Conferencia de resultados del 3T de 2026 de EVERTEC (EVTC): El crecimiento en América Latina impulsa la mejora de las perspectivas

Conclusiones clave

• Los ingresos del T3 de 2026 aumentaron un 24% interanual hasta los 283 millones de dólares, o un 21% en moneda constante. Las adquisiciones, el crecimiento orgánico y los movimientos divisarios favorables respaldaron este incremento.
• El EBITDA ajustado aumentó un 19% hasta los 110 millones de dólares. El margen EBITDA ajustado descendió del 40,5% al 39,0%, debido principalmente a que el negocio de América Latina, de mayor crecimiento, presenta un perfil de margen diferente.
• El BPA ajustado aumentó un 15% hasta 1,07 dólares, impulsado por un mayor beneficio neto ajustado y un menor número de acciones diluidas tras las recompras.
• Los ingresos de Pagos y Soluciones para América Latina se dispararon un 59% hasta los 144 millones de dólares, o un 52% en moneda constante. El EBITDA ajustado aumentó un 77% hasta los 43 millones de dólares.
• La dirección elevó sus previsiones de ingresos reportados para 2026 a 1.880-1.960 millones de dólares y ajustó su previsión de margen EBITDA ajustado a aproximadamente un 39,5%, o un 40% en moneda constante.
• Casi la mitad de los ingresos de EVERTEC procede ahora de fuera de Puerto Rico, frente al 14% en 2015, lo que refleja las adquisiciones y la expansión regional en pagos y software financiero.

Resultados financieros principales

Rendimiento operativo y del negocio

Pagos y Soluciones para América Latina

Los ingresos aumentaron un 59% hasta los 144 millones de dólares, lo que incluye un beneficio por tipo de cambio de aproximadamente 6 millones de dólares, procedente principalmente del real brasileño. El crecimiento en moneda constante fue del 52%.

Dimensa y Tecnobank contribuyeron al crecimiento, mientras que los ingresos orgánicos aumentaron a un ritmo de dos dígitos. Brasil se benefició de contratos de subcontratación nuevos y ampliados, ajuste de precios y relaciones más amplias con clientes consorciados. Colombia y Chile también registraron la ampliación de sus relaciones con clientes.

Los servicios de valor añadido (incluidas las soluciones de recuperación digital, analítica y nube) contribuyeron al crecimiento. El EBITDA ajustado del segmento aumentó un 77% hasta los 43 millones de dólares, con una expansión del margen de 310 puntos básicos hasta el 30,1%, o el 31,5% en moneda constante.

Adquirencia de comercios

Los ingresos netos aumentaron un 9% hasta los 51 millones de dólares. El volumen de ventas aumentó aproximadamente un 8%, mientras que las transacciones crecieron cerca del 5%. El aumento de los precios de la gasolina, la mezcla de comercios, nuevos clientes de alto volumen como LUMA e iniciativas de fijación de precios respaldaron los resultados.

El EBITDA ajustado aumentó en 3 millones de dólares hasta los 21 millones de dólares. El margen se expandió aproximadamente 220 puntos básicos hasta el 42%.

Servicios de Pago

Los ingresos aumentaron un 9% hasta los 60 millones de dólares. Entre los factores clave figuran el crecimiento del 11% en las transacciones de TPV, el crecimiento de dos dígitos en los volúmenes y transacciones de ATH Movil, en particular ATH Business, y los ingresos procedentes de una alianza global de pagos.

La actividad de registro de vehículos y procesamiento de multas también contribuyó, incluido el programa de Amnistía de Multas de Tránsito de Puerto Rico. La dirección señaló que el beneficio de la amnistía se concentró en el T2 y el T3, finalizó en julio y no se espera que se repita el próximo año.

El EBITDA ajustado aumentó un 14% hasta los 34 millones de dólares, mientras que el margen se expandió aproximadamente 280 puntos básicos hasta el 57%.

Soluciones de Negocio

Los ingresos cayeron un 5% hasta los 59 millones de dólares. El descenso reflejó el descuento contractual del 10% concedido a Banco Popular que entró en vigor en octubre de 2025 y la ausencia de ventas de hardware del año anterior, lo que se vio parcialmente compensado por un incremento en los ingresos de Soluciones Tecnológicas.

El EBITDA ajustado cayó un 18% hasta los 21 millones de dólares, con un margen del 35,2%. La disminución de los ingresos, las mayores reservas y el incremento de los costes tecnológicos pesaron sobre la rentabilidad. El descuento de Banco Popular se absorbió por completo el 1 de octubre de 2026.

