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EI

EVERTEC, Inc. (EVTC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered double‑digit top‑line growth and margin expansion: Revenue rose 11% to $228.8M; Adjusted EBITDA rose 14% to $89.4M with Adjusted EBITDA margin up ~100 bps to 39.1% .
  • Results beat S&P Global consensus on revenue and EPS; adjusted EPS of $0.87 exceeded the Street’s “Primary EPS” consensus of $0.80; revenue of $228.8M beat $218.0M; management raised constant‑currency revenue and CC adjusted EPS outlook for 2025 * .
  • Guidance raised: CC revenue to $903–$911M and CC adjusted EPS to $3.44–$3.53; GAAP revenue guidance narrowed to $889–$897M, GAAP adjusted EPS raised at the low end to $3.36–$3.45; tax rate 6–7%, CapEx ~$85M unchanged .
  • Key narrative drivers: LatAm reacceleration (Brazil, Getnet Chile), Puerto Rico stability with ATH Movil/volume growth, merchant acquiring spread tailwinds; watch for Q2 client attrition impact and Popular 10% discount in Q4 2025 .

What Went Well and What Went Wrong

What Went Well

  • Broad‑based growth across all segments with constant‑currency revenue up ~15% driven by organic performance and Q4 2024 tuck‑ins; “another quarter of strong revenue and earnings growth” per CEO Mac Schuessler .
  • LatAm segment momentum: revenue +13% YoY (+22% CC); Brazil reaccelerated after repricing and modernization; Getnet Chile fully rolled out with >200,000 merchants using EVTC’s tech, driving double‑digit organic growth .
  • Margin execution: company‑wide Adjusted EBITDA margin +~100 bps to 39.1%; Merchant Acquiring adjusted EBITDA margin rose ~510 bps to 42.7% on spread/pricing and cost optimization .

What Went Wrong

  • Business Solutions margin compression (~580 bps to 33.9%) on mix shift to lower‑margin hardware/software and higher professional services; adjusted EBITDA down ~4% YoY for the segment .
  • FX headwinds (notably Brazilian real) reduced reported growth vs constant currency; management assumes ~160 bps FX headwind for FY25 GAAP growth .
  • Anticipated client attrition and lower inter‑segment processing volumes to weigh on Puerto Rico processing services and LatAm beginning in Q2; Popular 10% discount expected to reduce revenue/EBITDA by ~$4M in Q4 2025 .

Financial Results

Consolidated Performance vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$211.8 $216.4 $228.8
GAAP Diluted EPS ($)$0.38 $0.62 $0.50
Adjusted EPS ($)$0.86 $0.87 $0.87
Adjusted EBITDA ($USD Millions)$87.4 $88.6 $89.4
Adjusted EBITDA Margin (%)41.3% 40.9% 39.1%

Actual vs S&P Global Consensus (Q1 2025)

MetricConsensusActualSurprise
Revenue ($USD Millions)$218.0*$228.8 +$10.8M (beat)*
Primary EPS ($)$0.80*$0.87 +$0.07 (beat)*
EBITDA ($USD Millions)$85.6*$79.4 −$6.2M (miss)*

Values with asterisks retrieved from S&P Global.*

Segment Breakdown

SegmentQ1 2024 Revenue ($M)Q1 2025 Revenue ($M)Q1 2024 Adj. EBITDA ($M)Q1 2025 Adj. EBITDA ($M)
Payments – Puerto Rico & Caribbean$53.0 $55.2 $30.4 $31.4
Latin America Payments & Solutions$74.2 $83.8 $16.3 $24.9
Merchant Acquiring, net$43.1 $47.6 $16.2 $20.4
Business Solutions$58.1 $65.6 $23.0 $22.2
Corporate & Other$(23.2) $(23.4) $(7.7) $(9.5)
Total$205.3 $228.8 $78.2 $89.4

Segment margin reference points from call: Merchant Acquiring 42.7%, Puerto Rico & Caribbean 57.0%, LatAm 29.7%, Business Solutions 33.9% .

KPIs and Operating Metrics

KPIQ1 2025
Operating Cash Flow ($M)$37.6
Capital Expenditures ($M)$22.3
Liquidity ($M)$459.7
Net Debt ($M)$704
Net Debt / TTM Adjusted EBITDA (x)~2.04x
Puerto Rico POS Transaction Growth (%)~4%
Merchant Acquiring Revenue Growth (%)~11% YoY

Guidance Changes

MetricPeriodPrevious Guidance (as of Q4 2024)Current Guidance (as of Q1 2025)Change
Revenue (GAAP)FY 2025$889–$899M $889–$897M Narrowed; high end −$2M
Revenue (Constant Currency)FY 2025~5.5%–6.7% growth $903–$911M (~6.8%–7.7% growth) Raised
Adjusted EPS (GAAP)FY 2025$3.34–$3.45 $3.36–$3.45 Raised low end by $0.02
Adjusted EPS (Constant Currency)FY 2025~2.6%–6.0% growth $3.44–$3.53 (~4.9%–7.6% growth) Raised
Adjusted EBITDA MarginFY 2025Not specified39.5%–40.5% (assumption) Provided on call
Adjusted Tax RateFY 2025~6%–7% ~6%–7% (unchanged)
Capital ExpendituresFY 2025~$85M ~$85M (unchanged)
DividendQ2 2025—$0.05/share declared, payable June 6 Initiated/maintained quarterly dividend

