Executive Summary / Key Takeaways

• Strategic Diversification Fuels Growth: EVERTEC is successfully transforming from a Puerto Rico-centric processor into a diversified Latin American fintech leader, with LATAM revenue growing from 10% in 2015 to 33% in 2024, driven by strategic acquisitions and organic expansion.
• Technological Edge and Operational Discipline: The company leverages its proprietary ATH network and specialized platforms, alongside disciplined cost efficiency initiatives, to drive growth and maintain robust margins, even as it integrates lower-margin Latin American businesses.
• Strong Financial Performance and Outlook: Q2 2025 saw 8% revenue growth (10% constant currency) and 8% Adjusted EBITDA growth, with management raising 2025 revenue guidance to $901-$909 million (6.6%-7.6% growth) and Adjusted EPS to 4.8%-7% growth.
• Proactive Risk Mitigation: EVERTEC is actively offsetting anticipated headwinds, including a 10% discount on certain Popular, Inc. (BPOP) services starting Q4 2025 and client attrition in Latin America, through comprehensive cost-cutting measures.
• Capital Allocation for Growth and Returns: With a healthy balance sheet (1.95x net debt to Adjusted EBITDA), the company prioritizes M&A for growth while returning capital to shareholders through dividends and a refreshed $150 million share repurchase program.

A Regional Fintech Powerhouse Emerges

EVERTEC, Inc., founded in 1988 and headquartered in San Juan, Puerto Rico, has evolved into a leading full-service transaction processing and financial technology provider across Latin America and the Caribbean. Its foundational relationship with Popular, Inc. , established through a Master Service Agreement (MSA) in 2010, initially shaped its operational focus and revenue streams. This long-standing partnership remains significant, contributing approximately 31% of EVERTEC's revenues for the first six months of 2025.

A pivotal moment arrived in 2022 when EVERTEC solidified its independence from Popular, Inc. through a series of strategic agreements and Popular's divestiture of its remaining EVERTEC shares. This transition catalyzed a deliberate strategy to diversify its revenue mix, particularly by expanding its footprint in the fast-growing Latin American market. This strategic pivot has yielded tangible results, with LATAM's contribution to total revenue surging from approximately 10% in 2015 to 33% by 2024.

The company's growth narrative is deeply intertwined with the ongoing global migration from cash and paper to electronic payments. EVERTEC operates in markets where electronic payment penetration is significantly lower compared to the U.S. and European markets, presenting substantial growth opportunities. The shrinking unbanked and underbanked populations in Latin America and the Caribbean further drive incremental penetration and growth of electronic payments. This trend is amplified by the accelerated consumer preference for digital, contactless, and omni-channel payment methods, which EVERTEC actively supports through its innovative solutions.

Technological Edge: The Engine of Differentiation

At the core of EVERTEC's competitive advantage lies its robust and proprietary technology infrastructure. The company owns and operates the ATH network, which it believes is a leading personal identification number (PIN) debit network in the Caribbean and Latin America. This network processes over ten billion transactions annually, providing a critical backbone for electronic payments across the region.

EVERTEC's technological differentiation extends to its ability to develop and customize software, enabling rapid implementation for clients. For instance, in Chile, the company's technology powers GetNet, which now serves over 200,000 active merchants, demonstrating EVERTEC's success in enabling banks to transition from legacy systems. This regional optimization allows for 10-15% faster transaction speeds in Latin America compared to some global competitors, a crucial advantage in high-volume payment processing.

Recent strategic acquisitions further bolster EVERTEC's technological capabilities. Grandata, acquired in October 2024, specializes in leveraging behavioral data from telcos to provide credit risk insights, particularly for underbanked populations. This unique capability enhances EVERTEC's proprietary product offering and extends its relationships with key fintechs like Mercado Libre (MELI), positioning it as a preferred partner for issuing platforms across Latin America. Similarly, the December 2024 acquisition of Nubity, a cloud services provider specializing in AWS cloud infrastructure management and DevOps, enhances EVERTEC's managed services and creates significant cross-sell opportunities, including in Puerto Rico.