Previsiones de la dirección

EVERTEC elevó sus previsiones de ingresos reportados para todo el año 2026 a 1.880-1.960 millones de dólares, lo que representa un crecimiento interanual del 15,7%-17,6%. Se espera que el crecimiento de los ingresos en moneda constante sea del 14,5%-15,4%, coincidiendo en gran medida con las previsiones anteriores.

La previsión incluye movimientos divisarios favorables hasta octubre y asume un tipo de cambio medio de aproximadamente 5,45 BRL por dólar estadounidense para el resto del periodo.

La dirección prevé un crecimiento de un dígito alto en 2026 en Adquirencia de Comercios y Pagos para Puerto Rico y el Caribe. Se espera que Pagos y Soluciones para América Latina crezca en un rango comprendido entre el 40% bajo y medio sobre una base reportada, y entre el 30% medio y alto en moneda constante. Se prevé que los ingresos de Soluciones de Negocio disminuyan a una tasa de un dígito medio.

Para 2027, la dirección prevé un crecimiento continuado en América Latina gracias al aumento gradual derivado de los contratos adjudicados en 2026, la venta cruzada y los nuevos negocios de pagos, software y servicios de valor añadido. Se espera que el contrato de Transbank comience a aportar a finales de la segunda mitad de 2027, con un impulso más significativo en 2028. También se prevé que las sinergias con Dimensa adquieran mayor relevancia en 2027 y se anualicen por completo en 2028.

Riesgos y factores a vigilar

• El tipo de cambio sigue siendo una variable importante a medida que América Latina representa una mayor proporción de los ingresos. La dirección señaló la reciente volatilidad del real brasileño.
• La mezcla geográfica sigue presionando el margen consolidado debido a que América Latina crece a mayor velocidad que Puerto Rico.
• Se prevé que el aumento de los gastos por intereses, las amortizaciones y depreciaciones y las participaciones no controlatorias vinculadas a Tecnobank limiten la conversión del crecimiento del EBITDA en crecimiento del beneficio ajustado.
• Soluciones de Negocio afronta retrasos en la consecución de ciertos nuevos contratos.
• La renovación prevista del contrato de EBT incluye precios más bajos, lo que la dirección prevé que modere el crecimiento de Servicios de Pago en 2027.
• La previsión de menores volúmenes de transacciones de Getnet compensará en parte el crecimiento en América Latina en 2027, aunque los mínimos contractuales ofrecen cierto respaldo a los ingresos.
• El programa de Amnistía de Multas de Tránsito de Puerto Rico aportó un beneficio puntual que la dirección no espera que vuelva a repetirse el año próximo.

Aspectos destacados del turno de preguntas de los analistas

La dirección afirmó que actualmente no prevé un impacto significativo en el negocio debido a acontecimientos políticos o regulatorios en Brasil. La empresa mantiene su optimismo respecto a la demanda, pero sigue vigilando los movimientos divisarios.

En cuanto al crecimiento a más largo plazo, la dirección calificó a América Latina como un mercado que históricamente crece a tasas de un dígito alto a dos dígitos bajos, frente al crecimiento de un dígito bajo a medio de Puerto Rico. La compañía tiene como objetivo mantener los márgenes cerca de los niveles actuales a medida que se expande su mezcla regional.

La dirección calificó a Transbank como uno de los mayores contratos de EVERTEC, solo por detrás de Banco Popular, y prevé que la mayor parte de su aportación financiera se produzca en 2028.

La empresa atribuyó su capacidad para superar el crecimiento de partes del mercado latinoamericano a las ganancias de cuota y a la venta cruzada. La dirección citó a Banco de Chile y Transbank en Chile, así como la consecución de un nuevo cliente en Perú, al tiempo que destacó las oportunidades de ampliación de contratos en Brasil.

EVERTEC también indicó que su plantilla distribuida en una geografía más amplia le permite acceder a talento técnico a diferentes niveles de coste. La dirección prevé que la inteligencia artificial respalde la productividad con el tiempo, en particular en el desarrollo de software, la resolución de incidencias, la optimización de la nube y los procesos comerciales.

Transcripción completa de la conferencia de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Good day, and welcome to the EVERTEC Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

Please note, today's event is being recorded. I'd now like to turn the conference over to Lily Arteaga. Please go ahead.

Lily Arteaga

Thank you, and good afternoon. With me today are Mac Schuessler, our President and CEO; and Karla Cruz-Jusino, 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 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 and 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's website at www.evertecinc.com. I will now hand the call over to Mac.

Morgan Schuessler

Thank you, and good afternoon, everyone. EVERTEC has reached an important point in its evolution. This year, we completed two strategic acquisitions in Latin America, further advancing a transformation that has been underway for more than a decade.

