Evertec Q2 2025 Earnings Report

Evertec EPS Results

• Actual EPS: $0.89
• Consensus EPS: $0.86
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.83

Evertec Revenue Results

• Actual Revenue: $229.61 million
• Expected Revenue: $222.23 million
• Beat/Miss: Beat by +$7.37 million
• YoY Revenue Growth: +8.30%

Evertec Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 4:30PM ET

Evertec (NYSE:EVTC) (NYSE: EVTC) is a leading full‐service transaction processor in Puerto Rico, Latin America and the Caribbean. The company delivers integrated technology solutions for electronic payments, providing financial institutions, merchants and governments with secure and scalable platforms to accept, process and settle transactions across card, ATM, debit and digital channels. Headquartered in San Juan, Puerto Rico, Evertec supports both domestic and cross‐border payment flows, enabling clients to streamline operations and expand their digital commerce capabilities.

Evertec’s suite of services includes merchant acquiring, payment gateway connectivity, ATM and point‐of‐sale network management, and fraud prevention solutions. The company operates proprietary networks such as ATH in Puerto Rico and the Caribbean, in addition to supporting national and regional debit networks throughout Latin America. Its digital commerce offerings encompass e-wallet integrations, payment orchestration and value-added services like loyalty management and real-time analytics. Business process outsourcing services round out its portfolio, assisting clients with customer care, reconciliation and back‐office support.

With a footprint spanning more than 40 markets, Evertec serves commercial banks, credit unions, independent software vendors and retail merchants across the United States, Mexico, Central America, Colombia, the Dominican Republic and other Caribbean nations. The company traces its origins to the early 1980s, when it began providing electronic funds transfer services in Puerto Rico. In June 2014, Evertec completed its initial public offering on the New York Stock Exchange, positioning itself for continued growth across the region.

Evertec’s management team is led by President and Chief Executive Officer José M. Quintero, whose leadership focuses on innovation, operational excellence and strategic partnerships. Guided by an independent board of directors, the company invests in emerging technologies such as real-time payments, open banking and digital identity solutions to meet evolving client needs. Through ongoing enhancements to its platforms and expansion into new markets, Evertec aims to reinforce its role as a trusted payments technology partner.

Evertec Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: In Q2 Evertec delivered $230 M in revenue (up 8% YoY, 10% in constant currency), $93 M adjusted EBITDA (+8%) with a 40.3% margin, and $0.89 adjusted EPS (+7%), exceeding internal expectations.
• Positive Sentiment: The Puerto Rico segment grew Merchant Acquiring and Payment Services revenues by 4% YoY, with ATH Mobile revenue up 17% amid stable local economic conditions.
• Positive Sentiment: Latin America revenue rose 15% (20% constant currency), driven by organic growth in key markets and the Grandada and Nubity acquisitions, and management reports no direct tariff impacts to date.
• Positive Sentiment: Evertec generated $86 M in H1 operating cash flow, returned $6.4 M in dividends and $3.7 M in share repurchases, maintains liquidity of ~$485 M, and authorized a $150 M share repurchase program through 2026.
• Positive Sentiment: Full-year 2025 guidance was raised to 6.6%–7.6% revenue growth (7.8%–8.7% cc) with an expected 4.8% EPS increase and a 39.5%–40.5% adjusted EBITDA margin.

Presentation

[Operator]

note this event is being recorded.

[Operator]

I would now like to turn the conference over to Beatrice Brown from Investor Relations. Please go ahead.

[Beatriz Brown-Sáenz, Reporting & IR Manager at EVERTEC]

Thank you, and good afternoon. With me today are Max Schuessler, our President and Chief Executive Officer and Joaquin Castrillo, our Chief Financial Officer. Before we begin, I would like to remind everyone that this call may contain forward looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report. During today's call, management will provide certain information that will constitute non GAAP financial measures under SEC rules, such as constant currency revenue, adjusted EBITDA, adjusted net income, adjusted earnings per common share and constant currency adjusted earnings per common share. Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the Investor Relations section of our company website at www.evertecinc.com. I will now hand the call over to Matt.

