EVERTEC's Q4 2024: Unpacking Contradictions in Pricing Power, M&A Strategy, and Growth Outlook

These are the key contradictions discussed in EVERTEC's latest 2024Q4 earnings call, specifically including: Pricing Initiatives and Pricing Power, Strategic M&A, Sinqia's Growth Expectations and Macroeconomic Conditions, and Margin Optimization:



Revenue and Growth:
- EVERTEC reported record revenue of $845.5 million for 2024, a 22% increase over the prior year.
- The growth was driven by strong execution across all core markets, successful integration of the Sinqia acquisition, and a robust business pipeline in Latin America.

Latin American Expansion:
- LATAM revenue increased by 62% year-over-year due to the full-year contribution of Sinqia, continuous organic growth, and contributions from acquisitions like Grandata and Nubity.
- The focus on Latin American expansion helped diversify revenue mix, with LATAM now making up approximately 33% of total revenue compared to 10% in 2015.

Merchant Acquiring Performance:
- Merchant Acquiring grew by 16% year-over-year in Q4, driven by improved spreads, increased sales volume, higher non-transactional fees, and net new merchants.
- The segment's adjusted EBITDA margin improved by approximately 680 basis points, reflecting strong top-line growth and margin optimization efforts.

Cost Management and Profitability:
- Adjusted EBITDA was $340.2 million for the year, up approximately 17% year-over-year, with an adjusted EBITDA margin of 40.2%.
- The focus on cost efficiency and expense management enabled EVERTEC to offset the 10% discount to Popular that will come into effect in 2025.

Strong Financial Performance:
- Adjusted EPS of $3.28 was up 16% year-over-year, driven by strong adjusted EBITDA growth, lower tax expense, and a lower share count.
- The company generated approximately $260 million in operating cash flows and returned approximately $95 million to shareholders through share repurchases and dividends.