Evertec (EVTC) Q1 2026 Earnings Transcript

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Date

Wednesday, May 6, 2026, at 4:30 p.m. ET

Call participants

• President & Chief Executive Officer — Morgan M. Schuessler
• Chief Financial Officer — Karla Cruz-Jusino

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Takeaways

• Revenue -- $247.9 million, up 8% year over year, with constant currency growth of 5% primarily from organic expansion and Technobank acquisition.
• Adjusted EBITDA -- $97 million, representing 9% growth and a 39.1% margin, flat to the prior year despite 10% Popular discount and adverse currency effects.
• Adjusted EPS -- $0.90, an increase of 3%, supported by adjusted EBITDA growth and a lower share count from repurchases.
• Merchant acquiring revenue -- $448.4 million, 2% growth, with volumes and transactions up 4%, offset by a decrease in spread and partially offset by higher non-transactional revenue.
• Payment services Puerto Rico & Caribbean revenue -- $58.4 million, up 6%, led by growth in ATH Móvil volumes and 8% higher POS transactions.
• Business solutions revenue -- $59.5 million, down 9% due to a 10% discount to Popular and absence of prior-year one-time hardware/software sale.
• Latin America payments & solutions revenue -- $110.3 million, up 32% reported and 24% constant currency, with $6.8 million FX tailwind, driven by Technobank’s contribution and Brazil growth.
• Adjusted net income -- $56 million, essentially flat versus the prior year’s $56.3 million, reflecting stable bottom-line performance despite higher tax rates and amortization expense.
• Cash flow from operations -- $31.2 million generated; capital expenditures totaled $22.7 million, focused on platform modernization and security.
• Shareholder returns -- $3.1 million paid in dividends and 683 thousand shares repurchased for $20 million, with $130 million remaining on the authorization.
• Liquidity position -- $450.3 million in liquidity and a $314.5 million cash balance as of quarter-end; net debt/adjusted EBITDA at 2.15x, within the company’s target range.
• 2026 guidance updated -- Revenue expected at $1.073 billion to $1.085 billion (15.1%-16.4% growth); constant currency growth projected at 13.8%-15%.
• Adjusted EPS guidance -- Growth projected at 6.6%-9.9% (reported) and 5.2%-8.6% (constant currency) from 2025’s $3.62; adjusted EBITDA margin expected to remain in the 39%-40% range.
• Dimensa acquisition -- Closed, expected to be neutral-to-slightly accretive to 2026 earnings, with revenue synergies and cost benefits expected mainly from 2027 onward.
• Capital structure -- Weighted average interest rate of 6%, reduced by 55 basis points, with total debt of $1.1 billion offset by $290.9 million in unrestricted cash.
• Segment outlook -- Merchant acquiring and payment services Puerto Rico & Caribbean foresee mid-single-digit growth; Latin America segment projected for revenue growth in the high 30s (reported) and mid-30s (constant currency); business solutions expected to decline in the low- to mid-single digits.
• Tax rate outlook -- Effective tax rate expected between 11%-12% for full year 2026.
• Capital expenditures guidance -- Anticipated to be $90 million in 2026.

Summary

Evertec (NYSE:EVTC) reported substantial revenue and adjusted EBITDA gains, driven primarily by successful M&A execution and robust organic business trends. The Dimensa acquisition introduces expansion into insurance and risk management verticals in Latin America, complementing prior deals like Sinqia and Technobank while contributing a high proportion of recurring revenue. Management emphasized ongoing cost discipline and confirmed that both growth and synergy benefits from recent acquisitions are expected to accelerate over time, though no 2026 synergy effects are included in current guidance. Updated full-year projections implicate higher expected growth rates in both reported and constant currency terms, reflecting sustained transaction volume growth, product integration, and resilient conditions in both Puerto Rico and Latin America.