Today, close to half of our revenue comes from outside of Puerto Rico, a significant shift from 10 years ago when our business was concentrated almost entirely in one market. That change reflects years of deliberate execution. We have expanded our regional presence, added differentiated capabilities and built trusted relationships with leading institutions across Latin America. Today, we are a broader, more balanced financial technology infrastructure company with meaningful positions across payments and financial software.

This is the right moment to step back and share what we have built, why the opportunity ahead is significant and how we intend to leverage our scale, capabilities and client relationships into the next phase of growth.

Turning to Slide 4. Latin America's financial system is being modernized. Cash and branch-based banking are giving way to digital and instant payment rails, modern cloud-based platforms and greater financial inclusion. Yet significant gaps remain with approximately 30% of adults still unbanked and 41% not using digital payments, highlighting the substantial runway for continued modernization.

To support this transition, banks, merchants, FinTechs and governments increasingly need technology partners that can support mission-critical operations securely, reliably and at scale. That is the role EVERTEC plays.

As shown on Slide 5, we operate in a large and growing addressable market, supported by attractive secular trends across both payments and software for the financial industry. Latin America has been the fastest-growing payments region since 2019, with strong growth expected to continue through 2030. In parallel, banks and investment companies across the region spend approximately $8 billion annually on software, a market expected to grow at an approximately 11% CAGR through 2030.

These are attractive, structurally growing markets, supported by greater financial inclusion, rising digital payment adoption and continued modernization of financial institutions. Taken together, we see a substantial runway for growth, both with the clients and markets we serve today and across the broader region. That brings us to why EVERTEC is well positioned to capture this opportunity.

Turning to Slide 6. We have built leadership across several important parts of the financial technology ecosystem. We are a leading merchant acquirer in Latin America, a leading provider of software to Brazilian financial institutions and the owner and operator of ATH, Puerto Rico's payment network.

Together, these positions give us a differentiated presence across payment and financial software with a strong foundation to deepen our relationships with existing clients and expand across the region. And the strength of those client relationships is an important part of our advantage.

As shown on Slide 7, our technology supports many of the leading financial institutions, major merchants, digital platforms, FinTechs, government entities and large enterprises across Puerto Rico and Latin America. These are complex relationships built on trust, reliability and significant integration into our clients' operations. That installed base is a strategic advantage. It creates multiple points of entry to expand our relationship, introduce additional capabilities and grow alongside our clients as their technology needs evolve.

Turning to Slide 8. Our capabilities address two fundamental needs across the financial ecosystem, running financial operations and moving money. To help our clients run their financial operations, we provide banks, consortia, funds and pension managers and insurers with software spanning core banking, credit and collections, fund and asset management, compliance, ERP and regulatory solutions.

We also enable money to move across the economy. Our capabilities include payment acceptance, merchant acquiring, transaction processing, card issuing, digital and government payments and the ATH network. Across both areas, we provide digital and value-added services that address adjacent client needs across cloud, risk, data and specialized digital solutions.

These capabilities help clients operate more efficiently, manage risk and deliver better experiences. The strategic strength of this portfolio is how these capabilities connect. We can begin with a specific client need and expand the relationship over time as that client modernizes its operations, adds payment capabilities and looks to EVERTEC for more of its technology needs.

As shown on Slide 9, Financial Technology in Latin America continues to be shaped in large part by local market dynamics. Regulatory frameworks vary by country. Payment rails are often domestic and financial institutions require providers with local expertise and a proven ability to operate mission-critical infrastructure. EVERTEC combines that local depth with pan-regional scale and broad capabilities across payments and software for the financial industry.

Built over many years, our resilient technology, in-country expertise, strong governance and trusted client relationships differentiate EVERTEC and create meaningful barriers to entry. The position we have today is the result of the strategy we began executing more than a decade ago.

Turning to Slide 10. Our objective was clear, to evolve from a company concentrated in Puerto Rico and a one significant client relationship into a broader Latin American financial technology company. We pursued that objective through continued investment in our products and technology, combined with disciplined expansion across the region.

Before 2022, we broadened our payments and processing capabilities, entered new markets and established local operating presence. The restructuring of our relationship with Banco Popular in 2022 provided greater strategic and financial flexibility to accelerate that evolution. Since then, we have continued to expand across Latin America, notably in Brazil, the region's largest financial market. The strategy has remained consistent, but the scale, reach and opportunity of EVERTEC has changed significantly. That execution has fundamentally reshaped EVERTEC.

As shown on Slide 11, EVERTEC has evolved into a pan-regional financial technology company with meaningful scale across payments and financial software. Today, close to half of our revenue comes from outside Puerto Rico compared with only 14% in 2015. Puerto Rico remains an important scale foundation, while Latin America has expanded our addressable market and growth opportunities. This transformation reflects deliberate choices about where to compete, which capabilities to build and how we deploy capital to create long-term value.