[Mac Schuessler, President & CEO at EVERTEC]

Thanks, Beatrice, and good afternoon, everyone. I'm pleased to announce second quarter results that reflect solid revenue growth across all of our segments. We delivered healthy growth over the prior year and exceeded our internal expectations as we continue to execute at a high level across all regions and business segments. I will begin today's call with a brief summary of our second quarter twenty twenty five results, followed by discussion of our Puerto Rico business and an update on Latam. I will then turn the call over to Joaquin, who will provide some additional details on our Q2 results and our updated outlook for 2025.

[Mac Schuessler, President & CEO at EVERTEC]

Beginning on Slide four, I'll stop by covering a few highlights from our second quarter results. Revenue for the second quarter was $230,000,000 an 8% increase over the prior year, while constant currency revenue was approximately $233,000,000 representing growth of 10% as we again saw growth across all of our segments. Adjusted EBITDA increased to $93,000,000 up approximately 8% year over year and adjusted EBITDA margin was 40.3% for the quarter and aligned with our expectations. Adjusted EPS of $0.89 was up 7% year over year, driven by the strong adjusted EBITDA growth and lower interest expense, partially offset by higher tax expense and operating depreciation and amortization. We generated operating cash flow of approximately $86,000,000 during the first half of the year and returned cash to shareholders through $6,400,000 in dividends and $3,700,000 of share repurchases.

[Mac Schuessler, President & CEO at EVERTEC]

Our liquidity remains strong at approximately $485,000,000 as of June 30. Let me now provide an update on Puerto Rico beginning on Slide five. Merchant Acquiring revenue grew 4% year over year driven by an improvement in spread as we continue to benefit from pricing initiatives implemented in the prior year and sales volume growth. Payment Services Puerto Rico also grew 4% year over year driven by strong performance in ATH Mobile, primarily ATH business as well as POS transaction growth. ATH mobile revenue grew 17% year over year.

[Mac Schuessler, President & CEO at EVERTEC]

Business solutions revenue also grew 4%, primarily driven by projects completed in the prior year, mainly for Popular and an increase in IT consulting services. The overall economic condition in Puerto Rico continues to remain stable. The unemployment rate remains near multi decade lows of about 5.2%. Passenger traffic in the San Juan Airport remained strong, up approximately 11% year over year through April. Moving to Latin America on Slide six.

[Mac Schuessler, President & CEO at EVERTEC]

Revenue increased 15% year over year or 20% on a constant currency basis, driven by continued organic growth across the region and the contribution from the Grandada and Nubity acquisitions. Our pipeline remains as active as it's ever been and we are confident in our ability to convert some of these opportunities into wins over the next quarters. Last quarter, I made a few comments regarding the tariff discussions and while we still remain vigilant of the potential tariffs that might be imposed in the countries in which we operate to date, we have not identified a direct impact on our results of operations. Before I turn the call over to Joaquin, I would like to note that our Board of Directors approved a refresh of our share repurchase program authorizing the company to repurchase up to an aggregate of $150,000,000 of shares of its common stock through 12/31/2026. I believe strongly in the opportunity ahead for Evotec and our share repurchase program provides another avenue for capital allocation while allowing us to continue and invest in the business for long term growth.

[Mac Schuessler, President & CEO at EVERTEC]

With that, I will now turn the call over to Joaquin to provide deeper commentary around our second quarter results and discuss our increased outlook for 2025.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Thank you, Mac, and good afternoon, everyone. Turning to slide eight, I'll start with a review of our second quarter results. Total revenue for the quarter was $229,600,000 up approximately 8% compared to the prior year quarter, reflecting strong organic growth across all of the company segments and the contribution from acquisitions completed in the 2024. Constant currency revenue was up 10% in the quarter with most of the headwind coming from the Brazilian real. Adjusted EBITDA for the quarter was 92,600,000.0 up approximately 8% from last year with a margin of 40.3, a decrease of 30 basis points from a year ago, but in line with our expectations.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