• Evertec leadership highlighted the transferability of acquired platforms such as Sinqia, Dimensa, and Technobank, citing new cross-selling opportunities and the ability to "broaden the value proposition" by integrating solutions for banks and insurance clients.
• Morgan M. Schuessler stated Dimensa's business is "mostly recurring revenue, roughly 95%," with no projected cost synergies in 2026; synergy realization is deferred to 2027 onward.
• AI enhancements are already being adopted, with management noting that the Place to Pay platform uses AI for incident resolution "five to eight times faster" and the Risk Center product decreased false positives by "about 40%" and increased fraud detection by approximately "20%."
• CFO Karla Cruz-Jusino clarified that higher corporate revenue is tied to intercompany transactions and signaled the current run rate is expected to persist in the upcoming quarters.
• Management affirmed ongoing evaluations of capital allocation priorities, expressing intent to balance further M&A, opportunistic share buybacks, and debt repayment, with integration of recent deals as the short-term focus.

Industry glossary

• ATH Móvil: Evertec's electronic payments and peer-to-peer mobile money transfer network, operating primarily in Puerto Rico.
• POS: Point-of-sale, referring to transactions and systems at the location where sales occur.
• Constant currency: A method of evaluating financial performance eliminating the effects of exchange rate fluctuations to reflect growth purely from business activity.
• Spread: The difference between transaction revenue and processing or funding costs, used as a margin metric in payments businesses.
• SLAs: Service level agreements, contractual commitments around performance and reliability for technology solutions.

Full Conference Call Transcript

Morgan M. Schuessler: Thanks, Loyda, and good afternoon, everyone. I am pleased to announce strong first quarter results that demonstrate continued execution against our strategic priorities and momentum across our core markets. Today, I will begin with an overview of our M&A framework and how it is translating into value creation across our portfolio, including the closing of the Dimensa acquisition and an update on Sinqia and Technobank. Each of these reflects a different phase of the same strategy: acquiring, integrating, and scaling high-quality assets. I will then review our Q1 performance before turning the call over to Karla for a more detailed discussion of our financial results. Let me start by outlining how we think about M&A.

Our framework is a disciplined approach built around a clearly defined set of criteria. First, we focus on scalable assets with transferable capabilities which allow us to drive efficient growth while minimizing incremental costs and simplifying integration. Second, client overlap and regional footprint are key considerations. We look to expand our services with the right financial institutions and retailers while leveraging the attractive growth characteristics of businesses with core operations across Latin America. Finally, we prioritize high-quality revenue and strong underlying economics, emphasizing profitable business models supported by recurring or volume-based revenue with clear opportunities for accelerating growth and expanding margin over time.

Consistent with that framework, I am pleased to announce that we have successfully closed our previously announced acquisition of Dimensa. Strategically, this acquisition represents an important step forward, positioning us among the largest financial SaaS providers in the market. Dimensa adds a meaningful set of new client relationships, strengthens existing key partnerships, and significantly expands our opportunities within the region as we continue to build a comprehensive one-stop shop portfolio of services. This acquisition simultaneously supports growth and efficiency, reinforcing our leadership in existing markets while expanding our presence into new segments. From a financial perspective, Dimensa is expected to be neutral to slightly accretive in 2026, reflecting integration timing and financing cost.

We anticipate realizing synergies beginning in 2027, which should further enhance the earnings contribution over time. On a pro forma basis and inclusive of the synergies, the acquisition multiple compares favorably with EVERTEC, Inc.'s current valuation. Given we are only days into the acquisition, near-term focus is integration execution and building momentum through 2026 and beyond, as we expect Dimensa to become an increasingly important contributor to our growth as we move forward. Turning to Sinqia, integration priorities remain focused on operational discipline, product rationalization, and go-to-market effectiveness. The commercial pipeline remains balanced between new customer wins and cross-sell opportunities, supported by our expanded product offering and modernization of existing platforms and the complementary acquisitions we have completed across Brazil.