Turning to Slide 12. M&A has been an important part of that transformation. Our approach is disciplined and capabilities led. We focus on businesses that strengthen our position in attractive markets, add complementary capabilities or client relationships and offer attractive returns with the potential to scale across the region. Each acquisition has strengthened the broader EVERTEC platform.

Our focus now is to unlock that value while continuing to invest organically and through disciplined M&A where we see the strongest potential for long-term returns. That strategy is translating into strong financial performance. Third quarter revenue increased 24% or 21% on a constant currency basis, while adjusted EBITDA increased 19%.

The business is becoming larger and more diversified with Latin America contributing an increasing share of our growth. We have accomplished this while maintaining a balanced approach to capital allocation. Through the first nine months, we generated approximately $176 million of operating cash flow, invested approximately $75 million in the business, deployed approximately $187 million towards acquisitions and returned approximately $92 million to shareholders through repurchases and dividends.

Our strong cash generation gives us the flexibility to invest in the business, add differentiated capabilities through disciplined M&A and return capital to shareholders. We will continue to allocate capital where we see the strongest potential to strengthen our competitive position and create long-term value.

Finally, innovation remains an important part of how we are positioning EVERTEC for the future. We have completed a bottom-up assessment of AI opportunities across the organization and developed implementation roadmaps for our highest value use cases focused on measurable business outcomes.

Software development is our largest near-term opportunity. Early pilots involving ATH Movil and our engineering teams in Brazil are demonstrating the potential to improve productivity, quality and delivery times, and we are beginning to apply those learnings more broadly across our development life cycle. We are also using AI to detect and resolve incidents faster, optimize cloud usage and give our sales teams more time to engage with clients.

We view AI as a multiyear transformation. We will invest in the platforms, governance and training required to scale responsibly with the objective of improving our cost structure over time while increasing the speed, quality and reliability of the services we provide.

BBChain is another example of investing ahead of where financial services are going, adding capabilities in tokenization and digital assets that can create new opportunities over time. More broadly, we continue to invest across our platform, products and capabilities to strengthen our competitive position and support our long-term growth. As we enter our next phase, we do so from a position of strength.

EVERTEC is broader, more balanced and more capable with strong market positions, trusted client relationships and multiple avenues for growth. We're investing with discipline and executing with a clear focus on long-term value creation. With that, I'll turn the call over to Karla to review our third quarter results and updated outlook.

Karla Cruz-Jusino

Thanks, Mac, and good afternoon, everyone. Turning to Slide 14. I'll begin by reviewing EVERTEC's third quarter results.

Total revenue for the quarter was $283 million, an increase of approximately 24% when compared with the prior year quarter. Growth was driven by contributions from acquisitions completed in the current and prior year, organic growth across most of our segments and favorable foreign currency movements, primarily in Brazil.

On a constant currency basis, revenue was $277 million, representing growth of approximately 21%. Foreign currency contributed approximately $6 million to reported revenue during the quarter. Adjusted EBITDA increased 19% year-over-year to $110 million, driven by the strong revenue growth. Adjusted EBITDA margin was 39% or 39.9% on a constant currency basis compared with 40.5% in the prior year quarter. The change in margin primarily reflects the business mix as Latin America continues to grow faster than Puerto Rico and represents an increasing share of the consolidated business.

This mix shift is consistent with our strategy to build a larger, more diversified company with an expanded market opportunity and additional sources of growth. Adjusted net income increased approximately 8% year-over-year to $65 million, driven by growth in adjusted EBITDA, partially offset by higher operating depreciation and amortization, higher interest expense from acquisition financing and interest rates, the noncontrolling interest associated with Tecnobank and a higher adjusted effective tax rate.

Adjusted EPS increased 15% to $1.07 compared with $0.92 in the prior year quarter, reflecting the growth in adjusted net income and the benefit of a lower diluted share count following share repurchases completed in the current and prior year.

With that, I'll turn to Slide 15 to cover our third quarter results by segment, beginning with Merchant Acquiring. Net revenue increased 9% year-over-year to $51 million, reflecting broad-based growth across the business. Sales volume increased approximately 8%, outpacing transaction growth of approximately 5%, primarily reflecting a higher average ticket driven by higher gas prices and changes in the merchant mix.

Growth was also supported by our existing merchant base, new high-volume merchants, including Puerto Rico's Electric utility LUMA and pricing initiatives that benefited non-transactional revenue. Adjusted EBITDA for the segment increased $3 million to $21 million compared to the prior year quarter. Adjusted EBITDA margin expanded approximately 220 basis points to 42%. The improvement was primarily driven by revenue growth and the benefit of the pricing initiatives.