The decline was mainly a result of last year's margin being positively impacted by highly accretive one time revenues in our Business Solutions segment. Adjusted net income was $57,700,000 an increase of approximately 7% year over year driven by the growth in adjusted EBITDA and lower cash interest expense, a function of the lower sulfur rates in comparison to the prior year and the effect of the Term Loan B repricing efforts executed last year. This was partially offset by a higher tax expense with our effective tax rate for the quarter coming in at 7.1% and higher operating depreciation and amortization expense. As expected, our effective tax rate has been increasing slightly as we find ways to lower our interest expense, which drives certain tax efficiencies and also as our EBITDA in LatAm and higher tax jurisdictions continues to grow. Adjusted EPS was $0.89 an increase of approximately 7% from the prior year driven by higher adjusted net income.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Moving to Slide nine, I will now cover our second quarter results by segment beginning with Merchant Acquiring. Net revenue increased approximately 4% year over year to $47,300,000 as we continue to see benefits from a higher spread and positive sales volume growth. As discussed in previous calls, we have now anniversaried most of the pricing initiatives implemented in the prior year. We also saw lower gas prices this past quarter, which impacted sales volume growth negatively, but this was offset by an increase in government related payments related to tax returns. Adjusted EBITDA for the segment was $20,000,000 with an adjusted EBITDA margin of 42.3%, an increase of approximately 200 basis points from the previous year as we drive revenue growth through improvements in spread.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

This effect was partially offset by higher processing costs as we saw higher overall transactions as a result of a lower average ticket. On Slide 10 are the results for the Payment Services Puerto Rico and Caribbean segment. Revenue in the quarter was $56,400,000 an increase of approximately 4% from the prior year. The revenue increase was primarily driven by sales volume and transaction growth in HH Mobile business as well as 5% POS transaction growth. This was partially offset by a decrease in services provided to the Latin America segment mainly as a result of lower transactions processed due to customer attrition.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Adjusted EBITDA was $33,000,000 up approximately 5% from the prior year and adjusted EBITDA margin was 58.5%, an increase of approximately 70 basis points from the prior year. The increase in margin is driven mainly by revenue growth and expense management. On Slide 11 are the results for Latin America Payments And Solutions. Revenue in the quarter was $86,100,000 up approximately 15% year over year or approximately 20% on a constant currency basis. We experienced organic growth across the region and continue to benefit from strong performance in the GetNet Chile relationship and the continued reacceleration in Brazil offset by attrition impacts in the quarter mainly related to the MELI relationship.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

The segment also benefited from Grand Data and Nubiti, the two acquisitions we completed in the fourth quarter of last year, both of which continue to perform as expected or better. Adjusted EBITDA was 23,300,000 an increase of approximately 33% from the prior year with an adjusted EBITDA margin of 27.1%, up approximately three seventy basis points. The margin increase was driven by the higher revenues, expense management initiatives and a positive impact to margin from the MELI attrition that was coming in at lower margins than average. Moving to Slide 12. Our Business Solutions segment revenue increased approximately 4% to 64,500,000.0 The increase is due primarily to the tailwind from projects that went into production last year and an increase in IT consulting services.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

We are lapping a key project this quarter and the second key project that went into production will be lapped next quarter. Adjusted EBITDA was $26,000,000 down approximately 13% from a year ago and adjusted EBITDA margin was down approximately seven fifty basis points from the prior year to 40.3%. Margin is down year over year as our prior year margins were positively impacted by the effect of a highly accretive non recurring project that was recognized. Moving to Slide 13, you will see a summary of our corporate and other expenses. Corporate and other adjusted EBITDA was negative $9,800,000 in the quarter or 4.3% of total revenue, which is lower than the expected 5% as we see some of the benefits from expense management initiatives we have implemented.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Moving on to our cash flow overview for the 2025 on Slide 13. Net cash from operating activities was 86,100,000.0 Capital expenditures were $42,300,000 through the second quarter in line with our plan for $85,000,000 for the year. We paid down approximately $16,800,000 in debt, paid approximately $8,900,000 in withholding taxes on share based compensation, returned approximately $10,000,000 to shareholders through share repurchases and dividends and exercised our option in the prior quarter to acquire the remaining non controlling interest in a Cinque subsidiary for approximately $5,200,000 We repurchased approximately 102,000 shares of our common stock during the quarter for approximately $3,700,000 And as Mac mentioned, our Board of Directors refreshed and extended our share repurchase program back to $150,000,000 authorized for repurchase through 12/31/2026. Our ending cash balance, excluding cash in settlement assets, was approximately $314,400,000 an increase of $16,100,000 from the year ended 2024. Moving to Slide 15.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Our net debt position at quarter end was $673,600,000 which includes $964,200,000 in total long and short term debt offset by 290,600,000 of unrestricted cash. Our weighted average interest rate was approximately 6.55%, a decrease of approximately 60 basis points from the 2024. Our net debt to trailing twelve month adjusted EBITDA was approximately 1.95 times down from 2.28 times a year ago. As of June 30, our total liquidity which excludes restricted cash and includes borrowing capacity was $484,500,000 up approximately $33,000,000 from a year ago. Now I will turn to Slide 16 for commentary on our updated 2025 outlook.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