While the competitive environment remains active, our scale, local expertise, and increasingly integrated offering continue to differentiate us. As we look ahead, our focus remains on driving operational efficiency and positioning the business for sustained margin improvement over time. Lastly, Technobank continues to validate our M&A strategy in Brazil, strengthening our local scale and capabilities while demonstrating our ability to integrate founder-led platforms and position them for sustainable growth, reinforcing confidence in our ability to execute strategic acquisitions in the region. Now, turning to slide seven, I will cover some highlights from our first quarter results.

Revenue for the quarter was approximately $247.9 million, an increase of 8% compared to the prior year, driven in part by the full-quarter contribution from the Technobank acquisition as well as organic growth across most of the company. On a constant currency basis, revenue reflected approximately 5% year-over-year growth. Adjusted EBITDA for the quarter was approximately $97 million, up 9% year over year. Adjusted EBITDA margin was 39.1%, consistent with the prior year despite headwinds from the 10% discount to Popular and unfavorable foreign exchange dynamics. This performance reflects our continued focus on disciplined cost management and operational efficiency.

Adjusted EPS was approximately $0.90, an increase of 3% from the prior year driven by strong adjusted EBITDA growth and the lower share count reflecting the impact of the share repurchases completed during the current and prior year. From a capital allocation perspective, during the quarter, we paid approximately $3.1 million in dividends and repurchased approximately 700 thousand shares for a total of $20 million. We exited the quarter with approximately $130 million remaining on our share repurchase program, providing us flexibility going forward. Our liquidity remains strong at approximately $460 million as of March 31, allowing us to execute on the Dimensa acquisition. Let me now provide an update on Puerto Rico beginning on slide eight.

Merchant acquiring revenue grew 2% year over year driven by higher sales volume despite a modest decline in spread that was consistent with our expectations. Payment Services Puerto Rico grew 6% year over year, driven by transaction growth and continued strength in ATH Móvil, primarily ATH Móvil Business. Business Solutions revenue declined approximately $6 million, or 9% year over year, primarily reflecting the 10% discount to Popular as well as a one-time hardware and software sale executed during the prior-year period. Overall, economic conditions in Puerto Rico continue to remain stable, with positive trends in total employment and strong tourism performance. The unemployment rate remained at 5.6%, while consumer spending continued to demonstrate strength and stability.

Turning to slide nine, in Latin America, revenue increased 32% year over year on a reported basis. Technobank delivered a strong full-quarter contribution in Q1, supporting revenue and EBITDA growth in Latin America and reinforcing the reacceleration we have been seeing in Brazil. We also benefited from continued organic growth across the region, including contribution from recent client wins. Results also benefited from a $6.8 million foreign exchange tailwind primarily in Brazil. On a constant currency basis, our Latin America business grew 24% compared to the prior year. In summary, we are pleased with our first quarter performance and the continued progress across our strategic initiatives. Our diversification into Latin America continues to drive growth.

Our Puerto Rico business remains resilient. And our disciplined M&A strategy continues to deliver tangible results. We remain focused on sustainable organic growth, disciplined capital allocation, and long-term value creation. With that, I will now turn the call over to Karla, who will provide more details on our Q1 results and discuss our updated outlook for the remainder of 2026.

Karla Cruz-Jusino: Thank you, Morgan, and good afternoon, everyone. Turning to slide 11, I will begin with a review of EVERTEC, Inc.'s first quarter results. Total revenue for the quarter was $247.9 million, an increase of approximately 8% compared to the prior year, driven by organic growth across most of our segments and the contribution from Technobank, which closed on October 1. On a constant currency basis, revenue growth would have been approximately 5%, with reported results this quarter benefiting from favorable foreign currency fluctuations primarily in Brazil. Adjusted EBITDA for the quarter increased to $97 million, up 9% year over year, with a 39.1% margin consistent with the prior year despite several known headwinds during the period.

