EVERTEC INC ((EVTC)) has held its Q1 earnings call. Read on for the main highlights of the call.
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EVERTEC Inc. Reports Strong Start to 2025 Amid Growth and Challenges
The recent earnings call for EVERTEC Inc. painted a picture of a robust beginning to 2025, marked by significant revenue growth and improved margins. The company showcased positive performance across its segments, particularly in Latin America. However, the call also highlighted challenges such as currency headwinds, attrition from key clients like MercadoLibre, and potential macroeconomic impacts from tariffs.
Strong Revenue Growth
EVERTEC reported a revenue of $228.8 million for the first quarter of 2025, marking an impressive 11.4% increase over the previous year. When adjusted for constant currency, the revenue growth stood at 15%, underscoring the company’s solid performance despite external challenges.
Adjusted EBITDA and Margin Improvement
The company achieved an adjusted EBITDA of $89.4 million, reflecting a 14% year-over-year increase. This was accompanied by a margin improvement of 100 basis points, bringing the margin to 39.1%. These figures highlight EVERTEC’s operational efficiency and effective cost management.
Adjusted EPS Growth
EVERTEC’s adjusted earnings per share (EPS) saw a substantial 21% increase year-over-year, reaching $0.87. This growth was driven by strong EBITDA performance, lower interest expenses, and a reduced share count, showcasing the company’s financial health.
Robust Performance in Latin America
Latin America emerged as a strong performer for EVERTEC, with revenue growth of 13% year-over-year, or 22% in constant currency. The region benefited from a strong relationship with GetNet Chile and a reacceleration of business in Brazil.
Improved 2025 Outlook
EVERTEC raised its constant currency revenue growth expectations for 2025 to a range of 6.8% to 7.7%, up from the previous forecast of 5.5% to 6.7%. This optimistic outlook reflects the company’s confidence in its strategic initiatives and market positioning.
Merchant Acquiring Segment Success
The Merchant Acquiring segment reported a net revenue increase of 11% year-over-year, reaching $47.6 million. The segment also experienced a significant margin increase of 510 basis points, demonstrating its strong market presence and profitability.
Financial Stability
EVERTEC maintained strong liquidity with approximately $460 million as of March 31, 2025, and a net debt to trailing 12-month adjusted EBITDA ratio of approximately 2.04x. This financial stability positions the company well for future growth and investment opportunities.
Currency Headwinds
Currency fluctuations, particularly involving the Brazilian real, posed a headwind of approximately 3.3% for the quarter. This challenge underscores the importance of effective currency risk management in the company’s operations.
Challenges in Business Solutions Margin
The Business Solutions segment faced a 4% decrease in adjusted EBITDA and a margin decline of 580 basis points. This was attributed to a revenue mix shift towards lower-margin hardware and software sales, highlighting the need for strategic adjustments in this segment.
MercadoLibre Attrition Impact
The loss of the MercadoLibre account is expected to impact EVERTEC’s revenue from the second quarter onwards, with significant attrition anticipated in Latin America. This development presents a challenge that the company will need to address strategically.
Potential Impact of Tariffs
Concerns were raised about tariffs affecting customer confidence and economic conditions in countries like Brazil and Chile. These factors could potentially disrupt payment volumes, posing a risk to EVERTEC’s operations in these markets.
Forward-Looking Guidance
During the earnings call, EVERTEC’s management provided a strong outlook for 2025, despite macroeconomic uncertainties. The company anticipates constant currency revenue growth of 6.8% to 7.7% and adjusted EPS growth of 4.9% to 7.6%. An expected adjusted EBITDA margin between 39.5% and 40.5% further underscores the company’s positive trajectory.
In conclusion, EVERTEC Inc.’s earnings call reflected a positive start to 2025, with strong revenue growth and improved margins. While challenges such as currency headwinds and client attrition were noted, the company’s robust performance in Latin America and optimistic forward-looking guidance highlight its resilience and strategic focus.