We now expect revenues to be between $9.00 1,000,000 and $9.00 $9,000,000 representing growth of 6.6% to 7.6%. This is a result of Q2 over performance and an improvement in foreign currency incorporated throughout the rest of the year, reflecting the improvement of the Brazilian currency this past quarter. On a constant currency basis, we expect growth of 7.8% to 8.7% year over year and above our prior constant currency range of 6.8% to 7.7%. Adjusted EPS is now expected to grow between 4.87% from the $3.28 reported for 2024, higher than our previous assumption of 2.4% to 5.2% growth. We continue to assume an adjusted EBITDA margin of 39.5% to 40.5% and adjusted effective tax rate of 6% to 7%.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Will now walk you through some of the key underlying assumptions that we considered in arriving at the outlook beginning with revenue expectations for our business segments. For Merchant Acquiring, we continue to expect mid single digit growth in 2025 as we anniversary some of the pricing initiatives implemented last year and approach tougher year over year comparables. In Payments Puerto Rico and Caribbean, we now expect low to mid single digit growth as we continue to benefit from strong APH mobile growth, partially offset by processing services with the LatAm segment and partial impact from the Q4 discount to Popular. For Payments Latin America, we continue to expect low double digit growth as we continue to rely on strong organic growth across the region and impact from M and A offset by the headwind of foreign currency mainly in Brazil. On a constant currency basis, we expect growth in the low to mid teens.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

We are now seeing most of the impact from MELI reflected in our numbers. And as a reminder, we will anniversary both the Grand Data and Nuiti acquisitions in Q4. Finally, in Business Solutions, we continue to expect low single digit revenue growth for the full year mainly as a result of the 10% discount to Popular MSA services in the fourth quarter, which as mentioned previously amounts to approximately $18,000,000 annualized or about $4,000,000 per quarter. Now turning to overall margin. The 10% popular discount that we have previously discussed will begin to impact our revenue and adjusted EBITDA in the 2025 by approximately $4,000,000 The cost initiatives put in place to offset this impact continue to progress as planned and this was reflected in our Q2 margin.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

We continue to expect a gradual improvement in overall margin in the third quarter and then a reset lower in the fourth quarter as the discount takes effect netting out to the 39.5% to 40.5% margin expected for the full year. We continue to expect an adjusted tax rate of 6% to 7% and CapEx of approximately $85,000,000 for 2025. We expect to return cash to shareholders via dividends and repurchases. In summary, we had a strong first half of the year and are on track to deliver strong top line growth in 2025 with improved margins. We look forward to updating you on our progress throughout the year and hope to see some of you at conferences over the next few months.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Operator, please go ahead and open the line for questions.

[Operator]

Thank you. We will now begin the question and answer session. Our first question comes from Vasu Govil of KBW. Please go ahead.

[Vasundhara Govil, Managing Director at Keefe, Bruyette & Woods (KBW)]

Hi, thank you for taking my question. Matt, maybe first for you. Stinkyat, that had been a strategic focus for the company for the last several quarters. And you laid out four or five different initiatives around tech modernization, repricing, etcetera. And obviously, you seem to be reaping the benefits of those initiatives as Brazil is getting better.