These headwinds included the full impact of the 10% discount to Popular as well as higher than anticipated unfavorable foreign exchange dynamics, particularly in countries where our contracts are denominated in U.S. dollars while our expenses are in the local currency, including Uruguay and Costa Rica. Our ability to maintain margin stability in this environment reflects continued execution against our cost discipline initiatives and a strong focus on operational efficiency across the organization. We continue to actively manage expenses while supporting growth initiatives, which have allowed us to absorb these headwinds and deliver consistent profitability. Adjusted net income was $56 million, broadly consistent with the $56.3 million in the prior year, reflecting strong adjusted EBITDA performance.

This resulted in solid bottom-line stability despite the anticipated increase in the adjusted effective tax rate to 10.9% for the quarter, driven by the continued growth in our Latin America operations, which are subject to higher statutory tax rates. Results also reflect higher operating depreciation and amortization as well as the impact of the 25% non-controlling interest from the Technobank acquisition. Adjusted EPS was $0.90, an increase of approximately 3% from the prior year, reflecting adjusted net income results and the benefit of a lower share count from repurchases completed during the current and prior periods. Moving to slide 12, I will now cover our first quarter results by segment.

Beginning with Merchant Acquiring, revenue increased approximately 2% year over year to $448.4 million. Sales volume and transactions both grew approximately 4%, with growth driven by new high-volume merchants as well as from existing customers. As expected, we did see a modest decline in spread reflecting a change in mix consistent with more recent trends, which was partially offset by higher non-transactional revenues from pricing initiatives implemented in the third quarter of the prior year. Adjusted EBITDA for the segment was $19.5 million with an adjusted EBITDA margin of 40.3%, down approximately 240 basis points from the prior year. The margin decline was primarily driven by higher processing costs related to CPI increases in our Payment Puerto Rico segment.

Overall performance continues to demonstrate stable demand and healthy underlying transaction activity. On slide 13 are the results for the Payment Services Puerto Rico and Caribbean segment. Revenue for the quarter was $58.4 million, an increase of approximately 6% year over year. Growth was driven by the continued strong performance in ATH Móvil, particularly ATH Móvil Business, which delivered double-digit growth in both volumes and transactions. We also saw solid growth in POS transactions, which increased approximately 8% year over year, supporting the overall segment performance. Results also benefited from higher services provided to our Latin America segment, reflecting organic growth and new client activity. These were partially offset by the 10% discount to Popular.

Adjusted EBITDA was $34.7 million, an increase of approximately 11% from the prior year, with an adjusted EBITDA margin of 59.4%, an increase of approximately 240 basis points. Margin expansion was driven by incremental volumes, including increased volumes across Merchant Acquiring and Latin America. Overall, the segment delivered strong year-over-year growth and continued to demonstrate its ability to scale. Turning to slide 14, I will cover our results for Latin America Payments and Solutions, which was the largest contributor to revenue and EBITDA growth during the quarter. Revenue for the quarter was $110.3 million, an increase of approximately 32% year over year.

Currency tailwinds in the quarter benefited segment growth by approximately $6.8 million, or 8%, mainly driven by the appreciation of the Brazilian real. On a constant currency basis, revenue growth for the segment would have been approximately 24%. Growth was driven by the full-quarter contribution from the Technobank acquisition, continued strength in Brazil, solid performance from Grenada, and overall organic growth across the region. These were partially offset by the attrition impact from the MELI relationship, which will anniversary in the second quarter, and pricing actions to extend key client contracts.

On a reported basis, adjusted EBITDA was $32.8 million, an increase of approximately 32% from the prior year, with an adjusted EBITDA margin of 29.7%, aligned with the prior year. Adjusted EBITDA benefited from strong revenue growth but was partially offset by foreign currency headwinds from higher than anticipated appreciation in markets such as Uruguay and Chile. Overall results reflect strong execution across the region, positioning the segment well for the remainder of the year. Moving to slide 15 are the results for our Business Solutions segment. Revenue for the quarter was $59.5 million, representing a decrease of approximately 9% from the prior year.