Earnings Call Themes & Trends

TopicQ3 2024 (Prev‑2)Q4 2024 (Prev‑1)Q1 2025 (Current)Trend
LatAm momentum (Brazil, Getnet Chile)Getnet Chile one‑timers ($1.8M) and Sinqia contribution; building momentum Continued volumes; acquisitions closed (Nubity) Double‑digit organic growth; Brazil reacceleration; Getnet Chile fully rolled out, >200k merchants Improving, broadening
Puerto Rico economy/ATH MovilSolid ATH Movil and transaction growth Ongoing transaction growth ATH Movil strong; PR employment up, airport pax +9% YoY; POS transactions +4% Stable to positive
Merchant acquiring spread/pricingPricing/spread tailwinds Similar tailwinds Spread tailwinds; margin +510 bps; lapping pricing later in year Near‑term tailwind; normalizing H2
FX headwindsFX impact noted FX impact ~160 bps FX headwind assumed for FY25 GAAP Persistent headwind
Client attrition/process volumes—Noted risks (general) Q2 attrition impact; lower PR processing to LatAm Headwind starting Q2
Guidance/toneFY24 guide raised during year FY25 guide introduced CC revenue/EPS raised; confident but cautious on macro/tariffs Constructive with caveats
Popular contract economics——10% discount in Q4 2025 to impact revenue/EBITDA by ~$4M; offset via cost initiatives Known Q4 headwind

Management Commentary

  • “We are pleased to report another quarter of strong revenue and earnings growth… Given our first quarter results, we are raising our outlook for the remainder of the year.” — Mac Schuessler, CEO .
  • “Constant currency revenue growth was 15%… most of the headwind coming from the Brazilian real… adjusted EBITDA margin was 39.1%, up ~100 bps.” — CFO Joaquín Castrillo .
  • “Getnet… is fully rolled out… >200,000 merchants… the most successful bank using our technology to move away from Transbank.” — CEO Mac Schuessler .
  • “We continue to expect revenue growth of low single digits for Business Solutions for the full year, with margins improving from the level reported in the first quarter.” — CFO Joaquín Castrillo .
  • “We are now assuming 160 bps of foreign currency headwinds… Constant currency revenue $903–$911M… CC adjusted EPS growth 4.9%–7.6%.” — CFO Joaquín Castrillo .

Q&A Highlights

  • Outperformance sources: Strong consumer confidence; merchant spread tailwinds; Brazil reacceleration; one‑time hardware/software sales; low‑end guide includes room for modest confidence degradation .
  • Merchant margins outlook: Spread drivers include card‑not‑present mix, pricing laps later in year, and regulated bank effect in PR; expect margin pressure as average ticket declines — no further expansion expected .
  • LatAm client attrition timing: About two‑thirds of Q2 impact, minimal delta Q2 to Q3; one‑timers in Q1 LatAm won’t recur .
  • M&A pipeline: Robust; focus on running best business while evaluating assets (recent Grandata/Nubity closes) .
  • Macro/tariffs: Monitoring potential indirect impacts; no material disruption yet; FX headwinds concentrated in Brazil .

Estimates Context

  • Q1 2025 revenue and EPS beat S&P Global consensus; EBITDA missed. Adjusted EPS $0.87 vs consensus $0.80; revenue $228.8M vs $218.0M; EBITDA $79.4M vs $85.6M, reflecting mix (lower‑margin hardware/software) and FX * .
  • Forward quarters: Street models imply sustained mid‑single‑digit growth with EPS of ~$0.89 in Q3 2025 and ~$0.90 in Q4 2025 and revenue of ~$224.7M/$236.8M respectively; management’s raised constant‑currency outlook suggests potential upward revisions if FX stabilizes and LatAm resilience continues [GetEstimates]* .

Values with asterisks retrieved from S&P Global.*

Key Takeaways for Investors

  • EVTC’s multi‑engine growth (PR, Merchant Acquiring, LatAm) is intact; raised CC revenue/EPS guide signals confidence in execution despite FX and macro .
  • Near‑term model adjustments: Raise FY25 CC revenue/EPS; consider FX headwind and Q2 LatAm attrition; temper Business Solutions margins given hardware/software mix .
  • Watch spread normalization: Merchant Acquiring margin expansion likely plateaus as pricing laps; average ticket declines could pressure margins in H2 .
  • Structural headwind in Q4: Popular 10% discount will shave ~$4M from revenue/EBITDA; management cost actions aim to offset — model a Q4 margin dip .
  • Brazil FX and macro: Currency volatility remains the principal exogenous risk; Getnet Chile strength and Brazil reacceleration are important offsets .
  • Capital deployment: Cash flow robust; liquidity ~$460M; dividend maintained at $0.05; buyback capacity ~$138M through 2025 offers optionality .
  • Catalyst path: Continued LatAm outperformance and incremental contract wins (Chile banks), plus stabilization in FX, could support estimate revisions and multiple expansion .