EVTC — EVERTEC, Inc.

EVERTEC (EVTC) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Total Revenue: $275 million, up 20% year-over-year; 16% growth on a constant currency basis.
• Adjusted EBITDA: $109 million, an 18% increase year-over-year, with a margin of 39.8%.
• Adjusted Net Income: $65 million, up 12% year-over-year.
• Adjusted EPS: $1.05, an 18% increase from $0.89 in the prior year.
• Cash Flow: Generated $91 million from operating activities; liquidity at $420 million.
• Net Debt: Approximately $1 billion, with a net debt to trailing 12 months adjusted EBITDA ratio of 2.55x.

2. Strategic Updates and Business Highlights

• Cybersecurity Incident: Addressed a cybersecurity incident from June; no operational disruptions reported, with ongoing remediation efforts.
• Acquisitions:
  • Completed the acquisition of Dimensa, enhancing software capabilities for financial institutions.
  • Acquired BBChain, expanding into blockchain and digital asset solutions.
• Organic Growth: Significant agreements with Transbank in Chile and Clip in Mexico, enhancing market presence and capabilities.
• AI Initiatives: Continued deployment of AI for operational efficiency and client service improvements.
• Segment Performance:
  • Merchant Acquiring: Revenue grew 11% year-over-year.
  • Payment Services: Revenue increased 8% year-over-year.
  • Latin America Payments and Solutions: Revenue surged 52% year-over-year, benefiting from acquisitions and favorable currency movements.
  • Business Solutions: Revenue declined 9% year-over-year due to a contractual discount with Popular.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Expected to be between $1.085 billion and $1.095 billion, reflecting a growth of 16.4% to 17.5% year-over-year.
• Adjusted EBITDA Margin: Expected to remain between 39% and 40%.
• Adjusted EPS Growth: Anticipated to grow between 8.8% and 11.7% from $3.62 reported for 2025.
• Segment Expectations:
  • Merchant Acquiring: High single-digit growth.
  • Payments Puerto Rico: Mid-single-digit growth.
  • Latin America Payments: Low 40s growth on a reported basis.
  • Business Solutions: Mid-single-digit decline expected.

4. Challenges and Points of Concern

• Business Solutions Segment: Experienced a 9% revenue decline due to the impact of a 10% discount to Popular, with expectations for continued pressure until the discount anniversary in Q4.
• Margin Profile: Adjusted EBITDA margin declined slightly due to the increasing contribution from lower-margin Latin America operations.
• Cybersecurity Risks: Ongoing remediation from the cybersecurity incident poses potential risks to operations and client trust.

5. Notable Q&A Insights

• Transbank Agreement: Expected to start contributing in the second half of 2027, with full ramp-up anticipated in 2028. This agreement is seen as a significant milestone for EVERTEC.
• Tax Relief Impact: The recent tax relief in Puerto Rico is not expected to recur, which may affect future revenue growth.
• BBChain Acquisition: Seen as a strategic move to tap into the growing demand for digital assets in Brazil, with potential synergies expected to materialize over time.
• Competitive Landscape: Discussion on the potential for similar business models in other Latin American countries, indicating opportunities for expansion.

Overall, EVERTEC reported strong financial performance in Q2 2026, with significant strategic initiatives underway, though challenges remain in certain segments and from external pressures. The company has raised its full-year outlook, reflecting confidence in its growth strategy and market position.