This decline was in line with our expectation and was primarily attributable to the 10% discount to Popular that began in October of last year, as well as a nonrecurring hardware and software sale completed during the prior-year quarter. Adjusted EBITDA was $21.6 million, slightly below the prior year, reflecting the impact of the 10% discount to Popular. Adjusted EBITDA margin increased approximately 240 basis points to 36.3%, mainly driven by lower expenses associated with the prior-year one-time hardware and software sale which came in at lower margins, as well as lower operating costs tied to nonrecurring projects executed in the prior-year quarter and cost-saving initiatives implemented within the segment.

Overall, segment profitability remained resilient, with margin expansion reflecting disciplined cost management and the absence of prior-year one-time items. Moving to slide 16, you will see a summary of our corporate and other expenses. Adjusted EBITDA was a negative $11.7 million for the quarter, representing 4.7% of total revenue, slightly below our expectations. Moving to slide 17, I will now review our cash flow performance. We continue to effectively manage our working capital, generating net cash from operating activities of $31.2 million during the quarter. Capital expenditures were $22.7 million for the quarter, reflecting ongoing investments to continue modernizing our platforms and enhancing our information security capabilities.

During the first quarter, we paid down approximately $6 million in debt and returned approximately $23.1 million to shareholders through share repurchases and dividends. We repurchased 683 thousand shares for $20 million during the quarter, and as of March 31, we had approximately $130 million remaining under our authorized share repurchase program available through 12/31/2027. Our ending cash balance for the quarter, excluding cash and settlement assets, was $314.5 million, a decrease of approximately $17.3 million compared to year-end 2025. Turning to slide 18, our net debt position at quarter end was $826.2 million, comprised of $1.1 billion in total long- and short-term debt offset by $290.9 million of unrestricted cash.

Our weighted average interest rate was approximately 6%, a decrease of approximately 55 basis points year over year, reflecting the benefit from debt repricing actions executed during the prior year and lower interest rates. Our net debt trailing twelve months adjusted EBITDA was approximately 2.15 times compared to 2.04 times a year ago, remaining at the lower end of our target leverage range of two to three times. This continues to reflect our disciplined approach to capital allocation and balance sheet management. As of March 31, and prior to closing the Dimensa acquisition, our total liquidity, which excludes restricted cash and includes available borrowing capacity, was $450.3 million, slightly above the prior year.

Turning now to our outlook for 2026 on slide 19. Based on our first quarter performance and the closing of the Dimensa acquisition, we are increasing our full-year expectations. For 2026, we now expect reported revenue to be in the range of $1.073 billion to $1.085 billion, representing growth of 15.1% to 16.4% year over year. This outlook includes approximately 135 basis points of foreign currency tailwinds driven primarily by the current appreciation of the Brazilian real relative to the 2025 monthly average exchange rate. On a constant currency basis, we now expect revenues for 2026 to grow between 13.8% to 15%, an increase from our prior constant currency range of 8.7% to 10%.

This outlook reflects two primary factors: the inclusion of Dimensa following its closing and the continued solid performance across our existing businesses, which remains largely in line with the assumptions we previously shared. Starting with the legacy business, we continue to have a positive outlook supported by sustained momentum across payments, resilient performance in Puerto Rico, and continued growth across key Latin American markets. We are seeing consistent execution against our commercial and operational priorities driven by a strong pipeline and disciplined cost management. As a result, our underlying assumptions for the core business remain intact and in several areas are tracking modestly ahead of our initial expectations.

With respect to Dimensa, the updated outlook reflects the incremental revenue contribution from the acquisition. Dimensa has strengthened our position in Latin America and aligns closely with our long-term strategic priorities. While the business currently operates at a modestly lower margin profile than our Latin America segment average, it has scale and strategic adjacencies that we expect to enhance our growth profile over time. For 2026, we are not assuming any synergies, as we expect the majority of cost and scale benefits to begin materializing in 2027 and beyond. At the segment level, for Merchant Acquiring, we continue to expect mid-single-digit growth in 2026, supported by stable transaction activity, sales volume, and the implementation of key merchants.

