Evertec Inc. Earnings Call: Strong Growth Amid Challenges

EVERTEC INC ((EVTC)) has held its Q3 earnings call. Read on for the main highlights of the call.

Evertec Inc. Reports Strong Revenue Growth Amidst Challenges in Latest Earnings Call

The recent earnings call for Evertec Inc. highlighted a robust performance in terms of revenue and strategic acquisitions, particularly in Latin America. Despite these positive developments, the company faces challenges such as a cybersecurity incident in Brazil and pressure on margins, which slightly temper the optimistic outlook.

Strong Revenue Growth

Evertec Inc. reported a solid revenue growth for the third quarter, reaching $228.6 million, marking an 8% increase over the previous year. On a constant currency basis, revenue was approximately $227.9 million, also reflecting an 8% growth. This demonstrates the company’s strong market position and effective strategies in driving revenue.

Adjusted EBITDA and EPS Growth

The company saw an increase in adjusted EBITDA, which rose to $92.6 million, up 6% year-over-year, with an adjusted EBITDA margin of 40.5%. Additionally, the adjusted earnings per share (EPS) increased by 7% year-over-year to $0.92, showcasing Evertec’s ability to enhance profitability.

Successful Acquisitions

Evertec successfully closed the acquisition of Tecnobank, bolstering its financial technology capabilities in Brazil. Furthermore, the acquisitions of Grandata and Nubity continue to perform well, contributing positively to the company’s growth and expansion strategy.

Key Wins in Latin America

The company signed significant deals with Banco de Chile and Financiera Oh in Peru, underscoring its strong market presence and potential for future growth in the Latin American region.

Strong Performance in Puerto Rico

In Puerto Rico, Evertec’s Merchant Acquiring revenue grew by 3% year-over-year, while Payment Services experienced a 5% year-over-year growth, indicating steady performance in this key market.

Cybersecurity Incident in Brazil

A cybersecurity incident was detected in Sinqia’s PIX environment in Brazil, affecting two banks. Although the majority of funds were recovered, the incident resulted in costs and potential claims, highlighting the importance of cybersecurity measures.

Margin Pressure

The company experienced a decrease in adjusted EBITDA margin by 80 basis points year-over-year to 40.5%. Specific segments faced margin declines due to factors such as lower average tickets, indicating areas where operational efficiency could be improved.

Forward-Looking Guidance

Looking ahead, Evertec provided updated guidance for fiscal year 2025, with expected revenues between $921 million and $927 million, representing an 8.9% to 9.6% growth. On a constant currency basis, growth is anticipated to be 10% to 11%. Adjusted EPS is projected to grow between 8.5% and 10.4% from the $3.28 reported for 2024. The company expects an adjusted EBITDA margin of approximately 40% and an adjusted effective tax rate ranging from 6% to 7%. This guidance reflects continued momentum across segments, particularly in Latin America, driven by strong organic growth and acquisitions.

In conclusion, Evertec Inc.’s latest earnings call reflects a strong performance with significant revenue growth and successful acquisitions, particularly in Latin America. However, challenges such as a cybersecurity incident in Brazil and margin pressure remain areas to address. The forward-looking guidance suggests continued growth and momentum, making Evertec a company to watch in the coming fiscal year.