Evertec (EVTC) Q3 2026 earnings review
Evertec sales jump on Brazil deals, but debt costs bite
Evertec, the Puerto Rico and Latin America payment processor, grew fast through Brazilian acquisitions while financing costs ate into profit. Constant-currency sales rose 21%, and profit per share excluding one-offs beat what the company's own second-half plan pointed to. Chief executive Mac Schuessler lifted the full-year outlook, though by our math the plan has sales growth slowing to 17% in the fourth quarter.
| Constant-currency revenue | $277.0M +21% from a year ago |
|---|---|
| Latin America segment revenue | $143.6M +59% from a year ago (46% of segments) |
| Profit per share, excluding one-offs | $1.07 +16% from a year ago (GAAP: $0.49, -4%) |
| Full-year revenue outlook | Raised $2M middle of the range: 17.2% growth |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the third quarter confirmed both the Latin American expansion and the heavy cost of funding it. A full quarter of Dimensa pushed Latin America to 46% of segment sales, but debt interest, overhead and deal write-offs kept net profit excluding one-offs to an 8% gain.
The question now is whether the Brazilian software businesses can grow past their one-year purchase marks while lifting margins. Either cross-selling and cost savings offset the debt and tax drag, or revenue slows once each acquisition laps its closing date. Fourth-quarter Latin America sales — the first period after Tecnobank passes its one-year anniversary — will show the underlying pace.
🐂 Bull Case
Latin America Now Carries Almost Half the Company
“We have built a broader, more diversified company with greater scale, deeper capabilities and more opportunities to grow across Puerto Rico and Latin America,” chief executive Mac Schuessler said. Evertec's Latin America Payments and Solutions division provides payment processing and banking software across the region, and management relies on it to outgrow the home market.
That division grew 59% from a year ago to $143.6 million, and rose 9.7% from last quarter with a full three months of Dimensa, its Brazilian financial software business bought in April. By our math, Latin America generated 45.8% of total segment revenue, up from 35.6% a year ago. Its profit margin before interest, taxes, depreciation and one-offs rose 3.1 percentage points to 30.1%.
What to watch: fourth-quarter Latin America revenue once the Tecnobank acquisition — a Brazilian vehicle-financing software provider bought in October 2025 — passes its one-year mark. Double-digit growth after that date will show the regional businesses are growing on their own.
Puerto Rico Payments Hold Up While Buybacks Lift Profit
Evertec runs the ATH debit network and processes card payments for merchants in Puerto Rico, using the cash from those operations to buy back its own stock. Both domestic payment divisions grew 9% from a year ago even after lapping last summer's concert tourism boost, while the company bought back $15.4 million of shares and expanded its buyback plan to $150 million.
- Puerto Rico and Caribbean payment services revenue: $60.1 million, up 8.9% from a year ago on ATH Movil app business volume
- Merchant acquiring revenue, where Evertec processes card sales for stores: $51.0 million, up 9.1% from a year ago
- Diluted share count: 60.4 million, down 6.7% from a year ago after $82.5 million of buybacks over nine months
The lower share count turned an 8.3% rise in net profit excluding one-offs into a 16.3% gain in per-share profit, to $1.07. Domestic payment cash flows are paying for share reductions that double the per-share growth rate.
What to watch: fourth-quarter share repurchases against the remaining $135 million authorization. Continued buying at this pace will keep per-share profit growing faster than net income.
🐻 Bear Case
Acquisition Costs Absorb Much of the Operating Gain
Schuessler said Evertec's transformation is translating into strong results, and operating profit before depreciation and one-offs rose $17.9 million, or 19.3%, to $110.5 million. Yet net profit excluding one-offs rose only $5.0 million, or 8.3%, and reported net profit fell 9.1% to $29.9 million, because the cost of buying and financing the new businesses took most of the gain.
- Selling and administrative overhead: 20.4% of revenue, up 3.9 percentage points from a year ago
- Depreciation and intangible write-offs: 15.4% of revenue, up 3.0 percentage points as deal write-offs doubled to $23.3 million by our math
- Net cash interest and minority partner share: up $6.8 million combined, driven by “higher interest rates and increased debt outstanding associated with the recent acquisitions”
- Carrying net debt: $962.3 million by our math, up 65.0% from a year ago
Excluding a $6 million tax-credit gain a year ago, reported net profit rose 11.2% by our math, still half the pace of revenue. Buying software companies with debt lifts revenue immediately, but interest, taxes in “Latin American jurisdictions with higher statutory tax rates” and minority partner payouts leave much less for shareholders.
What to watch: the 2027 interest and tax outlook on the fourth-quarter call. Another step up in financing or tax costs will keep per-share profit growing slower than revenue.
Latin America Mix Still Weighs on the Total Margin
Evertec's total profit margin before interest, taxes, depreciation and one-offs fell 1.5 percentage points from a year ago to 39.0%, and slipped 0.8 percentage points from last quarter. The company said the drop reflected “the increasing weight of Latin America, reflecting the region's continued growth and different margin profile.”
At the same time, Business Solutions — the division that runs core banking and technology systems for Popular, Inc., Puerto Rico's largest bank — shrank 5.0% to $58.6 million, “reflecting the 10% discount to Popular that came into effect in the fourth quarter of 2025.” Its segment margin fell 5.5 percentage points to 35.2% by our math. Because Latin America earns a 30.1% margin while Puerto Rico payment services earn 56.8%, faster growth in Brazil pulls the company-wide margin down.
