EVERTEC, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Mac Schuessler noted a strong start to 2025 with revenue growth across all segments, adjusted EBITDA up 14% y-o-y, and strong liquidity.
• Puerto Rico update: Merchant Acquiring grew 11%, Payments Puerto Rico grew 4%, Business Solutions grew 13%. Economy stable with low unemployment; tourism mixed.
• LatAm update: Revenue grew 13% y-o-y (22% constant currency) driven by GetNet Chile and Brazil reacceleration.
• Tariff discussions: Cautious due to potential indirect impacts on business from economic disruptions in export-reliant countries.

Segment Performance

• Merchant Acquiring: Net revenue increased approximately 11% year-over-year to $47.6 million. Adjusted EBITDA was $20.4 million with an adjusted EBITDA margin of 42.7%, an increase of approximately 510 basis points from the previous year.
• Payment Services, Puerto Rico and Caribbean: Revenue in the quarter was $55.2 million, an increase of approximately 4% from the prior year. Adjusted EBITDA was $31.4 million, up approximately 4% from the prior year, and adjusted EBITDA margin was 57%, down approximately 20 basis points from the prior year.
• Latin America Payments & Solutions: Revenue in the quarter was $83.8 million, up approximately 13% year-over-year or 22% on a constant currency basis. Adjusted EBITDA was $24.9 million, an increase of approximately 53% from the prior year, with an adjusted EBITDA margin of 29.7%, up approximately 780 basis points.
• Business Solutions: Segment revenue increased approximately 13% to $65.6 million. Adjusted EBITDA was $22.2 million, down approximately 4% from a year ago, and adjusted EBITDA margin was down approximately 580 basis points from the prior year to 33.9%.

Guidance

• Constant currency revenue expected $903M-$911M (6.8%-7.7% growth), GAAP growth 5.2%-6.1%.
• Constant currency adjusted EPS expected 4.9%-7.6% growth.
• Adjusted EBITDA margin 39.5%-40.5%, effective tax rate 6%-7%.
• Segment-specific: Merchant Acquiring mid-single-digit growth, Payments PR/Caribbean low single-digit, LatAm low double-digit constant currency, Business Solutions low single-digit growth with margin improvement.

Risks

• Tariff discussions: Potential indirect impacts on customer confidence, employment, and business due to economic disruptions in countries relying on exports.

Question and Answer

Q: About revenue outperformance and macro impact on guidance A: Outperformed in segments, slight macro monitoring considered in guidance Q: M&A strategy A: Focus on M&A, robust pipeline with assets being looked at Q: Brazil performance A: Reacceleration due to initiatives, positive growth seen Q: GetNet Chile partnership A: Successful rollout, over 200k merchants using tech, potential for more opportunities Q: Merchant margins and MercadoLibre roll-off A: Margins driven by spread, pricing, and bank regulation; MercadoLibre impact in 2Q Q: Hurricane relief funds in Puerto Rico A: Funds flowing, reflected in performance