Turning to Slide 16. Payment Services revenue increased 9% year-over-year to $60 million. Growth was driven by 11% POS transaction growth, double-digit growth in ATH Movil volumes and transactions, particularly in ATH Business, revenue from our partnership with a leading global payments company and higher vehicle registration and fine processing activity, including the activity associated with the Transit Fine Amnesty program, which extended through July.

Revenue derived from other segments also increased driven by higher transaction volumes across our Latin America acquired and risk and fraud monitoring platforms, reflecting organic growth and new client wins. Adjusted EBITDA increased 14% year-over-year to $34 million, while adjusted EBITDA margin expanded approximately 280 basis points to 57%. The improvement reflected revenue growth and a more favorable revenue mix. These benefits were partially offset by a onetime operational loss and higher technology costs.

Turning to Slide 17. Latin America Payments and Solutions was again the largest contributor to our revenue and EBITDA growth. Revenue increased 59% year-over-year to $144 million, including an approximately $6 million benefit from foreign currency, primarily reflecting the appreciation of the Brazilian real. On a constant currency basis, revenue increased approximately 52%.

Growth reflected contributions from Dimensa and Tecnobank as well as a broad-based organic growth across the region. In Brazil, growth was supported by new and expanded business outsourcing engagements as well as repricing and broader engagements with existing consortium clients. Across the rest of Latin America, growth was supported by expanded relationships with existing clients in Colombia and Chile and higher revenues from services provided to our Puerto Rico business.

Value-added services also contributed to growth across the region with higher activity in digital recovery, analytics and cloud solutions. These capabilities added through acquisitions in recent years are now contributing to organic growth as we expand them across our client base and regional footprint.

Adjusted EBITDA increased 77% year-over-year to $43 million, while adjusted EBITDA margin expanded approximately 310 basis points to 30.1%. The improvement was driven by revenue growth and the higher margin contribution from Tecnobank, partially offset by higher personnel and technology costs as we continue to invest in the business. On a constant currency basis, the margin was 31.5%.

Moving to Slide 18. Business Solutions revenue decreased 5% year-over-year to $59 million, primarily reflecting the 10% contractual discount to Popular, which became effective on October of 2025 and the nonrecurrence of hardware sales recorded in the prior year quarter, partially offset by higher Technology Solutions revenue.

Adjusted EBITDA decreased 18% to $21 million with a margin of 35.2%. The year-over-year decline primarily reflects the lower revenue, higher reserves and increased technology costs.

Turning to Slide 19. Adjusted EBITDA for Corporate and Other was negative $9 million for the quarter, representing 3.2% of total revenue. Turning to Slide 20, I'll now review our cash flow performance. Through the third quarter, we generated approximately $176 million of net cash from operating activities, reflecting our continued focus on working capital management and cash conversion.

During the period, we deployed capital across several priorities, including the acquisition of Dimensa and $92 million returned to shareholders through dividends and share repurchases.

Turning to Slide 21. Quarter end net debt increased by $135 million to approximately $1 billion, primarily reflecting financing activities related to the Dimensa acquisition. We ended the quarter with $284 million of unrestricted cash, excluding cash and settlement assets compared with $306 million at year-end 2025. Our weighted average interest rate was 6.27%, relatively flat compared to the prior year quarter.

Net debt to trailing 12 months adjusted EBITDA was 2.46x, down from 2.55x in the second quarter and compared to 1.81x a year ago, remaining within our target leverage range of 2x to 3x. The sequential improvement reflects continued deleveraging following the Dimensa acquisition. We ended the quarter with $450 million of total liquidity, excluding restricted cash and including available borrowing capacity.

We are also progressing the renewal of our credit facility ahead of its maturity as part of our normal course capital planning. We remain focused on maintaining appropriate liquidity and financial flexibility to support the business. Overall, the strength of our balance sheet and cash generation also provides us with the flexibility to invest in our strategic growth priorities while continuing to return capital to shareholders.

Turning now to our updated outlook for 2026 on Slide 22. Given our performance through the third quarter and our expectations for the remainder of the year, we are raising our full year guidance. For 2026, we now expect reported revenue to be in the range of $1.88 billion to $1.96 billion, representing growth of 15.7% to 17.6% year-over-year. Our reported outlook incorporates the realized favorable foreign exchange movements, along with higher expectations for payment services.

On a constant currency basis, we expect revenue growth for 2026 to be between 14.5% and 15.4%, broadly consistent with our prior outlook. Our reported outlook incorporates favorable currency movements through October and assumes an average Brazilian real exchange rate of approximately BRL 5.45 to the U.S. dollar for the remainder of the period. While the real has been volatile in the last week, we believe this remains a reasonable average assumption, although further currency movements could impact our reported results.