In Payments Puerto Rico and Caribbean, we also continue to expect mid-single-digit growth driven by continued strength in ATH Móvil and POS volume, including processing services provided to the Latin America segment, partially offset by the impact of the Popular discount. For Latin America Payments and Solutions, we now expect revenue to grow in the high 30s on a reported basis and mid-30s on a constant currency basis. Finally, in Business Solutions, we continue to expect revenue to decline in the low- to mid-single digits, reflecting the anticipated reset following the Popular discount. Adjusted EPS is now expected to grow between 6.6% to 9.9% from the $3.62 reported for 2025, or between 5.2% to 8.6% on a constant currency basis.

This outlook assumes an adjusted EBITDA margin of 39% to 40%. The updated range reflects the higher anticipated contribution from Latin America while continuing to incorporate the operating discipline and cost initiatives we have discussed in prior quarters. From an earnings perspective, our updated guidance assumes that Dimensa will be neutral to slightly accretive in 2026, reflecting the balance between operating contributions, incremental interest expense, and integration timing. Below the line, our outlook reflects the post-transaction capital structure, financing costs, and related tax considerations. We continue to expect our effective tax rate to remain within a range of approximately 11% to 12% for the full year. Capital expenditures are also expected to remain at approximately $90 million.

In addition, we expect to continue returning capital to shareholders through dividends and, when appropriate, share repurchases. Overall, our increased 2026 outlook reflects confidence in the performance of our existing business and the strategic and financial contribution of Dimensa. While our focus in 2026 remains on integration and execution, we continue to see meaningful long-term value creation opportunities. In summary, we delivered a solid first quarter, increased our full-year outlook, and remain well positioned to execute against our priorities for 2026, supported by a strong balance sheet, disciplined capital allocation, and continued focus on execution. With that, Operator, please open the line for questions.

Operator: We will now open the call for questions. The first question comes from an analyst with Raymond James.

Analyst: Hey, good afternoon. I appreciate you taking the questions. Just wanted to start here on the updated outlook. I appreciate the color on the expected EPS impact from Dimensa, but as we think about the $40 million raise to the midpoint of revenue, can you give us a more detailed sense of how much of that is driven by the deal versus some of those other factors you talked about?

Morgan M. Schuessler: Thanks for the question. Look, we do not break that out historically, but let me give you a little bit of color on Dimensa since you asked. We are extremely excited about the deal because this year it will be neutral to accretive, and our leverage ratio will still be 2.4x or less. And in 2026, we have no synergy baked in. So what you are seeing in the guide does not include synergies, which we think we will realize in 2027 and 2028, which make the deal even more valuable. It is mostly recurring revenue, roughly 95%.

It gets us into two verticals we are not in today—insurance and risk—and it also helps us double down on funds and banks. So we think there are a lot of synergies not only on the expense side but also on the revenue side. But we cannot really break out the specifics on the numbers for the deal.

Analyst: I appreciate that and the extra color. And then just a quick follow-up here on the corporate revenue headwind. It grew pretty meaningfully year over year. Can you provide some color on what drove this in the quarter, and to the extent you can give any expectations, is this the right run rate you are thinking about for the year, or do you expect it to step down as we progress throughout the year?

Karla Cruz-Jusino: Corporate revenue is impacted by intercompany transactions that we have pulled out as part of the growth in some of our segments. That is the expected run rate as we think about the next couple of quarters.

Morgan M. Schuessler: Very good. Thank you.

Analyst: That was all. Thank you.

Operator: The next question comes from James Friedman with Susquehanna.

James Friedman: Hi. I am sorry for the background noise. I wanted to know, Morgan, in terms of your prepared remarks and the observation on slide four about the transferability of the acquired assets, could you elaborate on that? In particular, the transferability—like in which use cases have you had the most success so far in transferring the assets either regionally or to other verticals?