[Vasundhara Govil, Managing Director at Keefe, Bruyette & Woods (KBW)]

But maybe you could just remind us what innings are you in with each of those initiatives? I know some of them will be ongoing, but just looking for some sort of update on what process has been made?

[Mac Schuessler, President & CEO at EVERTEC]

Sure. Thanks, Vasu for the question. So as you know, I mean, the entire segment grew double digit this quarter and we're incredibly pleased with that. And there are three components. One is Cinque, which actually outperformed our expectation for the quarter.

[Mac Schuessler, President & CEO at EVERTEC]

The legacy business, which performed in line with what we expected and then the acquisitions performed incredibly well. So if you look at all three parts of that segment, they performed at or above our expectations. To your question, SyncIP, it was a significant amount of focus for us as we integrated that acquisition through a couple of initiatives. One was again really focusing on customers and modernizing our technology. So that's a multi year sort of initiative, but we modernize the technologies and the platforms first where we thought we could get the most revenue in the short amount of time.

[Mac Schuessler, President & CEO at EVERTEC]

So we're seeing that flow through the numbers. And we think that will flow into the rest of the year and into 2026. But that will be a multi year project where we modernize our platforms, we're able to change pricing and then we are also able to grow with our customers. Then we also did a repricing in general. So beyond just the modernization is we looked at some of these legacy contracts and went back to are we priced below market?

[Mac Schuessler, President & CEO at EVERTEC]

Can we change it again so we can grow the market? And so with those revenue synergies, we did the repricing and we're seeing the benefits of that this year and again into next year. And then margin optimization, we've taken a very close look at margins. We're managing those. As you can see, don't break out Brazil separately.

[Mac Schuessler, President & CEO at EVERTEC]

But the margins for the segment were pretty good. But all these initiatives, we're seeing the sort of the benefits of those this quarter and that was why we saw the strength in the quarter. And we think that will carry out through the rest of the year.

[Vasundhara Govil, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great. Thank you. That was great color. And then maybe a quick one for you, Opheen. Just on the outlook, the second half outlook also looks to be better than initially thought.

[Vasundhara Govil, Managing Director at Keefe, Bruyette & Woods (KBW)]

And I think some of it is just FX headwinds are lower. But just if you were to think about the underlying trends, I know you called out some headwinds from gas prices in the quarter. But other than that it seems macro How is are you guys thinking about any impact from tariffs in the back half? Just sort of what's baked in into the second half from expectations going into the year? Is it better or worse?

[Vasundhara Govil, Managing Director at Keefe, Bruyette & Woods (KBW)]

And then from a macro perspective, what are you baking in?

[Mac Schuessler, President & CEO at EVERTEC]

I mean, think in general it's better, right?

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

I think the first half has been very, very good and LatAm has in general exceeded expectations. What I would say to give a little bit more color in terms of what we're thinking, right, to your point. If we look at merchant acquiring, we're kind of lapping some of these pricing initiatives that have been a tailwind for us. So we will necessarily have let's say that push going into the second half. And that's I would say what's driving the second half of that guidance.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

In general, when it comes to tariffs, I think more generally on the low end of our guidance, we have as we did last quarter kind of included some conservativism just to give ourselves some space given the uncertainty. But again nothing substantial in terms of how we're expected to perform for the full year. When we look at payments Puerto Rico, I would say we continue to expect performance relatively similar to what we saw this past quarter except that in Q4 part of that Popular discount will have some effect in that segment. So that will again kind of slow down in Q4. When we look at Latin America, I think there's two key things.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

One we kind of called out in the prepared remarks. We're going anniversary the two acquisitions in the fourth quarter. But as a reminder in Q3 of last year, we also had an important catch up related to get net that amounted to about $1,800,000 that we won't have this year. So that also kind of contributes to let's say our guidance for the second half. In the case of Business Solutions, again what I would say is similar performance except that in Q4 the full effect of the discount which is mainly impacting Business Solutions is going to get let's say reflected in the numbers.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

So I hope that adds a little bit of more detail as to how we're thinking about it.

[Vasundhara Govil, Managing Director at Keefe, Bruyette & Woods (KBW)]

Absolutely. Thank you very much.