The company's commitment to innovation is evident in its development of digital payment solutions such as Placetopay (e-commerce gateway), ATH Movil and ATH Business (digital wallets), and Paystudio (issuing and acquiring processing platform). EVERTEC has also developed software to leverage Brazil's PIX instant money transfer system, demonstrating its agility in adopting and integrating cutting-edge payment technologies. These technological advancements contribute directly to EVERTEC's competitive moat, enabling it to offer a comprehensive suite of services from a single source, capture and analyze data for value-added services, and drive higher client retention and growth.

Competitive Arena: Battling for Latin American Payments

EVERTEC operates in a dynamic and competitive landscape, vying for market share against both global giants and regional specialists. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, EVERTEC holds an estimated 5-7% aggregate market share in Latin American payment processing. Its 8% year-over-year revenue growth trajectory in 2025 is outpacing the broader market's estimated 6% growth, but it trails some larger global players in absolute scale and certain efficiency metrics.

Key publicly traded direct competitors include Fiserv (FISV), Fidelity National Information Services (FIS), Global Payments (GPN), and ACI Worldwide (ACIW).

• Fiserv: A global behemoth with a substantial market share, FISV reported 2024 revenue growth of 7% and superior profitability (58% gross margin, 22% operating margin, 15% net margin) compared to EVERTEC's TTM figures (51.37% gross margin, 22.01% operating margin, 15.55% net margin). FISV's scale allows it to process transactions at an estimated 20% lower operating cost per unit and invest more heavily in R&D (5% of revenue vs. EVERTEC's estimated 3%), leading to faster product rollouts. However, EVERTEC's regional expertise and customized solutions for emerging markets allow it to capture share where FISV's broader approach may be less effective.

• Fidelity National Information Services: Focusing on core banking and payment modernization, FIS reported 6% revenue growth in 2024. While FIS's global platforms offer 25% greater efficiency in fraud prevention, EVERTEC's ATH network provides 10-15% faster transaction speeds in Latin America due to its optimized regional infrastructure. EVERTEC's unique regulatory expertise in the Caribbean also creates exclusive contract opportunities that FIS struggles to penetrate.
• Global Payments: A strong player in merchant acquiring, GPN achieved 9% revenue growth in 2024. Its platforms offer an estimated 15% lower operating costs per transaction due to advanced automation. EVERTEC differentiates itself through deep expertise in EBT and prepaid card services in Latin America, providing 20% higher reliability in volatile markets.
• ACI Worldwide: ACIW, with 5% revenue growth in 2024, competes in core banking and transaction processing. While EVERTEC's ATH network offers faster processing, ACIW's systems are estimated to be 15% more efficient in multi-currency handling, highlighting a potential technological gap for EVERTEC in certain specialized areas.

EVERTEC's competitive advantages, or "moats," are primarily its strong regional network effects, particularly with the ATH network, which fosters high customer loyalty and recurring revenue. Its proprietary technology, including advanced fraud monitoring tools, reduces false declines by 25%, enhancing its value proposition. Furthermore, its status as a publicly traded company, coupled with U.S. regulatory oversight, provides clients with confidence in its compliance and cybersecurity capabilities. The company's on-the-ground presence and Spanish-speaking development teams in each country offer a localized support model that larger, more centralized competitors may struggle to replicate.

However, EVERTEC faces competitive disadvantages due to its smaller scale, which can lead to 10-15% higher operating costs compared to global leaders, potentially impacting margins. There are also perceived technological gaps, with some systems being 20% slower in innovation cycles compared to certain rivals. High regulatory barriers and established network effects in its core markets, however, act as significant barriers to entry for new players, protecting EVERTEC's existing market share.

Operational Excellence & Financial Momentum

EVERTEC's strategic focus on diversification and operational efficiency is clearly reflected in its recent financial performance. For the second quarter of 2025, the company reported total revenue of $229.6 million, an 8% increase year-over-year, or approximately 10% on a constant currency basis. This growth was broad-based, with all segments contributing positively. Adjusted EBITDA for the quarter rose 8% to $92.6 million, maintaining a healthy 40.3% margin, despite a slight year-over-year decrease due to the prior year's margin benefiting from highly accretive one-time revenues in the Business Solutions segment. Adjusted EPS for Q2 2025 was $0.89, up 7% year-over-year.