What to watch: Business Solutions revenue in the fourth quarter, when the 10% Popular price cut passes its one-year mark. A further decline after the discount anniversary will show that project delays are hurting the division too.
Risks this quarter didn't answer
Six standing concerns from prior quarters could not be checked from the third-quarter earnings release alone and await the conference call or quarterly filing.
- Underlying Latin America growth: the release did not state how fast Latin America grew excluding acquisitions and currency.
- Currency boost ending: foreign exchange added $21.8 million in nine months against a $21 million full-year assumption, leaving a slight fourth-quarter drag by our math.
- New customer rollouts: the release gave no update on the 2027 revenue ramp for Chilean payment processor Transbank or Mexican card reader provider Clip.
- Cybersecurity costs: the release did not state what the June 2026 cyber incident cost in the third quarter.
- Minority buyout options: the release gave no estimate for the Lote45 minority partner buyout option that opens in January 2027.
- Debt refinancing and Popular cap: the release did not address the December 2027 loan maturities or the October 2026 inflation cap on Popular pricing.
👓 Other Themes
BBChain Brings Blockchain Infrastructure to Brazil
Evertec completed the purchase of BBChain, a Brazilian software provider, during the third quarter. The company said the deal is “expanding capabilities in blockchain, tokenization, and digital asset technology infrastructure.” It is the fourth acquisition in Brazil in three years, adding digital-asset ledger tools alongside Sinqia, Tecnobank and Dimensa, though the release gave no revenue contribution for the business.
💲 Other KPIs
Free cash flow — operating cash left after software and equipment spending — rose 29.4% from a year ago to $58.5 million in the third quarter by our math, or 20.7% of revenue. After dipping in the first half, nine-month free cash flow is now up 13.8% to $101.4 million, helped by $37.6 million of unpaid bills and accrued expenses.
Total contract liability — cash collected from customers for services Evertec has not yet delivered — fell $6.1 million from last quarter to $61.7 million, and is down 16.2% since December by our math. The balance has shrunk for three straight quarters as upfront fees from the 2022 Popular contract are gradually recognized as revenue.
Customer bills awaiting collection rose 21.7% from a year ago and 13.9% since December to $187.2 million. Receivables grew slightly slower than the 23.8% rise in third-quarter revenue, showing that newly acquired Brazilian software units are collecting cash on schedule.
🔮 Guidance
Raised. The payment processor lifted the middle of its full-year sales plan by $2 million, to 17.2% growth, or 14.5% to 15.4% in constant currency. By our math, that leaves $286.3 million for the fourth quarter, or 16.9% growth vs 23.8% in the third quarter, as the October 2025 Tecnobank deal passes its one-year mark. Third raise this year, and each is smaller: +$49M, +$11M, +$2M.
Raised. Management lifted the middle of the range by 5 cents, to 11.6% growth for the year (9.4% to 11.6% in constant currency), helped by a lower share count target of 61.2 million. By our math, the plan leaves $1.02 for the fourth quarter, up 9.7% from a year ago vs 16.3% in the third quarter. Third raise this year: +$0.02, +$0.07, +$0.05.
Raised. The middle of the reported profit per share plan moved up 3 cents to $1.70, which still represents a 22.7% drop for the full year because of second-quarter write-offs and deal amortization. By our math, the plan leaves $0.74 for the fourth quarter, up 32.1% from $0.56 a year ago.
Unchanged at the middle. Evertec replaced its 39% to 40% range with a point target of about 39.5%. After delivering 39.3% across the first nine months and 39.0% in the third quarter, the target leaves a 40.0% margin for the fourth quarter by our math.
Raised. The Latin American fintech group added $5 million to its full-year software and equipment spending plan after closing the Dimensa and BBChain acquisitions. With $74.9 million spent in the first nine months, the target leaves $20.1 million for the fourth quarter by our math, down from $27.1 million in the third quarter.
Cut. The full-year tax rate plan excluding one-offs came down by 1 percentage point after nine-month taxes ran at 9.3% of adjusted pre-tax profit, giving a small lift to the full-year per-share profit outlook.
❓ Key Questions
How fast did Latin America grow without acquisitions?
Latin America revenue jumped 59% to $143.6 million, but the period included both Tecnobank and Dimensa plus a $6 million currency boost. Without the underlying growth rate, investors cannot tell how much growth came from existing operations.
What did the June cyber incident cost this quarter?
Selling and administrative overhead jumped $20.0 million from a year ago, or 3.9 percentage points of revenue. Last quarter included remediation costs for a June cybersecurity incident, and the release did not say whether those expenses continued.
How much cash will the Lote45 buyout take?
Minority partners in Lote45 can require Evertec to buy their 43.7% stake starting January 1, 2027, and Evertec already spent $23.1 million buying minority stakes this year. The release gave no estimate for January's cash call.
When will the 2027 bank loans be refinanced?
Carrying debt reached $1.28 billion at quarter-end, and the Term A loan plus the credit line mature in December 2027. Investors need to know the refinancing timeline and what interest rate management expects.