[Operator]

Our next question comes from Nate Svensson of Deutsche Bank. Please go ahead.

[Nate Svensson, Director, Senior Equity Research Analyst - Payments, Processors & IT Services at Deutsche Bank]

Hey guys, nice result and thanks for the questions. Mac, you mentioned an active pipeline that you think should lead to new business wins. I was hoping you could give a little more color on that. Maybe what areas of the business are getting you excited within the pipeline? And then has there been any change in tenor of tone tenor or tone of these conversations that you're having?

[Nate Svensson, Director, Senior Equity Research Analyst - Payments, Processors & IT Services at Deutsche Bank]

Like I know across the industry as a whole, we've talked about delayed decision making, especially post the April tariff announcement. So just wondering if you've seen anything like that or any color you can give there?

[Mac Schuessler, President & CEO at EVERTEC]

No, so I mean, I would say, I would repeat, we have a very active organic pipeline. I mean, we announced Group of Evolve couple of calls ago, don't know if it was last two calls ago. But we're very enthusiastic about some additional opportunities that we should be able to announce this year. We don't see people pulling back because of the noise around tariffs. These are long term decisions that financial institutions are making to upgrade or change their technology, so that they can grow either they're issuing or acquiring portfolio.

[Mac Schuessler, President & CEO at EVERTEC]

So we haven't really seen an impact into the demand that we're dealing with now. But we will announce the deals as they come, but we're very optimistic about our pipeline.

[Nate Svensson, Director, Senior Equity Research Analyst - Payments, Processors & IT Services at Deutsche Bank]

That's great to hear. The other thing that I think stood out was just the strength in ATH mobile. I think you mentioned that revenue growth of 17% seems incredibly strong. Could you unpack that a little bit? What is driving that really healthy growth?

[Nate Svensson, Director, Senior Equity Research Analyst - Payments, Processors & IT Services at Deutsche Bank]

Is it macro factors, changes in consumer or merchant demand, any strategic initiatives on your side that you're pushing?

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Honestly, Nate, there's a little bit of everything there. I think we continue to take advantage of cash pockets just in the Puerto Rico economy and ATH Mobile given the usage and the network effect that it has in Puerto Rico given almost 2,000,000 users is really impactful for businesses of all sizes. And so originally ATH business which we can envision as being something for small businesses has really become something more universal in medium sized businesses, even in some cases larger businesses and looking for ways to use that sort of contactless technology. And so we're seeing just more volume and more businesses signing up.

[Nate Svensson, Director, Senior Equity Research Analyst - Payments, Processors & IT Services at Deutsche Bank]

Thanks, Joaquin. Thanks, Mike.

[Mac Schuessler, President & CEO at EVERTEC]

Thank you.

[Operator]

Our next question comes from Chris Kennedy of William Blair. Please go ahead.

[Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair]

Good afternoon. Thanks for taking the question. Can you just talk a little bit more about Cynquia? Historically, they've done a lot of acquisitions. And how is that engine or the possibility of you doing acquisitions with the Cynquia asset?

[Mac Schuessler, President & CEO at EVERTEC]

Yeah. So Chris, we were really focused after the acquisition on integrating Cynquia and make sure that it was operating well, make sure that the current business they have, we're getting the growth rate back to where we wanted it. During that time, we still been actively looking at deals in Brazil. We probably have a deeper understanding of that market than any other market because of the depth of customers, they already had an MA function just focused on that market. So we have a very good purview.

[Mac Schuessler, President & CEO at EVERTEC]

And as opportunities arise, we're highly confident that we can roll those into Brazil. That operation now that it's growing at the rate that we would like it to. I would just add on, we're still looking at stuff across the region. So if you think about Grandada and Nubiti, both of those were in Mexico. So we're looking across the region, but we are extremely excited about looking at things in Brazil and we have a confidence level now.

[Mac Schuessler, President & CEO at EVERTEC]

It's a good time going forward to add things that we can find.

[Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair]

Great. And then just follow-up. You mentioned Mexico, it seems like a big opportunity for you. Can you just talk about your priorities in Mexico?