With that in mind, we believe our updated outlook appropriately reflects the strength of our underlying business while maintaining a measured approach to foreign exchange as we close out the year.

At the segment level, in Merchant Acquiring, we continue to expect high single-digit growth in 2026, supported by continued transaction and volume growth as well as the benefit of the key merchant implementations, including LUMA. In Payments Puerto Rico and Caribbean, we now expect high single-digit growth driven by continued strength in ATH Movil and POS transaction volumes. For Latin America Payments and Solutions, we now expect revenue growth in the mid 40s range on a reported basis and continue to expect growth in the mid- to high 30s range on a constant currency basis, reflecting continued execution across the region and the contributions from Dimensa and Tecnobank.

Finally, in Business Solutions, we continue to expect revenue to decline in the mid-single-digit range, slightly below our prior expectations due primarily to delays in certain new business wins. As a reminder, the 10% contractual discount to Popular reached its anniversary on October 1 and will no longer be a year-over-year headwind beginning in the fourth quarter.

Overall, we are pleased with our performance through the third quarter and the continued momentum across the business. Our increased outlook reflects solid underlying performance, the benefits of our increasingly diversified business and the favorable foreign exchange movements realized through mid-October. We have now narrowed our adjusted EBITDA margin outlook to approximately 39.5% on a reported basis and 40% on a constant currency basis with a foreign exchange creating a modest headwind to reported margins.

Underlying performance continues to benefit from disciplined cost management and favorable business mix. Our updated outlook also incorporates a higher than initially anticipated R&D tax credit realized in the fourth quarter, providing an incremental benefit to margins.

Turning to adjusted EPS. We now expect growth of 10.5% to 12.7% compared with $3.62 reported in 2025 and 9.4% and 11.6% on a constant currency basis. The increased outlook reflects our operating performance and the benefit of the share repurchases completed over the past year. While stronger operating performance across the business is driving our increased outlook, we continue to expect certain items below adjusted EBITDA to limit the full translation of EBITDA growth into earnings growth, including higher interest expense, increased depreciation and amortization and higher noncontrolling interest related to Tecnobank.

Turning to taxes. We now expect our full year effective tax rate to be approximately 10% to 11%, reflecting our current geographic mix of earnings and the benefit of our tax structure in Puerto Rico. We also continue to benefit from the tax deductibility of certain acquisition-related amortizations in Brazil, which reduces taxable income in the jurisdiction and contributes to the overall effective tax rate. As we continue investing to support growth, we now expect capital expenditures of approximately $95 million compared with our prior outlook of $90 million, primarily reflecting investments in technology, infrastructure and security.

Before I close, I'd like to provide an early framework for 2027 by highlighting some of the key operating drivers and considerations we expect to shape our performance next year.

Beginning with Puerto Rico, as I mentioned earlier, the 10% contractual discount on selected MSA services with Banco Popular fully lapped in October 2026, removing that year-over-year headwind as we enter 2027.

In Merchant Acquiring, we expect continued healthy transaction and sales volume growth in 2027, although at more moderate levels than in 2026 as we compare against a stronger base. Growth will continue to benefit from the ramp of key merchant wins implemented during 2026.

In Payments Puerto Rico and Caribbean, we expect ATH Movil to continue growing in 2027, although at a more tempered pace following several years of strong expansion and against a significantly larger base alongside continued healthy POS transaction trends. We also anticipate extending our EBT relationship under a long-term agreement, providing greater visibility over the contract term. However, the anticipated renewal includes lower pricing, which we expect will temper segment growth in 2027.

Turning to Latin America Payments and Solutions. We expect continued growth across the region, driven by the ramp of 2026 wins, new business across payments, software and value-added services and increasing cross-sell across our existing client base. This includes Transbank, a strategic win that expands our presence in Chile and extends our role in payment processing. We expect the relationship to begin contributing late in the second half of 2027 with a more meaningful ramp in 2028.

Together, these opportunities allow us to deepen client relationships while expanding the breadth of solutions we provide across the region. Partially offsetting these growth drivers, 2027 will reflect lower expected transaction volumes from Getnet, with contractual minimums providing a measure of revenue support over the remainder contract term.

In Business Solutions, lapping the popular contractual discount provides a more normalized year-over-year comparison. We expect the segment to benefit from this dynamic while remaining focused on new business opportunities and continued growth in Technology Solutions.

From a margin perspective, we expect acquisition synergies, disciplined cost management and operating leverage to help offset continued mix pressure. As the Dimensa integration advances, we expect synergies to become a more meaningful contributor in 2027 with a full benefit annualized in 2028 as we leverage our regional scale.

Foreign exchange will remain an important consideration as Latin America represents an increasing share of our business, and we will provide specific foreign exchange assumptions with our formal 2027 outlook.