Looking at the first six months of 2025, total revenue reached $458.4 million, a 10% increase over the prior year period. Adjusted EBITDA for the first half was $182 million, with a margin of 39.7%, and Adjusted EPS stood at $1.76. For the full year 2024, EVERTEC achieved record revenue of $845.5 million, marking a 22% increase year-over-year (23.5% on a constant currency basis), and an Adjusted EBITDA of $340.2 million, with a 40.2% margin.

Segment-wise, performance highlights include:

• Merchant Acquiring: Q2 2025 revenue grew 4.3% to $47.3 million, driven by improved "spread" from pricing initiatives and sales volume growth. The segment's Adjusted EBITDA margin was 42.3%, benefiting from top-line growth and cost optimization.
• Payment Services - Puerto Rico & Caribbean: Q2 2025 revenue increased 4.1% to $56.4 million, primarily fueled by the strong performance of ATH Móvil, which saw 17% revenue growth year-over-year, and overall POS transaction growth. The segment maintained a robust 58.5% Adjusted EBITDA margin.
• Latin America Payments & Solutions: This segment was a standout, with Q2 2025 revenue surging 15.2% to $86.1 million (20% on a constant currency basis). This was driven by strong organic growth, the reacceleration of the Brazil business (Sinqia (SQIA3)), and contributions from the Grandata and Nubity acquisitions. The segment's Adjusted EBITDA margin expanded significantly to 27.1%, up 370 basis points, partly due to expense management and the positive margin impact from the attrition of lower-margin Mercado Libre business.
• Business Solutions: Q2 2025 revenue grew 3.5% to $64.5 million, primarily from projects completed in the prior year, especially for Popular, and increased IT consulting services. The segment's Adjusted EBITDA margin was 40.3%, though it faced headwinds from the lapping of highly accretive nonrecurring projects from the prior year and a mix shift towards lower-margin hardware and software sales.

From a liquidity standpoint, EVERTEC maintains a strong position. As of June 30, 2025, total liquidity stood at approximately $485 million, including $290.6 million in cash and cash equivalents. The company's net debt to trailing 12-month Adjusted EBITDA was approximately 1.95x, comfortably within its target range of 2x to 3x. Operating cash flow for the first half of 2025 was $86.1 million, demonstrating healthy cash generation. Capital expenditures for the first half were $42.7 million, in line with the full-year plan of $85 million, reflecting ongoing investments in technology and infrastructure.

Strategic Initiatives & Future Growth Catalysts

EVERTEC's strategic roadmap is built on a foundation of disciplined M&A, continuous product innovation, and proactive operational management. The integration of Sinqia, its largest acquisition to date, remains a key focus. Management has successfully reaccelerated growth in the Brazil business through initiatives such as product modernization, contract repricing, and margin optimization efforts. This includes implementing new versions of platforms like GRC, which has already led to new client wins and a pipeline of interested customers. The company has also repriced contracts with 51 clients, moving towards more contemporary, volume-based terms.

The recent acquisitions of Grandata and Nubity further exemplify EVERTEC's commitment to expanding its product offerings and geographic reach. Grandata's data analytics capabilities enhance EVERTEC's issuing platform, while Nubity's cloud services provide new cross-sell opportunities. These tuck-in acquisitions are performing at or above expectations and are expected to largely offset anticipated client attrition in Latin America, including the credit migration of Mercado Libre.

New business wins, such as the deal with Grupo Aval (AVAL) in Colombia to provide acquiring processing and risk monitoring services, underscore the strength of EVERTEC's organic pipeline in Latin America, which management describes as the strongest in years. These efforts are expected to contribute meaningfully to organic growth from 2026 onwards.

A significant strategic initiative is the proactive management of the upcoming 10% discount on certain MSA services with Popular, Inc. , set to begin in October 2025. This discount is estimated to impact revenue by approximately $4 million in Q4 2025 and $18 million annually in fiscal year 2026, primarily affecting the Business Solutions segment. To mitigate this, EVERTEC has implemented comprehensive cost efficiency initiatives since early 2024. These measures are designed to more than offset the EBITDA impact of the discount, ensuring the company can maintain its Adjusted EBITDA margins in a range similar to 2024 for the coming years, even as its lower-margin Latin American business grows.