[Mac Schuessler, President & CEO at EVERTEC]

Yes. So the initial priority, I mean, we've been very focused on issuing in Mexico. And we continue to talk to different clients there and opportunities there and also integrating Grandada and Nubiti. Those have given us sort of the type of capability that Grandada has is unique. So it allowed us to open up conversations with other institutions in the market.

[Mac Schuessler, President & CEO at EVERTEC]

But as we look at, mean, we've said Colombia is important, Chile is important, Brazil is important, Mexico is important, and Costa Rica. Mexico is one that we'll continue to focus on going forward, because we definitely don't have the presence that we have in some of those other markets. And so we're actively looking for opportunities and having good conversations.

[Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair]

Great. Thanks for taking the questions.

[Operator]

Our next question comes from John Davis of Raymond James. Go ahead.

[John Davis, Managing Director at Raymond James Financial]

Hey, good afternoon, guys. Max, just wanted to follow-up on a comment you just made on Cinque. I think you said it was kind of back where you wanted it to be. I just want to confirm that. And I assume what that means it's back to kind of the healthy, not putting a number on it, high single, low double digit growth rate that you thought it could be or it was when you acquired it.

[John Davis, Managing Director at Raymond James Financial]

So it was kind of come full circle, it decelerated and you're happy with the rate of growth there. Is that fair?

[Mac Schuessler, President & CEO at EVERTEC]

Yes, I mean, it exceeded our expectations for the quarter. So as we talked about earlier with Vasu's question, as soon as we acquire the company, we spent a lot of time trying to integrate it, but also get the growth rate back and made a lot of changes. And we're very pleased with how it performed. And it like I said, it outperformed our expectation for the quarter.

[John Davis, Managing Director at Raymond James Financial]

Okay. And then I assume kind of an earlier question, just want to frame it a little bit differently. I know you guys don't guide by quarter, but you said that 2Q was better than you expected. But it looks like the full year was raised by more than kind of 2Q upside. So it sounds like maybe Cinque you expect to continue.

[John Davis, Managing Director at Raymond James Financial]

Anything else that was better in the quarter that you also expect to continue to kind of outpace your initial expectations in the back half of the year?

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

Hey, John. So this is Joaquin. I mean, look, as Mike said before, I think we have pretty much the three key buckets in LatAm performing at a really high level, meaning Brazil, meaning our organic business in let's say the legacy Bay Region plus M and A. So we're expecting that to continue. We do have included in that guide a slight improvement in foreign currency that is flowing through as well.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

But we will anniversary some of the M and A going into Q4. So I mean nothing else really to highlight.

[John Davis, Managing Director at Raymond James Financial]

Okay. Last one on M and A. MAC balance sheet is in really good shape back under two times. How do you think about the M and A pipeline? Anything exciting?

[John Davis, Managing Director at Raymond James Financial]

Do you feel like you're far enough on the other side of Cinque to do something more material? Or should we consider more deals like Grand Data and Nubity?

[Mac Schuessler, President & CEO at EVERTEC]

So what I would say is, I wouldn't I mean, we're not really focused on a big Cinque transformational deal. But we do feel like we're in a good shape from a balance sheet perspective. We do have an active pipeline and M and A is a big important is an important part of our growth. So you should expect to see us do deals sort of with the exception of Cinque, things like that, maybe a little bit bigger, maybe a little bit smaller, but sort of in that zip code.

[John Davis, Managing Director at Raymond James Financial]

Okay. Appreciate it. Thanks guys.

[Operator]

Our next question comes from James Friedman of Susquehanna. Please go ahead.

[Jamie Friedman, Senior FinTech & IT Services Research Analyst at Susquehanna International Group]

Hi. Let me echo the congratulations. Mac, the first one is for you. I'm curious, how would you articulate what you see as your competitive advantage in Latin America? Is it apropos of your technology advantage or is it apropos of your industry knowledge and experience?

[Jamie Friedman, Senior FinTech & IT Services Research Analyst at Susquehanna International Group]

When you go to market in Latin America, I know it's a big place with a lot of different products, but if you had to summarize, what gives Evotec the right to win down there?