Morgan M. Schuessler: Yes, great question. There are a couple of pieces to this. One is Sinqia specifically. A lot of what we have done in Brazil with Sinqia is primarily focused on the current market. We do have some products that we have exported, but it has been limited. PayStudio is a platform, Place to Pay is a platform, and Risk Center is a platform that we have localized throughout the region. That is what Santander is running on. That is what Banco de Chile is running on, Grupo Aval, and even BCR now in Costa Rica. Those are some of the platforms we have regionalized. In Brazil, we have done a good job of leveraging platforms from a cross-sell perspective.

With Dimensa, they have four verticals—two of those we were not in. They are in the insurance business, with about 65% of the market, dealing with brokers, underwriters, and consumers. They also have a risk management product for financial institutions. We are able to cross-sell our products to their insurance and risk customers and vice versa. On the funds side, we have a similar product where we have very different customers—we have mid-size banks and they have larger banks. In terms of transferring capabilities, we think we can take Lot 45, which is one of our products that we acquired with Sinqia, and bolt it onto the Dimensa product.

That is where we can take these products in Brazil and bolt them together. Dimensa has a set of clients we do not have, and we have a capability they do not have, so we can broaden the value proposition. So in that concept of transferability—platforms we can leverage across deals—we have those we can leverage across the region, which are a lot of the payment products, and within Brazil we can combine products between Sinqia, Dimensa, and Technobank, plus there are highly transferable customer bases and integrations we can do to make these products work together.

James Friedman: That is a great answer. And at a higher level about the prospects of inflation—maybe for Morgan or for Karla—some of the other payments companies are talking about it. Could you share your perspective how inflation impacts the business, whether it is wage inflation or gas inflation? Any commentary at a high level on inflation would be helpful. Thank you.

Morgan M. Schuessler: There are multiple impacts like in anyone’s business. The good thing is that some of our payments businesses are tied to ticket size. So if there is inflation in some of our merchant acquiring businesses, we actually get lift from that in incremental revenue. Also, some of our contracts—particularly with banks—are tied to CPI. So in some ways, we benefit from inflation. But just like any other business, when there is inflation and it impacts our costs, those are costs we have to absorb.

I think we have demonstrated when we have significant cost increases across our base—whether it is the $18 million discount we had to pass to Popular or inflation in general—we have managed it well and kept our margins around the 40% level.

Operator: The next question comes from Vasundhara Govil with KBW.

Vasundhara Govil: Thank you for taking my questions. Morgan, a high-level one on AI. Given the market’s focus on potential for AI to reshape software economics, how do you think about that potential risk, and are you seeing appetite among financial institutions in Latin America to embed AI into their workflows? How might that affect you?

Morgan M. Schuessler: Great question. We are bullish on AI generally—around software development and the enterprise. This year we have focused on appropriate governance and experimentation to see where the biggest benefits are. We see three areas of impact, none of which are baked into 2026 guidance: efficiency, growth, and quality. Efficiency can change our cost structure. Growth comes from adding new features to improve our products so we can grow faster. Quality improves through better SLAs as AI helps how we manage service. Two examples: Incident management—our Place to Pay product is using AI to manage incidents, allowing us to resolve issues five to eight times faster, improving uptime and quality.

On growth and user experience—our Risk Center product uses AI to make it easier for users to create rules and logic with natural language, reducing false positives by about 40% and increasing fraud detection by about 20%. We see real use cases across those areas, which should help margins, accelerate growth, and improve quality over time.

Vasundhara Govil: That is helpful. It does not sound like you think it is a big threat in terms of banks using AI themselves to disrupt some of the software products you offer today?

Morgan M. Schuessler: No. We are processing financial transactions with reconciliation and settlement between financial institutions and delivering risk management products. We believe we can provide these capabilities more quickly and cost effectively. We see AI as a catalyst and a tailwind, not a negative.