In summary, our strong third quarter performance and increased full year outlook demonstrate the momentum across our business. We entered 2027 with a larger, more diversified platform, meaningful growth opportunities and a clear path to capture greater benefits from our regional scale. We remain focused on executing our strategy, strengthening profitability and delivering sustainable long-term value for our shareholders.

Operator

[Operator Instructions]

Today's question comes from Nate Svensson with Deutsche Bank.

Preguntas y respuestas

Christopher Svensson

Appreciate all the details in the slides and in your prepared remarks. You mentioned the FX dynamics, but I guess maybe a broader question on the environment in Brazil. Clearly, a lot of changes on the political front over the past few weeks. So hoping for an update on what you're hearing on the ground from clients and how you're thinking about the potential for regulatory or macro changes in Brazil. And then I guess, more broadly, I would love to hear how you can help your financial institution clients as they adapt to potential changes in the country.

Morgan Schuessler

Yes, sure. this is Mac. Great question. As you know, I mean, this is the same administration that we've experienced in the past. So this is not new. And also, the legislature sort of still remains with the conservative parties now. So that should create a little bit of balance. It did have some impact on the currency, as we've talked about and as you've noticed. From our business perspective, we don't anticipate a significant change. With higher rates, you do see that some of our products will continue to be in demand, our clients' products. And so at this point, we're still optimistic about our business. We're watching the currency changes like you are, but we don't see a significant impact.

Christopher Svensson

That's good to hear. For a follow-up, I wanted to ask about payment processing Puerto Rico. Again, appreciated the '27 commentary. I guess with regards to 3Q, nice to see the 9% growth. Some stuff has been recurring themes, healthy consumer, ATH Movil, I guess the two items you called out, I was hoping for more color on were the partnership with a leading global payments company and the vehicle registration and fine processing activity. So I guess on the partnership, could you give more color on what exactly that entails and the benefits you're seeing?

I imagine you can't disclose who that is, but more color would be helpful. And then on this vehicle registration and fine impact, any way to help size that? I figure it must have been material enough to warrant a call out. But given my lack of familiarity with the program, maybe you could help explain whether this is a onetime thing or if this is some sort of step-up in the revenues there.

Karla Cruz-Jusino

So with the first one on the partnership, we did call it out last quarter as a onetime benefit, at least at the magnitude that it was reflected in the Q2 results. That's a partnership that will continue to benefit going forward. It's sort of like a commission type of relationship. And then on the second one, the amnesty, it's a onetime Q2 and Q3 benefit. It was an Amnesty Program that the Puerto Rico government offered in a way to pay your fines. And it ended in July. The bulk of that benefit we did see in Q3. People were waiting until the last minute to execute the payment, and that we do not expect it to recur next year.

Operator

And our next question today comes from Chris Kennedy at William Blair.

Cristopher Kennedy

Thanks for all the detail in the deck. You've talked about how the business has evolved over the years. Is there any way to think about kind of what the go-forward growth rate of the business is given how much it's changed?

Morgan Schuessler

Yes. I mean, Chris, great question. As you know, we don't give long-term guidance. Over time, you've followed the story for a long time, and we really appreciate that. We've diversified outside of Puerto Rico, so we could get a company that grows on a consistent basis at a higher rate. while trying to maintain our margins. So we are focused on growing the Latin American business at a rate faster. It's typically been low single digit -- high -- sorry, low double digit, sometimes high single digit. And then Puerto Rico has been sort of low single digit to mid-single digit. So that's how we think about it longer term. And then as you know, we're very focused on our margins, making sure that we do everything we can to keep our margins in a similar ZIP code as it is today as we grow outside of Puerto Rico.

Cristopher Kennedy

Understood. And then we keep getting questions on the opportunity with Transbank. Is there any way to kind of frame the potential with that contract?

Morgan Schuessler

Yes. I mean, look, we don't -- I mean we're not going to -- it is a big opportunity, right, both reputationally and from a revenue perspective. And it's one of the biggest contracts we've ever signed, as we said, after Popular, it's our largest contract. But it's much more in line with the processing deal, that size, but it's the largest one that we have. It's baked into this year's guidance. And when we guide for 2027, it will be in the '27 guidance, but the majority of the benefit will be in '28.

Karla Cruz-Jusino

Correct. We will see the benefits late in the second half of 2027 for that particular transaction and then continuing to see the full extent of the benefit in 2028.

Operator

And our next question today comes from Madison Suhr at Raymond James.

Madison Suhr

But just wanted to start on LatAm here, clearly strong results, growth accelerated. I know there was some additional M&A contribution in there, but it does seem like organic growth is also very healthy again. So all that said, maybe just touch on some of the key drivers. What drove that upside in Latin America? Was there anything more onetime-ish or pull forward that contributed? Or is it just kind of strong execution there?