[Mac Schuessler, President & CEO at EVERTEC]

Yes. So I mean, I would start and this has changed over the last decade, I would start with our technology, right. So in the past, we didn't have technology in all these markets. And some of the technology we're running was not proprietary. If you look at most of Latin America today, where we do business, we have our own technology where we develop the software, we're able to customize it for customers, we're able to move quickly to implement it, which is unique.

[Mac Schuessler, President & CEO at EVERTEC]

And it's also not only that the product is our technology, but it's also deployed with some of the biggest names in the region. So it's tested, it's tried, it works and we will localize it in each of these markets. So would start with our technology. The second is our expertise, right. So when some of these partners come to us about merchant acquiring, they want to move away from the sort of the legacy processor in their country.

[Mac Schuessler, President & CEO at EVERTEC]

We have the expertise to show them how to do that, to operate a merchant acquiring business, how to look at pricing, how to look at acquisition. And we can also give them sort of how they stand up that business. So to your point, it's our industry knowledge and our expertise. And then finally, I would say, well not finally, but it's also the fact that we are a public company. We throw off a good bit of EBITDA and they are confident that because we are public, we make money, we are regulated by the feds for our U.

[Mac Schuessler, President & CEO at EVERTEC]

S. Banks that they can count on us to run an operation that if something happens, which God forbid it does that we are one of the ones that knows how to deal with compliance, cybersecurity, those types of things. And then the last thing I'd say, we're on the ground in each of these countries. So we have a workforce. We have people that can work directly with them.

[Mac Schuessler, President & CEO at EVERTEC]

All our developers speak Spanish, but we have a presence in each of these countries. We're not trying to export it from Morocco or export it from Asia, right? We actually have a presence in each of these countries of a team that they can work with.

[Jamie Friedman, Senior FinTech & IT Services Research Analyst at Susquehanna International Group]

Well, all right. That's a great answer. I'll drop back in the queue. Thank you both.

[Mac Schuessler, President & CEO at EVERTEC]

Thank you.

[Operator]

Our next question comes from James Faucette of Morgan Stanley. Please go ahead.

[James Faucette, Managing Director at Morgan Stanley]

Hi, this is Jubali from Asghar asking on behalf of James. Thank you for taking my question. Just on merchant acquiring, amid the macro uncertainty throughout this year, looks like consumer spend trends have held up pretty well. But just wondering if there's anything to call out in terms of category of spend changes and what trends have looked like through the July? Thank you.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

I mean in terms of patterns that we would call out, I wouldn't necessarily we haven't identified anything specific that would be let's say attached to the tariffs. What we did call out is obviously gas prices. So the sales volume on gas on let's say our gas segment has been a bit of a drag mainly because the price of gas is down. But other than that and then on the other side of it which is kind of seasonal for us, we had very good volume in let's say government payments mainly as a result of just tax return season. But other than that to your point consumer continues to be very resilient.

[Joaquin Castrillo-Salgado, EVP - CFO & Treasurer at EVERTEC]

So we haven't seen really any significant changes in any other key areas of the portfolio.

[James Faucette, Managing Director at Morgan Stanley]

Thank you.

[Operator]

This concludes the question and answer session. I would like to turn the conference back over to Matt Schuessler for any closing remarks.

[Mac Schuessler, President & CEO at EVERTEC]

I want to thank everybody for joining the call. I want to thank my colleagues for a great quarter and we look forward to seeing you guys at conferences throughout the quarter. Good night.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Participants

Executives

• Joaquin Castrillo-Salgado, EVP - CFO & Treasurer

Analysts

• Beatriz Brown-Sáenz, Reporting & IR Manager at EVERTEC
• Mac Schuessler, President & CEO at EVERTEC
• Vasundhara Govil, Managing Director at Keefe, Bruyette & Woods (KBW)
• Nate Svensson, Director, Senior Equity Research Analyst - Payments, Processors & IT Services at Deutsche Bank
• Cristopher Kennedy, Research Analyst - Financial Services & Technology at William Blair
• John Davis, Managing Director at Raymond James Financial
• Jamie Friedman, Senior FinTech & IT Services Research Analyst at Susquehanna International Group
• James Faucette, Managing Director at Morgan Stanley