Vasundhara Govil: Thank you. And a follow-up on the Banco de Chile partnership. Last quarter you mentioned it is now operational. How is that tracking relative to your expectations, and how long before it ramps to full run rate? How should we think about the revenue potential relative to the Santander relationship today?

Morgan M. Schuessler: Great question. The deals we have talked about on previous calls are going as expected. Any benefits we see in 2026 are already baked into the guidance. All of the projects we have announced as far as new clients are going as anticipated.

Operator: The next question comes from an analyst with Deutsche Bank.

Analyst: Hey, thanks for the question. A follow-up on Dimensa. I understand you do not break out the inorganic contribution, so maybe asking differently on historical performance. The prior owner of Dimensa disclosed some numbers for 2024 and 2025 in Brazilian reals. Is there any accounting consideration—net versus gross revenue—or anything we should keep in mind when looking at historicals? And the 2024 to 2025 growth rate looked healthy—was that all organic, or did Dimensa benefit from some inorganic items? Any sense of how Dimensa had been performing, leaving aside what is in the 2026 guide?

Morgan M. Schuessler: Dimensa, similar to Sinqia, had some M&A in their historical growth. They did have some softness a couple of years ago, as we did, given the circumstances in Brazil. After Lula won, IT spend was more cautious, and they also had some legacy platforms that were outdated. Looking forward, we believe there are meaningful cost synergies we will take out in 2027—not included in 2026—and we have heard from clients who are excited about us acquiring this asset because they want us to do with Dimensa what we did with Sinqia: modernize platforms so they can grow. They are looking to have multiple relationships with a vendor like Sinqia/EVERTEC.

We see a lot of cross-sell opportunities—Dimensa has some of the biggest banks in funds, and we can bolt on Lot 45 to provide other capabilities using our products. We think the revenue synergies and growth tailwind from combining, modernizing, and cross-selling are compelling.

Analyst: Got it—helpful. And a higher-level one on capital allocation. You have done a bunch of acquisitions, leverage is in a healthy spot, and you have about $130 million on the repurchase authorization. How should we think about prioritizing buybacks versus paying down debt versus other opportunities to continue building in Latin America? Are there prospects of attractive deals you are looking at? How should we think about the priority of each in 2026?

Morgan M. Schuessler: Great question. We just bought Dimensa and Technobank, so we are very focused on integrating those—that is a key priority. We are now a little over 45% of revenue outside Puerto Rico, and a lot of that has been M&A. We will continue to focus on M&A and have a healthy pipeline, but right now we are focused on Dimensa and Technobank. We believe the stock is attractive, and as you can tell by our previous buybacks, we are opportunistic. We will balance M&A, buybacks, and debt paydown as we look at capital allocation, but near term the focus is on integrating the deals we have while continuing to consider buying stock.

Operator: The next question comes from Cristopher David Kennedy with William Blair.

Cristopher David Kennedy: Good afternoon. Thanks for taking the question. You provided some good updates on the economy in Puerto Rico. Any comments or observations on markets outside of Puerto Rico that you can talk about given macro uncertainties?

Morgan M. Schuessler: We do not have anything specific to call out. We remain confident in 2026, and even with some of the developments in different markets, we do not see anything we would specifically flag.

Cristopher David Kennedy: Understood. And last call you talked about one of the biggest pipelines for the company. Can you talk about how the conversion of the pipeline is progressing?

Morgan M. Schuessler: Great question. On the organic side, we have posted some pretty big deals—Banco de Chile, Grupo Aval, Financiera Oh! were among those we have discussed. We still have a very healthy organic pipeline, and we are optimistic we will continue to have wins to announce throughout the year.

Operator: That concludes the question and answer session. I would like to turn the floor to management for any closing comments.

Morgan M. Schuessler: I want to thank everybody for joining the call. We look forward to seeing you at conferences and speaking to you individually over the coming quarter. Everybody have a good night. Thank you.

Operator: Thank you. That concludes today's conference. Thank you for attending today's presentation. You may now disconnect your lines.

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