully rolled out, with Santander using Evertec's technology to enroll merchants. This has led to strong performance, and Evertec is optimistic about further opportunities as the market evolves.

Q: How should we think about merchant margins and the impact of Mercado Libre's exit? A: Castrillo explained that merchant margins benefited from pricing actions and cost optimizations. However, as these factors are lapped, margins may face pressure. Mercado Libre's exit will impact two-thirds of the second quarter, with minimal drop-off expected in subsequent quarters.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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