Morgan Schuessler

Yes. So I mean, look, we had a hard time hearing you. But I mean, I think what you're asking is what was driving the organic growth. We did have M&A, as you pointed out, but the organic growth was healthy as well. It was low double digit, right? But you're asking what was driving -- I think what he was asking is what drove that Q3 growth.

Madison Suhr

Yes. LatAm specifically was -- appeared to be pretty strong relative to my numbers, even on an organic basis.

Karla Cruz-Jusino

Okay. So before I answer that question, I'd like to clarify one point from my prepared remarks regarding our growth expectations for the actually Latin America Payments and Solutions segment. For 2026, we expect growth in the low to mid-40s range on a reported basis. I just wanted to clarify that. And then if we go to the growth drivers for the third quarter, we saw, as Mac mentioned, right, above and beyond the contributions from both Tecnobank, which anniversary is now in the third quarter and then Dimensa, we saw broad-based organic growth, double-digit growth this quarter.

We saw it in expanded relationships within the Brazilian segment. We also saw expanded acquiring relationships in both Colombia and Chile and then just benefits from our current relationships and partnerships that we have in Costa Rico. And we also saw the benefits of some value-added services that we have embedded into our new business, right, driven by some of the acquisitions entered into 2025.

Madison Suhr

Okay. I appreciate that. Hopefully, I'm coming through a little bit clear. But zooming out a bit in LatAm there, I appreciate the comments that you just provided around kind of the way to think about that business. But if I look at some of the additional disclosures around the end market growth, it's like 7% payments growth, double-digit financial software spending. So maybe just touch on what gives you confidence to kind of sustain growth above what the market is and where you expect some of these continued share gains to come from? And I apologize for the audio.

Morgan Schuessler

So you're talking about in our Latin America business specifically?

Madison Suhr

Yes.

Morgan Schuessler

Yes. Look, I mean, we think that we have a lot of opportunity to grow because we are growing -- in some cases, we're grabbing share. So if you look at Chile, we're really grabbing share. We signed Banco de Chile, we signed Transbank. In Peru, we actually signed finance area. So in some cases, we're picking up a big chunk of market share, which is allowing us to get the growth rate that we're getting today. And then if you also look at what we're doing with in Brazil, that's as I think about our payments business around the region.

When I look deeper in Brazil and I look at our financial services business, the cross-selling opportunity because we are now one of the largest tech companies to financial services, the ability to modify some of those contracts, right, more volume-based, but also get new business out of those companies. So we believe, in some cases, because we're stealing share, we may be able to grow faster than the market depending on the unique situation. But that's why we're really targeting that business to grow high single, low double digit over a long period of time.

Operator

[Operator Instructions] Our next question comes from James Friedman at Susquehanna.

James Friedman

Good results here, Mac and Karla. I wanted to ask about -- and these slides that set the context of the evolution of the company are very helpful. I want to ask about the evolution of the labor pool. So you're disclosing in here that the employees in Puerto Rico have gone from 78% of headcount to 19%. I'm curious how we should be thinking about the labor cost trends in particular and technical capacities over the course of that journey.

Morgan Schuessler

Yes, it's a great question. So first, let me say the shift has been primarily because the labor -- our population has grown so much, right? I mean we were doing sort of mid-$300 million of revenue when I got here in 2014, 2015 to well over $1 billion this year. So there's been a substantial growth in the company. So the majority of the shift has not been because we've had significant reductions in Puerto Rico. I mean we moved jobs around from different geographies, but it's because we've become so big in Brazil, because we've established a great business in Chile, because we're growing into Colombia and Mexico.

So that shows the distribution shift. I mean I do believe that we've been able, and we've talked about this on previous calls, we've been able to take advantage of the labor arbitrage so that we can get the best talent at the best cost in the region. And that's been the benefit of growing into so many countries.

We talked a little bit earlier like over time, we do think as we grow, we can grow using artificial intelligence to help make sure that we're efficient as an organization. But yes, I mean, the growth of our footprint has really given us the opportunity to grow our legal pool in the best places and give us arbitrage so that we will be the best people at the best cost. But that big shift has been because the population has grown, much less a big -- it wasn't a big cut in Puerto Rico per se.

Operator

And that does conclude our question-and-answer session. I'd like to turn the conference back over to the management team for any closing remarks.

Morgan Schuessler

Yes. So this is back again. I want to thank everybody for joining the call. I want to thank my colleagues for a great quarter and the investors for your confidence in the company. We look forward to seeing you over the next coming months at different conferences and meetings. Have a good night.

Operator

Thank you, sir. And we thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful evening.