Navigating the Macro Currents: Risks and Resilience

While EVERTEC demonstrates strong operational execution, it operates within a macro environment that presents certain risks and challenges. Foreign currency fluctuations, particularly the devaluation of the Brazilian Real, Mexican Peso, and Chilean currency against the U.S. dollar, have created headwinds to revenue growth. For instance, the Brazilian Real was down approximately 13% against the U.S. dollar over the last year, contributing to a 9.6 percentage point negative impact on the Latin America segment's growth in Q4 2024.

The company also remains vigilant regarding potential tariffs in the countries where it operates. While no direct material impact has been identified to date, management acknowledges the potential for indirect effects on customer confidence, employment, and payment volumes in export-reliant economies like Brazil and Chile.

Client attrition, notably the Mercado Libre relationship due to its credit migration, and some other undisclosed clients, is expected to create a headwind in 2025. However, management views these as anomalies that are not expected to persist, and the impact is anticipated to be largely offset by contributions from recent M&A transactions and organic growth.

Despite these challenges, EVERTEC's diversified business model and proactive management of expenses demonstrate resilience. The ongoing cost efficiency initiatives are a testament to the company's commitment to maintaining profitability amidst anticipated revenue pressures.

Outlook: Charting a Course for Sustained Growth

EVERTEC has raised its 2025 outlook, reflecting strong performance in the first half of the year and an improved foreign currency outlook. The company now expects full-year 2025 revenues to be between $901 million and $909 million, representing year-over-year growth of 6.6% to 7.6%. On a constant currency basis, revenue growth is projected to be even stronger, between 7.8% and 8.7%. Adjusted EPS is expected to grow between 4.8% and 7% from the $3.28 reported in 2024.

Key assumptions underpinning this guidance include:

• Merchant Acquiring: Expected to achieve mid-single-digit growth, with the tailwinds from prior year pricing initiatives moderating.
• Payment Services - Puerto Rico & Caribbean: Anticipated low to mid-single-digit growth, driven by ATH Móvil's continued strength, partially offset by reduced processing services for the LatAm segment and the Popular discount in Q4 2025.
• Latin America Payments & Solutions: Projected for low double-digit constant currency growth, with strong organic expansion and M&A contributions largely offsetting client attrition. Management expects low to mid-teens growth on a constant currency basis.
• Business Solutions: Expected to see low single-digit revenue growth for the full year, primarily due to the impact of the 10% Popular MSA services discount commencing in Q4 2025.

Overall, management anticipates an Adjusted EBITDA margin of 39.5% to 40.5% for 2025. This includes a strategic approach to margins, with a gradual improvement expected in Q3 2025, followed by a reset lower in Q4 as the Popular discount takes effect. The cost efficiency initiatives are crucial to this outlook, designed to ensure that the EBITDA impact of the discount is more than offset. The adjusted effective tax rate is projected to be between 6% and 7%, higher than prior years due to a greater contribution from higher-tax Latin American jurisdictions and lower interest expense. Capital expenditures are targeted at approximately $85 million for the year, reflecting continued investment in the business.

Conclusion

EVERTEC stands at a compelling juncture, having successfully executed a strategic pivot towards diversified growth in Latin America while maintaining its strong foundational business in Puerto Rico. The company's disciplined approach to M&A, exemplified by the successful integration of Sinqia and the accretive additions of Grandata and Nubity, is unlocking new growth vectors and enhancing its technological capabilities. Its proprietary ATH network and specialized platforms provide a distinct competitive edge, enabling faster processing, robust fraud prevention, and localized solutions in a rapidly digitizing region.

Despite facing headwinds such as foreign currency fluctuations, client attrition, and the upcoming Popular discount, EVERTEC has demonstrated proactive risk mitigation through aggressive cost efficiency initiatives. These measures are poised to preserve the company's strong Adjusted EBITDA margins, ensuring financial resilience even as the revenue mix shifts. With a healthy balance sheet and a clear capital allocation strategy prioritizing growth investments and shareholder returns, EVERTEC is well-positioned to capitalize on the ongoing migration to electronic payments and the increasing demand for financial technology solutions across Latin America. For discerning investors, EVERTEC offers a unique blend of regional market leadership, technological innovation, and operational discipline, charting a course for sustained profitability and long-term value creation.