EVERTEC Inc. Earnings Call Highlights Growth, Latin Charge

EVERTEC INC ((EVTC)) has held its Q4 earnings call. Read on for the main highlights of the call.

EVERTEC Inc.’s latest earnings call struck an overall upbeat tone, spotlighting record 2025 revenue, solid double-digit growth in Latin America, and higher adjusted EBITDA and EPS. Management acknowledged margin pressure, a Banco Popular pricing reset, and a higher expected tax rate, but emphasized strong cash generation, disciplined leverage, and a robust pipeline as key supports for 2026.

Record Revenue and Broad-Based Top-Line Growth

EVERTEC reported 2025 revenue of about $932 million, up roughly 10% year over year, or 11% on a constant currency basis, underscoring healthy demand across its network. Fourth-quarter sales climbed to $244.8 million, a 13% increase, and the company guided 2026 revenue to a range of $1.024 billion to $1.036 billion, implying another near double-digit advance.

Latin America Emerges as the Key Growth Engine

The Latin America Payments & Solutions unit again led the way with about 22% growth for 2025, or 24% when stripping out FX swings, and an impressive roughly 40% year-over-year jump in the fourth quarter. EVERTEC credited a reacceleration in Brazil and successful conversions such as Banco de Chile and Grupo Aval and expects this segment to expand in the mid-20s percentage range in 2026.

Profitability Holds Up as EPS Moves Higher

Profitability remained solid, with adjusted EBITDA for 2025 rising to $373.4 million and margins just above 40%, while the fourth quarter posted $98.8 million in adjusted EBITDA with a similar margin profile. Adjusted EPS advanced 10% to $3.62 for the year and 7% to $0.93 in the quarter, and the company projected another 6.1% to 9.4% EPS increase for 2026.

Strategic M&A and New Wins Fuel the Growth Story

Management highlighted its strategic deal making, noting the closing of the Tecnobank acquisition in the fourth quarter and the announced Dimensa purchase expected to close in the second quarter of 2026. Combined with new client wins such as Banco de Chile going into production, EVERTEC argued that both M&A and organic pipeline conversions should support a second-half 2026 growth acceleration.

Cash Generation, Buybacks, and Ample Liquidity

The company generated roughly $227 million in operating cash flow during 2025 and returned about $82 million to shareholders, including approximately $66 million in fourth-quarter buybacks. EVERTEC ended the year with about $348.1 million in cash and total liquidity of roughly $490.4 million and refreshed its share repurchase authorization to $150 million through late 2027.

Leverage Kept in Check with Lower Funding Costs

On the balance sheet front, net debt stood at about $806 million, translating to a net leverage ratio of around 2.08 times trailing adjusted EBITDA, at the low end of the stated 2 to 3 times target band. The company also benefited from refinancing actions, bringing its weighted average interest rate down to about 5.86%, some 60 basis points lower than a year earlier.

Technology and AI Investments Aim to Boost Efficiency

EVERTEC underscored stepped-up technology and AI investments, noting that more than 4,500 employees were upskilled on AI tools in 2025 and that these tools are now embedded in delivery, risk, fraud, and credit decisioning. Capital expenditures are expected to reach about $90 million in 2026 as the firm modernizes platforms and strengthens security, with management already seeing productivity gains through shorter engineering and testing cycles.

Business Solutions Faces Reset from Banco Popular Discount

Not all segments moved higher, as Business Solutions posted a 7% year-over-year revenue decline in the fourth quarter and a roughly 15% drop in adjusted EBITDA, shrinking its margin by about 370 basis points to 35.3%. Management attributed most of this pressure to a 10% pricing discount instituted with Banco Popular in October 2025 and warned that segment revenue should fall in the low- to mid-single-digit range in 2026.

Margin Pressure Across Merchant and Puerto Rico Segments

Merchant Acquiring also saw some squeeze, with its adjusted EBITDA margin down roughly 250 basis points year over year to about 40.2% in the fourth quarter as processing costs climbed. In the Payments Puerto Rico segment, adjusted EBITDA dipped around 3% and margins contracted by about 350 basis points to 53.7%, with higher cloud and POS repair expenses weighing on results and Latin America margins also showing modest compression despite rapid growth.

One-Time Benefits and Rising Operating Costs

Fourth-quarter performance was bolstered by a $7.1 million R&D tax credit, which lifted results but will not repeat and may make future comparisons more difficult for investors tracking momentum. Management also cited increased cloud costs and equipment maintenance expenses, especially in Puerto Rico, as ongoing headwinds that could continue to pressure near-term margins.

Foreign Exchange Boosts Results but Adds Volatility

Currency movements provided a tailwind in the latest quarter, with a stronger Brazilian real adding roughly 4 percentage points to Latin America growth and helping overall reported numbers. However, EVERTEC cautioned that such FX benefits can reverse, and its 2026 guidance assumes only about a 120 basis point tailwind, underlining that volatility may affect comparability across periods.

Dilution from Tecnobank and Noncontrolling Interests

Adjusted net income in the fourth quarter grew a more modest 6% to $59.5 million, as incremental debt tied to the Tecnobank acquisition and earnings attributable to a noncontrolling interest diluted the bottom line. While management stressed that its overall capitalization remains disciplined, investors were reminded that acquisition-related leverage and minority interests can mute per-share gains even in growth periods.

Higher Tax Rate Expected to Trim Net Margins

The company reported a very low 8.1% adjusted effective tax rate in the fourth quarter, but it expects that figure to move higher in 2026 as Latin America becomes a larger share of profits. Guidance calls for an 11% to 12% adjusted tax rate next year, which will eat into net income margins even as operating performance and revenue continue to expand.

Guidance Signals Continued Growth with Stable Margins

Looking ahead to 2026, EVERTEC projected revenue of $1.024 billion to $1.036 billion and adjusted EPS growth of 6.1% to 9.4%, based on an EBITDA margin band of 39.5% to 40.5% and a tax rate in the low teens. The company expects mid-single-digit growth in Merchant Acquiring and Payments Puerto Rico & Caribbean, mid-20s growth in Latin America, and a modest revenue decline in Business Solutions, with the Dimensa deal offering potential upside not included in current forecasts.

EVERTEC’s earnings call painted a picture of a company leaning into Latin American expansion and technology investments while managing through margin pressure and pricing resets in parts of its legacy portfolio. For investors, the key takeaway is that robust growth drivers, strong liquidity, and disciplined leverage appear to outweigh the headwinds, but segment-level volatility and a rising tax bill remain important risks to monitor.